By Ayman al-Warfali and Angus McDowall
SIRTE, Libya/TUNIS (Reuters) - In Libya's frontline city of Sirte, parts of which still lie in ruins, the commission set up to oversee warring rivals' recent ceasefire has put its name on a large downtown conference centre - an outward sign of its commitment to peace.
So far the ceasefire is holding, and some elements of the truce have been implemented: flights between rival cities Tripoli and Benghazi have resumed and foreign fighters have left oil facilities - the keys to Libya's economy.
But meetings of the Joint Military Commission in northern Libya, attended by five officers each from the two sides, have yet to make progress on other key demands of a U.N.-brokered agreement, underlining its fragility.
The rivals in a civil war that has left thousands dead and the country in chaos have yet to withdraw troops from frontline positions, open a major coastal road linking Sirte to Misrata and rid their ranks of foreign mercenaries.
"The danger won't end unless the process of national reconciliation is completed," said Mohammed Mofteh, 33, the head of a charity in Sirte, summing up widespread public scepticism about permanent peace.
Since the internationally recognised Government of National Accord (GNA) drove Khalifa Haftar's Libyan National Army (LNA) back from the capital Tripoli in June, the shooting has given way to political jostling.
The U.N.-led diplomatic effort has set a roadmap to elections at the end of next year and implemented an audit of the central bank, which is split between the sides.
The 75 participants in a U.N.-led political dialogue, which is separate from the military commission's work, have also a Dec. 24, 2021 election date. But they have not agreed on a unified transitional government needed to oversee the vote.
Progress in those political talks slowed when they turned to the question of who would be on the new presidential council and the prime minister, said Hamad al-Bandaq, an eastern-based member of parliament who took part.
"We reached a stumbling block, which is the choice of who will be in the presidential council and government," he said.
Beyond the GNA and LNA's involvement in the peace process, their foreign backers - Turkey in the case of the GNA and Russia, the UAE and Egypt in the case of the LNA - also support it, though they, too, have invested heavily in the conflict.
Some of their military and economic interests could be lost or reversed under a new unified government.
Situated near Libya's main oil terminals, and seen as the gateway to the OPEC producer's "oil crescent", Sirte - now under the control of the LNA - was a major prize in the civil war.
Its domed Ouagadougou Conference Centre, an undamaged part of which is now the Joint Military Commission headquarters, serves as a reminder of what is at stake.
The biggest building Muammar Gaddafi gave to his hometown, the centre hosted the 2009 African Union summit. But it is pitted with bullet and shrapnel marks from a battle in the 2011 uprising that toppled the former leader.
After Islamic State seized Sirte in 2015, its black flag was painted onto the centre. Today a new banner for the commission hangs where GNA and LNA negotiators hash out details of their October ceasefire.
They have pledged to remove foreign mercenaries from Libya by late January, pull forces back from forward positions and open the road across frontlines.
But U.N. acting Libya envoy Stephanie Williams last week told the Security Council the GNA was still patrolling, the LNA setting up new fortifications and both sides landing cargo planes at bases they have used to resupply.
A Western diplomat focused on Libya said the two sides had asked for only limited outside monitoring of the ceasefire - a sign they may not plan new withdrawals until the political situation is clearer.
In Sirte, queues of up to 50 cars at petrol stations point to the hardships of life near the frontline. Living conditions in Tripoli and the eastern centre of Benghazi this summer led to widespread protests.
Williams has said this public frustration will aid the push for a deal. The U.N. process helped resolve an eight-month LNA blockade of oil exports which aggravated economic problems in both east and west.
The third strand of talks beyond the military commission and the political process is economic negotiations. There, too, the tussle, particularly over the National Oil Company and Central Bank of Libya, continues.
(Reporting by Ayman al-Warfali in Sirte and Angus McDowall in Tunis; writing by Angus McDowall; Editing by Mike Collett-White)