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So near and yet so far. At the end of the first week in June, the NMN special representative in Libya, Bernardino Leon, produced his long-promised fourth draft of a Libyan reconciliation agreement between the internationally-recognised House of Representatives, based in Tobruk, and the General National Congress, the rump parliament based in Tripoli.

Yet, within hours, the House rejected the proposal and withdrew from the talks sponsored by Leon. Its representatives were banned from travelling to Berlin, where the reconciliation talks, which were also to involve European and North African leaders, were set to proceed.

What went wrong?

Leon had proposed that a one-year national unity government be formed for which the House would provide the legislative body, whilst the Congress would be converted into an advisory body with 120 members.

The actual government would consist of a single prime minister with two deputies, one each from either side, presiding over a council of ministers with specific portfolios. 

Consultations over his proposals were to have taken between representatives of both sides and other regional politicians in Berlin and then more talks to set up the new administration were to take place in Morocco.

Observers are very surprised that it was the House that rejected pursuing the process - it has usually been the Islamist-dominated Congress that has resisted.

Recently, however, leading moderate Islamists have accepted the need for reconciliation and there has also been popular pressure in Misurata, which houses the militia coalition which supports the Congress - Libya Dawn - demanding a resolution of the crisis which grips Libya at present.  The Congress, too, voted at the beginning of June to continue with the UN-sponsored talks.

Libya Dawn is still sceptical of the reconciliation process but the major opposition to it has probably come from its opponents in Eastern Libya, the Libya Dignity movement.  This brings together militias, including the powerful Zintani and Qaqa militia coalitions in Tripolitania, with the remnants of the Libyan army, including its special forces, under General Khalifa Haftar as army commander.

He has sworn to eliminate Islamist influence, whether moderate or extreme, from Libya and is therefore innately hostile to Leon's attempts at compromise.

Haftar has also been busy building links with the new Sisi regime in Egypt and with the UAE, which is renowned for its longstanding hostility to even moderate movements such as the Muslim Brotherhood.

It remains to be seen to what extent Leon will be able to salvage his compromise peace project.

He is also widely suspected of harbouring political, even presidential, ambitions in a future, unified Libya and therefore has every reason to resist an initiative designed to achieve compromise and reconcile Libya's secular and moderate Islamic forces. 

It remains to be seen to what extent Leon will be able to salvage his compromise peace project.

The extremist threat

It is imperative that he does renew his efforts, however, for Libya's quarrelling politicians are in danger of overlooking the very real threat they face from more extreme movements that are incubating in the security chaos the country is experiencing.

Over the last three months, the Islamic State movement has burst out from its redoubt in the eastern town of Derna and has penetrated into the economic core of the country, the town of Sirte and the oil fields that surround it.

Despite attempts by Libyan Dawn militias - and, on at least one occasion, in collaboration with Libya Dignity's air-force in May - to force its fighters out of the town itself, it has been able to strengthen its hold and to capture the Gardabya airbase and the neighbouring power-station.

Now it has penetrated the oil fields around the town and has captured a group of Eritrean Christian migrants whom it threatens to kill.

It has not yet sought to control the all-important oil export ports of Ras Lanuf and Es-Sider but that is likely to be its next step. Then, however, it may run up against Ibrahim Jadran's Oil Protection Force, based in Adjedabia, which will have its own lucrative rackets to protect and will probably receive support from anti-Islamic State groups elsewhere in Cyrenaica, not least Libyan Dignity.

IS now controls a 200km stretch of the coastline between Sirte and Ben Jawad, including the Awlad Sulaiman town of Huwara. 

There are rumours, particularly among the Libyan Dawn militias, that it has been helped in extending its reach by cooperation from pro-Gaddafi regime groups in Sirte and surrounding towns, anxious to revenge themselves on the Misurata-based militias whom they blame for their defeat in 2011.

There are fears that the movement might now push westwards towards Misurata itself. If this is true, then it illustrates the group’s opportunistic strategy. This was precisely what it did in Iraq where it joined the remnants of the Baath Party and the Naqshbandi Order around Ibrahim al-Douri, Saddam Hussain's third-in-command. 

But the Islamic State group has not had unlimited success; it is currently fighting hard to retain its hold in Derna, where it began its operations last year.

There it has been confronted by pro-al-Qaeda groups based around the Shura Council of Derna which resents the pretensions of the IS.

It has also faced attack from Haftar's Libyan National Army, although the latter's primary target remains its attempt to subdue Ansar al-Sharia, another pro-al-Qaeda group, in Benghazi where fighting continues into its third month.

Libya's squabbling politicians need to stop burying their heads in the sand and wake up their real threat.