Tuareg rebels of north Mali's National Movement for the Liberation of Azawad (MNLA) on Friday proclaimed the "independence of Azawad" in a statement on their website and through a spokesman on France 24 television.
"We solemnly proclaim the independence of Azawad as from today," said Mossa Ag Attaher, who added that the rebels would respect "the borders with other states."
Armed Islamists had stormed the Algerian consulate in northeastern Mali and abducted seven diplomats Thursday amid fears al-Qaida-linked fighters are turning the country into a rogue state and fuelling a humanitarian crisis.
As the Tuareg trumpeted the success of a decades-old struggle to "liberate" their homeland, their fundamentalist comrades-turned-rivals began imposing sharia law in parts of northern Mali.
The MNLA said as a result of their successful conquest of an area they call the Azawad, they were halting all military operations from midnight Thursday.
Ag Attaher declared: "We completely accept the role and responsibility that behooves us to secure this territory. We have ended a very important fight, that of liberation ... now the biggest task commences."
The kidnapping of the Algerian consul and six staff members in Gao was "deplorable," he added, saying his group had been against it but finally went along with the move so as to spare their lives.
The desert nomads are not alone in the north and many say it is the Ansar Dine led by Iyad Ag Ghaly -- which has begun imposing sharia law -- who are the new masters of the desert.
"From what we know, the MNLA is in charge of nothing at the moment ... it is Iyad who is the strongest and he is with AQIM," a Malian military source told Agence France Presse earlier, referring to al-Qaida in the Islamic Maghreb (AQIM).
The statement on the MNLA's website stressed its "firm commitment to create the conditions for lasting peace (and) to initiate the institutional foundations for a state based on a democratic constitution for an independent Azawad."
The MNLA's executive committee called on the international community immediately to recognize the independent state,
Alarmed by the sudden collapse of the west African nation, which has split into a rebel-controlled north and junta-controlled south in two weeks since a coup, the international community grappled for a response.
Algeria's foreign ministry said an unidentified group had attacked its consulate in the town of Gao and kidnapped the consul and six staff members.
Witnesses told AFP the raiders hoisted the black Salafist flag that has been the emblem of Islamist rebels who have overrun Timbuktu and other northern cities.
Amnesty International warned Thursday that Mali's north faces a humanitarian catastrophe after rebels looted food and medicine supplies across an arid region already facing food shortages.
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