wolf blitzer. you're in "the situation room." libyan rebels say their real moment of victory won't come until moammar gadhafi is captured. we're following breaking news out of libya. the state department in washington says opposition fighters are believed to control about 90% of the capital, tripoli, and they say they have three of gadhafi's sons in custody, but moammar gadhafi remains at large. the u.s. government says it believes he's still in libya. libya's national transitional council says he may have fled to neighboring chad or algeria. president obama is calling on gra gaffie to surrender and prevent more bloodshed by telling supporters to lay down weapons. the u.s. military confirming a little while ago that gadhafi forces fired a scud missile near thesky of sirte, that happened today. sara sidner is one of our correspondents bravely covering the final push in zawiyah. what is the latest? >> reporter: we can tell you that in the city square in and around that area and around gadhafi's compound, there were loud blasts of gunfire going off for quite a while in the evening time, just before sunset. we were turned around by a rebel checkpoint. these checkpoints pop up in different places now. they're trying to take some control of the situation of the area, and what's happening is as we heard those blasts, we were told it is not safe, go away, get out of the area, turn around, so we had to turn around. we could still hear the gunfire. what we saw earlier in the day, and throughout the evening were people in the streets, they were celebrating, a lot of rapid gunfire in the air, celebratory gunfire as opposed to the gunfire we heard in the city, which we do understand the rebels are saying there were snipers in that area, which very, very scary obviously if you can't really see where the gunfire is coming from or who is shooting at you or how many. they said they were doing their best to get rid of what they call "mercenaries," and they say that a lot of these mercenaries are from places like chad, which is why you're hearing these rumors of moammar gadhafi having left the country or going into a different country such as chad, but a lot of rumors, wolf, i have to tell you they have getting stronger and stronger, first they said he was captured, then they said he was going to surrender, then they said he was sick. nobody really knows, but there's a great belief that he is still in the country, and perhaps somewhere in tripoli, when you start asking people in the streets, you will hear people think he's believed to be somewhere around there, they can't see how he could have escaped but no one really knows the whereabouts of moammar gadhafi at this point in time. >> the rebels have control, they've captured his three sons. do we know what's happened to them, where they are? >> we do not know. we just happened upon another arrest, another, people think is a member of the gadhafi regime, one of the most well-known news anchors for libya state tv. we just happened upon her detention. it happened about 60 minutes before we got to this one building along one of the main drags in tripoli. they said that this woman, her name is halla al misrati, she was taken. these detentions people were upset, this is the same woman on libyan state tv holding a gun saying "i will die or you will die" angering the rebels in the streets, they were shooting in the air, trying to get people back as the rebels tried to push into the area where they detained her but they held her and that she is unharmed, but we were unable to see her ourselves but it is interesting to know that they are trying to put together some sort of juls in the streets and going after some of the people who they believe are really a part of the gadhafi regime. >> sara is there any evidence of retribution yet? >> reporter: yes, now see this is one of those things that we watch out for, because we know it happened in benghazi. we know it happened in some of the other cities, where retribution and sometimes it was literally neighbor to neighbor, where someone knew that there were strong supporters of the gadhafi regime or they were an intelligence wing and worked for the intelligence wing of the gadhafi wing and in benghazi there were actual murders according to a judge i spoke to a few months ago when i was in benghazi so that's one things you have to watch out for. we have not heard of any of that going on in the city just yet but there is always that fear because it seems to crop up after a while, after the rebels sort of get hold of a town, the anger coming out in a violent way. one more thing to add, one thing we saw today that was different than yesterday, we did see a bit of looting in the city. people saying that these were houses that belonged to the gadhafi regime, or to people who worked for him and we did see people looting today. >> sara, don't go too fa are awafar away. be careful. fierce pockets in tripoli gadhafi's forces are putting up a fight. intense gunfire at the rixos hotel close to gadhafi's compound, where foreign journalists are staying, including our own matthew chance. matthew is joining us on the phone. matthew i understand the situation where you are has really deteriorated over the past few hours. >> reporter: yes, it has, wolf. it's been really difficult to get any communications out of the hotel. there's no electricity in the hotel and so we're all kind of sitting in the dark on the interior, in the interior sort of upstairs lobby of the hotel because it's a ferocious gun fight outside battle around the compound of colonel gadhafi. some of the bullets have been flying into the hotel. we've also, you know, been sort of, you know, less all of the government officials departed sometimes yesterday as the rebels began their advance into tripoli and what they left behind instead of letting us go out into the streets to do whatever they want they left behind some gadhafi loyalist gunmen in the lobby of the hotel, some of whom are very aggressive so we've all kind of like corralled ourselves on to the upper floors, not getting any information at all about what's going on outside of the hotel perimeter. of course what we do know clearly because we can hear it is that we're obviously in one of the pockets of tripoli that's still controlled by gadhafi loyalists and there's obviously very fierce fighting on the way between those loyalists and the opposition fighters and it's not surprising to me, wolf, because this is an area we've discussed before where there's some important, symbolic buildings, not just the rixos hotel from where all of the journalists have been