FACTBOX-Key political risks to watch in Guinea

* Polls on schedule but risks of trouble remain

* Large-scale minerals projects awaiting green light

By Daniel Magnowski and Saliou Samb

CONAKRY/DAKAR, June 1 (Reuters) - Guinea, one of the world's biggest sources of the mineral bauxite used for aluminium, will hold a presidential election in June aimed at ending a political crisis that has persisted since a 2008 military coup.

A truly free and fair vote could mark a turning point for the country and set a powerful example to neighbours in West Africa, where civil war, armed power grabs and accusations of rigged elections have become common.

Guineans and foreign observers see a legitimate poll as a first step towards Guinea winning back foreign aid and creating the conditions for its mineral wealth to improve the lives of its 10 million people.

POLITICS AND THE ELECTION

The Guinean army stepped into the power vacuum left when President Lansana Conte died in December 2008 after more than two decades of rule, selecting Captain Moussa Dadis Camara as head of the National Council for Democracy and Development (CNDD) junta, and de facto head of state.

Camara won early popularity but then reneged on promises to hand power back to civilians. He became an international pariah when security forces killed 150 unarmed pro-democracy marchers on Sept. 28 2009, a massacre in which the United Nations said Camara was implicated. The International Criminal Court said it believed crimes against humanity were committed. [ID:nLDE61I28A]

In December an ex-aide-de-camp wounded Camara in an assassination bid, since when he has undergone medical treatment in Morocco and has been convalescing outside Guinea. His second in command Sekouba Konate took over and -- to the relief of the region and with the firm backing of U.S. and French diplomacy -- named a transitional government tasked with preparing elections.

What to watch:

- Election delayed. While observers say preparations are far from perfect, there are concerns about the accuracy of voter lists. Most in Conakry believe the timetable of a June 27 first round and a possible run-off slated for July 18 will be kept, but any slippage would raise investor doubts over whether the transition will take place.

- Disputed result. Steadfastly sticking to the date may give rise to bigger problems if defeated candidates challenge the result by arguing the voter lists are not complete. All the big political parties have youth wings they can mobilise and there have already been reports of inter-party fighting. Any winner might have to offer top jobs to defeated rivals -- a scenario that would hamper any genuine reform drive. [ID:nLDE64G1BT]

- Ethnic conflict. Two main contenders, Alpha Conde and Cellou Dalein Diallo, draw support essentially on ethnic lines. Conde belongs to the Malinke ethnic group, as does around 35 percent of the population, while Diallo is a Peuhl, which make up around 40 percent.

Ethnic divisions have historically been a factor in Guinean politics. Malinke are seen as having held sway under President Sekou Toure, the country's first post-independence leader, while successor Lansana Conte belonged to the minority Soussou group. Camara came from one of the minorities in the southeast of the country and a third contender, Sidya Toure, belongs to the small Diakhanke group. Many Peuhl believe it is their turn to govern. Eyewitnesses said much of the Sept. 28 violence was ethnically motivated and if trouble erupts large numbers of Guineans could be sucked in. The nightmare scenario is that this triggers tensions among the same ethnic groups in neighbours such as Sierra Leone and Liberia.

- Army tries to retain power. Konate has not had to deal with any major rebellion bids within the ranks, suggesting he has broad military backing. But some analysts believe parts of the army will not readily step down from power and that whoever wins the election may have to buy off senior officers with some form of financial sweeteners -- a costly exercise that would mean fewer revenues for sorely needed renewal of basic public services and infrastructure.

- Camara's supporters rally. Interim premier Jean-Marie Dore has warned that supporters of Camara were plotting his return to Guinea to disrupt the election. There are concerns that Camara loyalists both within the army and his native Forestiere region, may try to cause trouble around election day -- a potential threat to a smooth transition to civilian rule. [ID:nLDE63R2QZ]

- Security. Even if the army does not attempt to hold onto power or destabilise the incoming government, its past role in maintaining law and order has been counter-productive. Military discipline has improved greatly under Konate but last year soliders, frequently drunk, were blamed for robberies and attacks on civilians. Though it seems unlikely that foreign firms and expatriates will be targeted, some expatriate mining executives quit the country last year on security concerns.