* FARC criticizes govt refusal to reciprocate ceasefire
* President stakes reelection on peace deal
* Drug trafficking tops agenda in talks
By Marc Frank
HAVANA, Jan 13 (Reuters) - Colombia's government and Marxist FARC rebels sat down in Havana on Monday to continue negotiations aimed at ending the last major guerilla conflict in Latin America as fighting raged and national elections loomed in the Andean nation.
After a three-week break, talks resumed with the FARC attacking the government's refusal to enter a ceasefire and President Juan Manuel Santos staking his reelection on reaching a peace deal in 2014 following 14 months of negotiations.
The FARC, or Revolutionary Armed Forces of Colombia, has been fighting the government in a jungle and urban conflict that has killed more than 200,000 people in the five decades since it began as a peasant movement seeking land reform.
"We hope (2014) will be the year of peace, the year that marks the end of the armed conflict that has affected us for half a century," Santos said at the New Year.
Santos kicks off his campaign for reelection later this month.
Colombians go to the polls in March to elect a new congress and again in May to elect a president.
The center-right Santos is running on ending the civil war by keeping up military pressure on the rebels even as the negotiations proceed. His main opponent, rightist Oscar Ivan Zuloaga, says he will end the talks and defeat the FARC militarily.
The FARC declared a unilateral truce over the holidays, which ends on January 15, while the government refused to reciprocate on the grounds that there could be a ceasefire only after a peace accord was signed.
"We regret this fatal position that negates the confidence needed to advance in the negotiations," the FARC said in a statement issued on Monday.
The talks in 2013 resulted in a general agreement on agrarian reform and rebel participation in politics once they lay down their arms, boosting Santos's standing in the polls.
Negotiations are currently centered on drug trafficking, with the issues of reparations for war victims and the process of disarmament still to be worked out, along with the thorny issue of what happens to FARC commanders and military personnel accused of various crimes, human rights violations and killing civilians.
The Colombian government and chief ally the United States say the FARC is financing its troops through drug trafficking, while the rebels insist the government has been corrupted by the traffickers.
"I am convinced that we have the conditions to achieve peace and it has to be dignified peace for both sides. Nobody is expecting rebels to kneel down and surrender," Santos said on Saturday.
"We are seeking a dignified way out for both parts, to bring an end to the conflict," he added.
The FARC, the larger of two guerrilla groups, with some 8,000 troops, has repeatedly stated that an agreement cannot include prison time for any of its leaders.
The government has been working toward negotiations with the second group, the Colombian National Liberation Army, with about 3,000 members.
The talks are being facilitated by Cuba and Norway and hosted in Havana. (Additional reporting by Nelson Acosta; editing by Andrew Hay)