* President seen stalling peace talks on northern Mali
* Two years after coup, 350,000 still displaced
* North Mali seen as key to fighting Islamists in Sahel
* Experts sceptical on pledges to fight corruption
By Emma Farge
BAMAKO, March 12 (Reuters) - President Ibrahim Boubacar Keita won power with a pledge to resurrect a "strong and united" Mali from the ashes of a war against Islamists militants yet six months later he has done little to heal the wounds of the conflict.
Elected with a reputation as a strongman, Keita has focused on restoring control over Mali's army after a March 2012 coup. The putsch plunged Mali into chaos that allowed Islamists to seize the north, forcing France to intervene in its ex-colony.
But the conservative 69-year-old, known by his initials IBK, has not addressed the grievances of Tuareg separatists whose uprising sparked the conflict nor salved the ethnic hatred it left behind.
Restoring stability to north Mali is a crucial step in stamping out al Qaeda cells and traffickers operating in the arid Sahel belt south of the Sahara. With $4 billion in Western aid flowing into Mali for reconstruction, France and its allies have a lot at stake.
"If northern Mali is missing, the Sahel puzzle won't be completed," said Jean-Baptiste Bouzard, Africa analyst at risk consultancy Maplecroft. He said that, despite concern among Western donors, they are reluctant to put pressure on Keita.
"The international community doesn't want to undermine IBK, as one of the justifications for intervention was restoring a strong government."
On the surface, life in the southern capital Bamako has returned to normal after a French-led campaign defeated the Islamists a year ago. Policemen direct traffic at busy junctions while women wash laundry on the muddy banks of the Niger river.
However, thick blast walls around the French embassy and trucks carrying blue-helmeted U.N. peacekeepers testify to the ongoing security risk in the West African country.
Close to 200,000 people are still displaced within Mali after the conflict, with a further 150,000 Malians scattered in refugee camps in neighbouring countries. According to Oxfam, 800,000 in the north need food assistance.
In Bamako's slums, many of those who fled Mali's north blame the government for abandoning them. Mahamadou Cisse went back to his village near the town of Timbuktu two months ago but left again, fearing for his life.
"In cities, the army is there but they don't control other areas," said Cisse, who fled his home in 2012 after it was looted by Tuaregs from the National Movement for the Liberation of Azawad (MNLA) - the name separatists give to northern Mali.
U.N. UNDERFUNDED, FRENCH STUCK
With Mali's army only slowly rebuilding, France has been forced to delay its troop withdrawal. It had aimed to reach 1,000 soldiers by December but still has 1,600 there.
Meanwhile, a U.N. mission meant to guarantee security is running at around half its 12,000 capacity, starved of funds from major contributors like the United States.
Islamist groups operate in desert spaces outside northern towns. The Movement for Unity and Jihad in Western Africa (MUJWA) claimed mortar attacks recently on Timbuktu and Gao.
Achieving a peace deal with separatists is key to restoring security but negotiations have stalled. A deal was reached to confine rebel fighters to barracks at preparatory talks in Bamako last month - which started three months late - but with no-one to enforce it, it may fall simply by the wayside.
A lack of cohesion within the array of separatist groups and the plethora of mediators is complicating talks. Regional powers Algeria, Morocco and Mauritania have all begun consultations with rebels, adding to official mediator President Blaise Compaore of Burkina Faso and the U.N. mission in Mali (MINUSMA).
Politicians in Bamako vaguely refer to "deep decentralisation" as the most acceptable form of governance for the north, but there is no consensus on how this would work.
Bruce Whitehouse, a Mali specialist at Lehigh University in Pennsylvania, said Tuareg leaders may struggle to win support from the rank and file for any such compromise: "They don't want regional autonomy. They want independence."
Any concessions to the Tuaregs, who have led four rebellions since independence from France in 1960, would be deeply unpopular with the black African majority. Tuaregs comprise less than 10 percent of Mali's 12 million people.
"All Tuaregs are the same. They are bandits," said Diarha Dyetteye, 40, a black woman who fled Timbuktu during the war.
With ethnic tensions running high, armed groups are conducting feuds in the lawless north with little fear of facing justice. Some 30 Tuaregs were killed near Gao last month.
Yet many analysts say resolving the north's grievances is simply not a priority for Keita. "IBK was elected on a strong man political platform. He wants to avoid making concessions. Stalling the peace talks is a way to avoid that," said Bouzard.
Before the war, anger in north Mali was stoked by collusion between northern leaders and Bamako officials in illegal activities such as trafficking and hostage-taking.
Yet to strengthen his grip on power, Keita is repeating the mistakes of the past, critics say. His party has recruited several ex-rebels, one of them accused by a prosecutor last year of war crimes and trafficking before charges were dropped.
Other observers criticise the appointments of family members, such as Keita's son Karim as head of the parliamentary defence commission. Karim's father-in-law Issaka Sidibe is the head of the National Assembly, Mali's second most powerful job.
On the streets of Bamako, people openly mock Keita's election slogan "Mali first", replacing it with "family first".
Ministers say they are determined to tackle corruption. Some donors have taken initiatives to improve surveillance: France has created a website to boost transparency in aid projects.
However, 85 percent of the $4.5 billion in promised aid is due to flow directly to the government, the International Monetary Fund say, making it more difficult to tackle graft.
"For 20 years, Mali has been like a cow from which everyone cuts off a slice," said Moussa Mara, town planning minister. He sees potential for change, pointing to a draft law that makes elected officials declare their wealth to the Supreme Court.
Others are less optimistic for a country ranking 127 out of 177 on Transparency's International global corruption index.
"There are a handful of people in charge of a system with good intentions and heaps of people who have the incentive to play the same games they have always played," said one diplomat.
Keita faces a delicate task as Malians clamour for better living standards. The challenge has been made steeper by a slump in the price of gold, Mali's economic lifeblood.
The gold sector employs 10,000 Malians and accounts for one third of state revenues yet the IMF predicts sales this year will slump by a fifth from 2012 levels to $1.7 billion. Ageing mines mean output will decline steadily from 2015, the IMF said.
"We are in a very difficult situation," Mines Minister Boubou Cisse told Reuters. "The sector is making redundancies in waves. Mali is not going to escape that."
To forge a lasting peace, Keita's government knows it must create economic opportunities in the north -- which accounts for just a fraction of total GDP. But the region is too dry for agriculture and lacks the mineral resources of the south.
Minister Cisse said he is seeking to attract companies to start oil production in the northern Taoudeni basin in the next five to 10 years, but analysts are sceptical anything will occur before a lasting peace is restored.
In the absence of alternatives to criminality, some fear the old networks will again take control of the north. "For every Tuareg with a dream of autonomy there's a smuggler who doesn't want you messing with his networks," said one Western diplomat. ($1 = 477.3200 CFA francs) (Additional reporting by Joe Penney, Adama Diarra and Tiemoko Diallo in Bamako; Editing by Daniel Flynn and Anna Willard)
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