* Election could end main parties grip on presidency
* Open race seen due to splits within parties
* PAIGC candidate still favourite, but not certain
* Post-election reforms critical to turn country around
By Bate Felix and Alberto Dabo
DAKAR/BISSAU, April 7 (Reuters) - Disarray in Guinea-Bissau's political parties and frustration among voters could open the way for a Harvard-educated political outsider to win a presidential election next week aimed at turning the page on years of coups and crime.
Guinea-Bissau - a transit route for South American cocaine into Europe which has been dubbed Africa's first 'narco-state' - was plunged into chaos two years ago when soldiers stormed the presidential palace days before an election for that post.
Long-delayed presidential and parliamentary elections to complete a transition back to democracy are due on April 13 - the fruit of months of pressure from the United Nations and West Africa regional bloc ECOWAS, which has been bankrolling the interim government.
A successful vote could unlock 110 million euros in European Union aid, frozen after a 2011 military uprising, and possibly help to attract investors to Guinea-Bissau's untapped mineral resources, including bauxite, phosphate and offshore oil.
Yet the poll is widely seen as a last chance for Guinea-Bissau, as donors tire of turmoil in the impoverished nation of 1.6 million people. No elected president has completed a five-year term since a war of independence from Portugal ended in 1976.
"The transition government and the military have tested the patience of the international community and donors to the limit," said Vincent Foucher of the International Crisis Group, a Brussels-based think-tank. "If the vote is a mess, ECOWAS will have to take a strong stand."
NEW GENERATION OF POLITICIANS
Military chief Antonio Injai launched the 2012 coup to foil then-Prime Minister Carlos Gomes Junior - his long-standing enemy who was poised to win a second-round presidential runoff against Kumba Yala of the Party for Social Renewal (PRS), the champion of the Balanta ethnic group that runs the army.
This time, Gomes Junior is in exile, having failed to win the candidacy for his African Party for the Independence of Guinea and Cape Verde (PAIGC). Yala is dead, succumbing to a heart attack on Thursday, months after retiring from politics.
Injai, meanwhile, is keeping a low profile, having been indicted by Washington on drug trafficking charges last year and unsuccessfully targeted by U.S. counter-narcotics agents in a dramatic sting operation.
That has opened the way to a new generation of politicians among the 13 candidates for the presidency. Chief amongst them is Paulo Gomes, a former World Bank executive who holds a Masters in economic policy from Harvard University.
With the electoral roll boosted by around a quarter to nearly 800,000 following a recent census, many young people will be voting for the first time, hungry for change.
"Young people are very disappointed with Guinea-Bissau's political leaders because of their mismanagement," said Suazilene da Costa, 18. "My father, a policeman, and other civil servants have not received their wages in five months."
OPEN RACE
Former finance minister Jose Mario Vaz saw off several challengers to win the nomination for the PAIGC, the country's dominant party. However, his candidacy is clouded by accusations from Bissau's attorney general of suspected involvement in the embezzlement of a $12.5 million budget grant from Angola.
The party machinery of the PAIGC makes it almost certain to win the ballot for Bissau's 100-seat parliament and ensures Vaz is a frontrunner for the presidential vote.
But, faced with anger at traditional parties and a strong challenge from independent candidate Gomes, Vaz's victory is far from certain, Foucher said. Many in the army regard Vaz as a puppet of Gomes Junior, in whose government he served.
"Both the military and pro-transition parties are suspicious of Vaz. And Gomes has both strong connections in West Africa, and an image as a potential reformer," Foucher said.
Gomes, 50, benefits from a strong reputation as a technocrat and is untarnished by connections with traditional parties.
"The population is very young and committed to changing the course of the country so there will be some surprises," he told Reuters. "My chances are strong."
Another independent candidate, Nuno Gomes Nabian, the former chair of Bissau's civil aviation agency who comes from the Balanta ethnic group, has garnered the support of the army's top brass. However, the Balanta vote - some 25 percent of the electorate - will be divided by two other candidates, weakening his chances.
DIFFICULT REFORMS AHEAD
To tackle rampant graft and a sclerotic administration, whoever wins the election must undertake sweeping reforms in almost every ministry, particularly finance and interior, according to a U.N. strategy document obtained by Reuters.
The plan - backed by ECOWAS, the African Union and the United States - calls for a tough governance programme modelled on post-conflict Liberia, which would hand power over government spending to technical advisers in key departments.
It was not immediately clear if any of the candidates would be willing to agree to such surrender of national sovereignty.
The most important reform is to curb the sway of the army over Bissau's politics. Since multiparty elections began in 1994, Guinea-Bissau has witnessed a civil war, two coups, an attempted coup and the assassination of a president by the army.
The new president also faces the daunting task of tackling drug smuggling by South American cartels transiting cocaine to Europe with the suspected complicity of corrupt officials. Some experts suggest trafficking has risen again after the April 2013 DEA sting which missed Injai but seized a former naval chief.
The new government will also have to jump-start the flagging $2 billion economy and tackle rampant unemployment. The IMF forecasts output will shrink by 2.7 percent this year, after contracting by 3.5 percent in 2013.
Part of the problem is that Bissau remains reliant on cashew production - which accounts for around 90 percent of exports and employs 80 percent of the population. A slump in cashew prices has combined with political uncertainty to stymie growth.
Chronic underinvestment in power infrastructure - which has seen capacity collapse from 25 megawatts in 2000 to just 5.5 megawatts - means only a fifth of the population has access to electricity. Underscoring the problems facing a new head of state, thousands of civil servants went on strike on Wednesday, saying they had not been paid in months.
"In Guinea-Bissau, our problem is not the election but post-electoral period," said political analyst Fode Mane. "The next head of state will face a lot of challenges." (Writing by Bate Felix; Editing by Daniel Flynn and Giles Elgood)
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