Libya Rebellion: 'It's Hard to Tell Friend From Foe'

'Nightline' anchor travels to the heart of the Jihadi stronghold in Libya.

DERNA, Libya, April 7, 2011— -- Derna is a beautiful part of Libya, but it's been scarred by war and now faces a dangerous and uncertain future.

In the chaos of the revolution, there is a power vacuum here. Throughout rebel-held territory and on the battlefield, radical Islamists are part of the fight -- and now they want to be part of that future.

My crew and I have taken a long journey to the very heart of that struggle within the rebel ranks.

Watch Terry Moran's full report from Libya tonight on "Nightline"

I sat down to talk with Abdel Hakim al-Hasadi, a rebel commander in Libya who boasted to The Economist last month that he had trained in Khost camp, Osama bin Laden's base in Afghanistan. But when he got in front of our cameras, he was singing a very different tune. In fact, he accused the Economist reporter of lying.

"If this is true, I was in prison in Islamabad and the Americans interrogated me [in 1995]," he said. "If this is true they would not have let me go."

"Did you meet Osama bin Laden?" I asked him.

"No, no," he said. "I didn't because Osama bin Laden was in Kandahar and I was in Jalalabad. These cities are 30-hour drive. If I did, though I didn't, but even if I did, it doesn't mean I'm from al-Qaeda."

Libyan leader Moammar Gadhafi last month called out several members of the rebel forces in his country as al-Qaeda members or sympathizers, including al-Hasadi.

Even though I pressed him on it, al-Hasadi continued to deny any connection. He instead said he worked for TNC, recognized by some countries as Libya's legitimate government.

"When there was amnesty for Libyans I came back to Libya," he said. "Since I came back in 2002, there are Taliban and al-Qaeda in Afghanistan. I did not leave my country, this is evidence I am not al-Qaeda."

In the dense fog of this war, it's hard to tell friend from foe, as we found out.

We set out from Cairo at dawn, from a city still basking in triumph from the peaceful revolution here, headed for war-torn Libya.

Across the monotonous desert landscape, mile after mile after mile. The truckers sometimes call to each other as they drive... a stop here and there along the roadside for a coffee, and then, the border.

The first sign of war: refugees. Whole families from other African nations, who came to Libya to work, and are now stranded, living under tarps.

The rebels now call this area "Free Libya." They've managed the border, they have a customs operation going strong, and they have raised the flag. It's the old Libyan flag, the pre-Gadhafi flag, in their effort to say this is their country now.