* Both factions resisting deal on unity government
* Hardliners in both camps still favour armed solution
* EU, UN have warned about sanctions over deal
By Ahmed Elumami
TRIPOLI, Oct 20 (Reuters) - U.N. attempts to broker a national government with Libya’s warring factions stalled on Tuesday after the elected parliament rejected a draft of an agreement meant to end the crisis.
Libya is caught in a conflict between the internationally recognised government and its elected parliament and a self-styled government controlling the capital Tripoli, each backed by rival armed factions.
After months of talks, the United Nations proposed a national power-sharing government to end a war international powers worry is allowing Islamist militants to gain ground.
In a confusing announcement on Monday night, House of Representatives President Aghila Saleh said most members of the elected legislature rejected the proposal, which named a six-member council as the executive of a unity government.
But some lawmakers said there had been a show of hands and others said there had been no official vote.
However, the lawmakers said there was a general rejection of the unity proposal because of changes they said were made to appease Tripoli, even after the House of Representatives had already agreed to the initial deal earlier this year.
“The majority of the House of Representatives rejected the proposed government ... because there were too many violations to the draft,” lawmaker Mohammad Al-Abani told Reuters.
Despite the resistance, delegations from both factions say they want to keep negotiating.
Libya’s recognised government has operated out of the east of the country since last year when an armed faction called Libya Dawn took over Tripoli in the west, set up its own government and reinstated a former parliament known as the GNC.
The GNC is also struggling to present a united front on the U.N. deal and has yet to vote officially. Some GNC leaders have rejected the deal, while on Tuesday a group of 25 lawmakers said they accepted it.
“I see the two non-votes as a convergence of the hardliners in both camps to preserve to status quo,” said Mattia Toaldo, Libya expert at the European Council on Foreign Relations.
Libya’s conflict is complicated because within each armed coalition divisions are growing. Brigades of former rebels who once fought together against Muammar Gaddafi have turned against each other. Loyalties are often more to tribe, city or region than the state.
The country’s oil industry has been badly hit by the chaos, with the OPEC member producing fewer than half the 1.6 million barrels per day it produced before the 2011 revolt ended Gaddafi’s rule and he was killed.
Most important will be the reaction to the deal of the armed groups, including divisive former Gaddafi ally Khalifa Haftar, whose Libya National Army is allied with the recognised government.
Some in the eastern government want Haftar to lead any new national armed forces, but his role in any unity government is a red line for the Tripoli faction.
EU leaders are promising aid and financing to any new unity government. The European Union is considering helping Libya strengthen its borders and disarm militias if a unity government is formed, a EU document seen by Reuters says.
A lack of a national agreement, though, could further encourage hardliners, and the United Nations and Europe Union have warned of potential sanctions against those who threaten the accord, including some of Libya’s top armed commanders. (Additional Reporting by Ayman Al-Warfalli; writing by Patrick Markey; Editing by Alison Williams)