supporting from this side of the libyan crieses over the last several months but also the compound of colonel gadhafi as well and much of the fighting it seems is around the compound for control of it. >> matthew, what's the situation as far as food is concerned? because i saw one of your tweets about the pantry being raided from food at the hotel. what's going on as far as food and water? >> reporter: yes, it's quite a worrying situation, actually. we've been scouring the place. it's virtually abandoned this hotel. we can't go out of it. there are still a couple of dpnmen dp gunmen in the lobby and the gates. we've got the run of the place, it's pitch black. we spent a couple of hours tonight walking around the kitchens, finding the store rooms, found some canned food, found some bottled water, found some, you know, some bread, which has gone a bit stale but we're trying to gather whatever supplies we can and put it in one place so we have a food store we've got access to. the things is we're not given any indication but the government as to or the gadhafi loyalists as to when we're getting out of here. we're hoping for the best but planning for the worst, which is that we're trying to get as much food and water together so if we are here for, you know, three or four days, a week, then we'll have enough food to get through that. but hopefully, hopefully we can kind of do some deal, negotiate some kind of exit from this hotel, because really, we don't feel we're getting much in terms of an overall picture of what's happening in tripoli. we're just confined to this one area, there's no internet no, light, no air conditioning, no running water. it's become quite desperate. >> you can't recharge the batteries for a cell phone for a satellite phone, i assume you're talking on that right now. how many journalists are stuck in that compound in that hotel together with you? i know the international journalists have been there. how many are with you? >> reporter: actually about 35 i suppose all in all. the telephone issue i'm running out of options when it comes to communication. i'm using a telephone kindly lent to me by chinese television. the chinese television crew here. they've got this satellite phone which still has battery power and they're kindly letting me use it for the interviews i've been doing with you and with our sister network cnni before this, but you know, when their goodwill runs out, you know, it's very difficult to see how i'm going to get any reports out of the hotel. as i say the internet's down. all our batteries are down in our phones. we've got some satellite phones but they're not working properly. and so we're having a bit of a nightmare technically and of course we've got no solution to that, and so you know we're doing what we can, wolf. >> matthew just so be precise in the lobby of the hotel, there are armed gunmen loyal to moammar gadhafi who are threatening to shoot you if you try to escape to leave this hotel and other armed gunmen at the main gate of the compound threatening to shoot anyone who tries to leave, is that right? >> reporter: you know, they don't characterize it in those terms. what these people say is that you have to stay in the hotel because if you don't, you could be shot by others. we're here to protect you. we're not going to let you go anywhere because we're going to protect you, but you no he what? throughout the course of the day we're basically, a lot of the journalists here, myself included, we became quite panicky, quite frightened because there were these gunmen downstairs, three or four of them kind of youngish, green bandanas on, clearly not regular army, carrying assault rifles, walking up amongst us, cocking their guns, telling us, "you guys are spies, you're nato spies," things like that, and really quite hostile, and we started thinking to ourselves, the collective group of journalists started thinking to ourselves, this is turning really ugly, this could go badly wrong. and so we sort of have been keeping ourselves away from those people, trying to separate ourselves from them as much as possible, keeping ourselves to ourselves, we're not taking any pictures inside the hotel. that angers them and so we're not doing that. we try to ask them if we can leave and picked up by some multinational agency or something like that, that's not being allowed at the moment. we were always under these kinds of restrictions in the rixos hotel with the government of libya, when we were doing that but now the situation changed so trau dramatically outside the tension has gone up a lot and it's become a lot more uglier. >> we used to see the briefings from gadhafi loyalists and the press spokesman see this, moussa ibrahim, they've all left. seif al islam is under arrest, we used to see him show up at the rixos hotel all the time. none of the senior officials are still hiding out there as far as you know? >> reporter: well i mean i can guarantee you they're not still hiding out here. it's totally deserted apart from the gunman i can tell you. the officials left 24 hours ago. moussa ibrahim left with his family, other people, broadcasters from state television were here, broadcasting from the basement of the hotel, from the makeshift studio, they've left, left their cameras there, left the sets there, left all of their desks and chairs, equipment and things like that, left it all there, they just completely vanished. we don't know where they've gone. the assumption is there's some safe house close by for them where they've relocated but we can't possibly confirm that, we're not allowed to get out of the gates of the hotel so yeah, more or less we're pretty much on our own with the exception of those guards who are essentially keeping us here. >> matthew, be careful over there. we'll try to stay in close touch. thank your chinese journalistic counterparts for allowing you to use that phone. we'll get back to you and hoping and praying for the best for you and all of the other journalists there. thank you, matthew chance and sara sidner in libya. meanwhile moammar gadhafi vowed the only way he'll leave libya is dead. will he find sanctuary? will he be brought to justice or will he become a martyr? we'll talk about the ways this bloody conflict could finally end. and not that long ago some libyan rebels didn't know how to shoot straight. we're taking a closer look at whether they're ready for a final battle in tripoli and the challenges after that. stay with us. you a're in "the situation room" we take it on ours. this summer put your family in an exceptionally engineered mercedes-benz now for an