* Assad wages southern offensive ahead of election
* West reluctant to give moderate rebels advanced weapons
* Nusra plays social role to gain wider acceptance
By Suleiman Al-Khalidi
AMMAN, May 22 (Reuters) - Atop the hill of Tel Ahmar just a few kilometres from Israeli forces on the Golan Heights, Syrian Islamist fighters hoist the al Qaeda flag and praise their mentor Osama bin Laden.
One of the men, a leader of al Qaeda's Nusra Front, compares their battlefield - a lush agricultural region where dead soldiers lie on the ground near a charred Soviet-era tank - with the struggle their comrades waged years ago in Afghanistan.
"This view reminds us of the lion of the mujahideen, Osama bin Laden, on the mountains of Tora Bora," he can be heard saying in a video posted by the group, which shows the fighters in sight of Israeli jeeps patrolling the fortified frontier.
Last month's capture of the post was followed days later by the seizure of the Syrian army's 61 Infantry Brigade base near the town of Nawa, one of the biggest rebel gains in the south during the three years of Syria's war.
The advances are important not just because they expand rebel control close to the Israeli-occupied Golan Heights and the Jordanian border, but because President Bashar al-Assad's power base in Damascus lies just 40 miles (65 km) to the north.
They have brought heavy retaliation from Assad's forces, including aerial bombardment. The army has also sent elite troop reinforcements to the south in recent days after rebels pulled out of Homs city, relieving pressure on the army there.
The reinforcements reflect Assad's determination, on the eve of a June 3 presidential election likely to extend his power for another seven years, not to lose control of the towns of Nawa and Quneitra in the Golan foothills.
Rebels last year briefly took the Quneitra border crossing with Israel and now control many rural villages in the area.
"The regime has rung alarm bells, fearing that the fall of Nawa and Quneitra could open an axis towards Damascus," said Brigadier General Assad Zoubi, who headed an air force academy before defecting in early 2012.
AL QAEDA POWER GROWS
The southern front's potential as a launchpad for an offensive against the capital means it could ultimately pose the main challenge to Assad.
"It's a much shorter distance than that required for a push to Damascus from the rebels' northern strongholds. The southern front, contrary to all previous expectations, may ultimately be the crucial one," said Ehud Yaari, a fellow at the Washington Institute, a leading U.S. think-tank.
"Coalitions of rebels are proving effective against regime outposts," said Yaari, adding Syrian army units in the south were thinly spread and often isolated.
Recent rebel advances have been mainly achieved by the Nusra Front together with other Islamist brigades and rebels fighting under the broad umbrella of the Free Syrian Army.
In all, Western intelligence sources estimate around 60 insurgent groups are operating in southern Syria. In contrast to the deadly internecine rebel fighting further north, so far they have coordinated well in battle.
Echoing the trend in the north, however, radical groups such as Nusra, Muthana and Ahrar al-Sham have grown in influence, eroding the dominance of larger brigades backed by Saudi Arabia.
The weakness of those brigades was further exposed when they failed to respond to Nusra's abduction of Colonel Ahmad Neamah, a critic of radical Islamists who leads the Western- and Saudi-backed military council which has around 20,000 rebels under its nominal authority.
The trial earlier this month of Neamah in a Nusra court, where he was videoed confessing to holding back weapons from rebels to suit foreign powers who wanted to prolong the conflict, has further discredited the moderate rebels' cause.
Rebels in Deraa, the cradle of the 2011 uprising against Assad, have long complained that unlike their comrades in the north, they have been choked of significant arms, with both the West and Jordan wary of arming insurgents so close to Israel.
SAUDI CONTAINMENT POLICY
From a covert operations room in the Jordanian capital Amman, intelligence officers from countries including the United States, Jordan, Saudi Arabia and the United Arab Emirates assess arms requests by the rebels.
They have ensured some light arms and ammunition cross the border - enough only to make tactical gains every once in a while - rebels in contact with the operations room say.
They say Saudi Arabia, the main backer, is now focusing less on a military challenge to Assad and more on financing groups such as the Yarmouk Brigade, Ahfad al-Rasoul Brigades and al-Omari Brigade to counter the future spread of al Qaeda.
"They are supporting groups that will one day stand up to the extremist radical groups and now want to disrupt the road to Damascus so that the battle is prolonged," said one Islamist rebel leader, who asked not to be identified.
Riyadh's deeper concern stems from the impact an al Qaeda enclave so close to home could have on thousands of young disaffected Saudis, according to Jordanian security sources. At its closest point, Saudi Arabia is separated from southern Syria by just 100 km (60 miles) of Jordanian desert.
Moderate rebels say they are losing ground because of Western reluctance to provide anti-aircraft weapons that could curb Assad's devastating air strikes.
In contrast, financial support from private Salafi funders mainly in Kuwait, Saudi Arabia and Qatar has enabled Nusra and hardline Islamist brigades to recruit more young men and tap into anger at perceived betrayal by the West and regional powers.
FROM BATTLEFIELD TO COURTS
Now nearly 2,000 Nusra Front fighters operate in the area with organizational skills that far outweigh those of their more secular-minded rivals, whose splits and squabbles have lost them much popular support.
Nusra fighters man dozens of checkpoints across the Hauran Plain, from the Golan Heights frontier in the west to Deraa on the Jordan border and other towns 60 km (40 miles) to the east.
They pay their men well and even ensure their families have enough flour and basic items, said one moderate rebel commander in the town of Jasem who has ties with Nusra fighters.
Their popularity has come at the expense of other insurgents who earned a reputation for looting and feuding. Nusra courts now deal with a growing number of issues, from family disputes to allocating financial aid to the needy, residents say.
In the last six months the Nusra Front has also established offices in the old quarter of Deraa city, where an assortment of rebel brigades set up on tribal lines had long held sway.
The emergence of Nusra has chipped away at that tribal structure of small brigades and family associations that were long viewed by Jordan and Saudi Arabia as a bulwark against the radical Salafi ideology promoted by wealthy Gulf benefactors.
"These Islamist groups have become the main actors on the ground. The Free Syrian Army has disintegrated so the expansion of Nusra in rural Deraa is natural and expected - though it was delayed because of the force of tribalism," said former Jordanian army general and military analyst Fayez Dwairi. (Editing by Dominic Evans and Giles Elgood)