Syrian President Bashar al-Assad's warning to his army to continue the fight against rebels in Syria's largest city are signs of desperation as his regime is losing support among the city's elite who've defected to the opposition, U.S. officials, Syrian activists and analysts say.

Assad, who had been silent in recent weeks as the country plunged deeper into civil war, issued a written statement Wednesday warning that the fate of Syria rests with his military's ability to regain control of Aleppo.

He described rebels as "criminal terrorist gangs," and added "the fate of our people and our nation, past, present and future, depends on this battle."

Jim Phillips, a senior analyst with the Heritage Foundation, said Assad is desperate to regain control of the nation's largest city.

"Aleppo is crucial for the ultimate survival of the Assad regime because of its economic importance and symbolic political importance," he said.

In the past, Assad's regime enjoyed support from the Sunni Muslim elite in Aleppo, which profited from commercial connections, Phillips said.

"It looks like they have flipped and defected to the opposition," he added. "The rebels have "already have scored a major psychological victory by penetrating Damascus and Aleppo, which had been fairly secure and quiet until the last few weeks."

Syrian activists said defections are growing daily among civilians, military and government officials. They also estimate more than 25,000 people have been killed since the uprising last March.

"[Aleppo] is a power point and the regime is doing its best to control it -- for them it is more important than Damascus," Syrian-based activist Abu Ghazi al-Hamwi told The Washington Examiner by Skype. "For the past week the Free Syrian Army has been trying to stop Assad's regime from advancing in Aleppo."

The opposition fighters have suffered significant losses, observers said. "They are up against [Assad's] airpower, both Russian MiG-[21 planes] and attack helicopters. But they are not giving up and holding strong," al-Hamwi added.

United Nations observers in Syria confirmed fighter jets firing on rebels in Aleppo on Tuesday. Syrian state run media said Assad's army was making significant gains against the rebels. But reporters and activists in Aleppo dispute those claims, saying the opposition rebels are controlling important areas of the city, according to wire reports.

Phillips said the Free Syrian Army is growing in strength. "[The rebels] greater use of RPGs and anti-tank weapons has deterred the Syrian army from entering neighborhoods with narrow streets or alleys," he said.

Defense Secretary Leon Panetta said this week during his trip to the Middle East that the battle of Aleppo will be "a nail in Assad's coffin."

"It is only a matter of time before Assad's regime collapses," said another U.S. official. "The fighting has intensified and the only real concern is what will happen between now and then, and even after."

Sara A. Carter is The Washington Examiner's national security correspondent. She can be reached at