exceptional price during the summer event. but hurry, this offer ends august 31st. but hurry, or creates another laptop bag or hires another employee, it's not just good for business -- it's good for the entire community. at bank of america, we know the impact that local businesses have on communities, so we're helping them with advice from local business experts and extending $18 billion in credit last year. that's how we're helping set opportunity in motion. and so too is the summer event. now get an incredible offer on the powerful c300 sport sedan. but hurry before this opportunity...disappears. the mercedes-benz summer event ends august 31st. jack cafferty is here with "the kafthe cafferty file." ? >> libyan rebels have control of most of the capital of tripoli. the main prize, colonel gadhafi, it's unclear where he is. some think he's hiding in tripoli, others think he may have fled to a neighboring country like chad or algeria. the pentagon said today thinks gadhafi is still in libya. if he is captured alive, the question becomes what happens to the man who ruled libya with an iron fist for more than four decades. the international criminal court in the hague has warrants for the arrest of gadhafi and one of his sons along with his brother-in-law who happens to be the head of military intelligence. but it's yet to be seen if the libyans will want to hand gadhafi over to the international criminal court or administer their own brand of justice. my money is on the latter. look at egypt, former had the hosni mubarak standing trial for the crimes he committed against his own citizens. it's highly unusual for an arab leader to be called to account by his own people. there are surely millions of libyans who would like nothing better than to see gadhafi brought to justice. think saddam hussein. since taking power in a 1969 coup, gadhafi destroyed any and all opposition, even sending hit squads to shoot down libyans in exile, people he referred to as stray dogs. gadhafi's also been tied to some of the most notorious terrorist atrocities worldwide before the 9/11 attacks including the bombing of pan am flight 103. the question is this, what should happen to libya's moammar gadhafi if he's captured? go to cnn.com/caffertyfile and post a comment on my blog or go to our post on "the situation room's" facebook page and render your opinion there. seems strange to me, wolf, with all the sophisticated satellites and communications and spying equipment that nobody knows where this guy is. >> how long did it take to find bin laden? >> true, and it took a while to find saddam hussein. they found him in some hole somewhere, it was a long while after the invasion happened. >> that's right. >> you're right. >> jack, thank you. the libyan dictator insists he won't be captured but instead go down fighting. listen to what he said back in february. >> translator: it's not possible that i leave this place, i will be a martyr at the end. >> let's discuss, get some analysis with fareed zakaria, also editor of "time" magazine. will be become a martyr or surrender and hope for the best? will he fight or surnder? >> my gut is he'll fight. gadhafi is different from ben ali or assad. gadhafi is a founder, a revolutionary. he was a rebel. he initiated the coup that brought him into power. he is more a castro-like figure, originally charismatic, populist figure, also militarily skillful and accomplished, somebody who takes risks. he's not a bureaucrat, he's not going to lay down the sword and go quietly into the night. of course if he feels like he is outnumbered and there's certainty, who knows but my gut is this guy's going to fight 'til the end. >> we're showing our viewers a picture of when you interviewed gadhafi a couple of years ago, right, fareed. that was in new york. give us a little reflection on who this man is because the whole world wants to know where he is, will he be captured and what happens to him >> he is without question the strangest foreign leader i have ever interviewed. he kept us waiting for hours on end. we were in the libyan mission to the u.n. because he insisted he had to be someplace where he could pitch a tent. he tried to rent donald trump's house, there were guerrilla clad women, his son was one of the ones who hasn't been captured yet, the leader of the guards the guy i was negotiating with to get the interview and finally hours later this guy turns up, an atmosphere of complete chaos and seemed like he was on drugs, completely out of it. he seemed bizarre, constantly quoting from his own green book, unaware of what was going on around him. you certainly had the feeling that this was a regime where the intelligence elements, his sons were very tightly in control. they were the coos, the operational heads of the regime and he had some weird mystical, sort of place in that firmament but it may well have been an act. it was the strangest interview. he went on and on, series of nonsequitors, very difficult to understand what he was saying. it was like interviewing yoda. >> i remember you once describing that to me. once the rebels capture him, assuming they capture him alive, what will they do to him, put on on trial in libya, send him to international court in the netherlands, what do you think they'll do with him? >> my guess, they will probably try him in libya. i think every country prefers to do that by themselves, but i have to say the libyan opposition so far has shown itself to be quite responsible, so i don't think it will be a show trial. i don't think there will be an immediate execution. i think it's interesting to listen to what they have saying. they almost seem to have learned the lessons and the mistakes of the iraq occupation better than we, the united states, did. they're emphasizing they want to keep intact the police, they want to keep intact the administrative services, the health system. they don't want to disband anything. they want to be inclusive. made a reference that everyone will share in libya's future. so in that context, you have to imagine that they're going to try to deal with gadhafi in a way that doesn't send a signal of retribution. this is not going to be the french revolution and the guillotine, rather some kind of legal process, some kind of fair trial. >> fareed, thanks very much. we'll stay in close touch with you as well, fareed zakaria gps airs sunday on cnn. check out my blog, i write about if you're in damascus, watching what's going on in tripoli and your name is bashar al assad how this might affect you, go to cnn.com/situationroom to check out my blog on what's happening in libya right