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Not long into the enforcement of the no-fly zone in Libya, a military stalemate appears to be taking shape. Forces loyal to Muammar Gadhafi continue to hold key towns against incursions by Libyan rebels--and the fragile international coalition that has been carrying out airstrikes over the past 11 days in order to protect Libyan civilians from attack is now at odds over whether the Libyan rebels require more direct military assistance.

Coalition members are discussing a range of options, including increased NATO close air support to aid the rebels engaged in direct combat with Gadhafi's forces and efforts--in all likelihood carried out covertly--to arm and train the rebels. In an exclusive report for Reuters, Mark Hosenball writes that Obama has issued a secret presidential finding authorizing covert U.S. support for the Libyan rebels--a move that will almost certainly raise the stakes in Libya for the United States and its coalition partners, while making it harder to assure the ambivalent U.S. public that the conflict in Libya will produce a quick resolution.

Despite the reported finding, the White House, for its part, insisted that "no decision" on arming the rebels had yet been made.

"We're not ruling it out or ruling it in," White House press secretary Jay Carney said in a statement Wednesday. "We're assessing and reviewing options for all types of assistance that we could provide to the Libyan people," in consultation, Carney added, with "international partners."

And talk of direct military assistance to the rebels has some Washington lawmakers and policymakers uneasy. They are leery of wading directly into a Libyan civil war, as opposed to the more limited kind of humanitarian intervention that President Barack Obama outlined in his speech to the nation on Monday. Then, the president stressed that the United States was intervening in order to avert a massacre of Libyan civilians that would have "stained the conscience of the world."

But now statements from the administration seem to signal a shift in thinking. Secretary of State Hillary Clinton, speaking at a conference on Libya in London Tuesday, said her reading of the UN Security Council resolution 1973 on Libya allowed for the arming of the Libyan rebels. At the same time, she insisted that the United States had not yet made any decision to do so.

A senior European diplomat, who spoke anonymously due to the sensitive nature of the ongoing discussions, said Wednesday that his country endorses a similar interpretation of the UN resolution--but added that his government favors "tipping the balance" decisively in favor of the Libyan opposition.

Former U.S. officials who have worked on Libya said they suspect that any plan to arm and train the rebels would be carried out covertly. Such initiatives would likely take shape via neighboring Egypt, the officials said—thereby bypassing the consensus-driven command structure of the NATO-led coalition that assumed command of Libya military operations Wednesday.

"I think that if we do arm the rebels, we will never hear about it," said one former U.S. official who has worked on Libya, requesting anonymity in order to share her views frankly.  "The Libyan rebels have said they want training by the Egyptian military. They say they don't want Americans on the ground.  The Egyptian military will give them stuff, some of which they've bought from us, it will be called technical assistance, that is how it's going to happen."

"The Egyptians really are already in there training," the former official said. She noted Egypt has made a point of keeping its role quiet--but that the United States is likely already aware of it.

Other analysts noted the years-long U.S. effort to train the security forces in Iraq and Afghanistan--and wondered, given that ongoing effort, just how coalition members might manage to effectively arm and train the Libyan rebels in a relatively short time frame.

"I don't know how you do it effectively," said former State Department Middle East official Joel Rubin. "Look at the lessons learned of our experiences in Iraq and Afghanistan, in training their security forces, how challenging and multi-year [a task] that is. We have been providing less complex weaponry to those forces than would be required to militarily-dislodge Gadhafi from outside. So I think one has to really recognize that that is the kind of effort that would be required to arm the rebels."

"It does feel like we are watching a stalemate develop," Rubin, now with the progressive National Security Network, added. "And I hate saying that ... We might see a divided Libya." Under this scenario, Rubin explained, Gadhafi would be entrenched in the capital Tripoli and the western part of the country, while the rebels would hold Benghazi and eastern Libya.

But Rubin also stressed that the military situation on the ground will play an important role in "shifting the dynamics inside of Tripoli, which is really going to be the ultimate determinant of Gadhafi's fate. Not fighting in Misrata."

Western officials and analysts also noted that Gadhafi regime insiders have been placing phone calls to western embassies and intermediaries, with the aim of opening up negotiations to secure a cease-fire arrangement or exit plan for themselves or Gadhafi.

Experts say that such calls are probably getting a thorough hearing. Even the governments in the coalition that have pushed hard against Gadhafi have said they would be amenable to a deal that could ensure Gadhafi leaves Libya.

"There has to be an escape valve," Rubin said.

The former U.S. official also noted reports Wednesday that Musa Kusa--Libya's foreign minister and former longtime intelligence chief --was in Europe. That seemed to indicate, in the official's view, that some sort of negotiations for a ceasefire, or an exit plan for Gadhafi associates, may be under way.

But the UK Foreign Office, confirming that Kusa had arrived in England, said that Kusa had defected. "He has told us that he is resigning his post," the UK Foreign Office said in a statement, according to the BBC.