* Rwandan Hutu FDLR rebels a priority after defeat of M23 in Congo
* Rebel group at heart of 20 years of instability in region
* Civilians wary after previous offensives failed to defeat rebels
By Peter Jones
TONGO, Democratic Republic of Congo, April 8 (Reuters) - Twenty years after the genocide in Rwanda, a rebel group founded by ethnic extremists who took part in that slaughter still prowls the lush hills of neighbouring eastern Congo, defying a renewed threat by the army and U.N. peacekeepers to dislodge it.
The Democratic Forces for the Liberation of Rwanda (FDLR) sits at the heart of two decades of war and instability in Democratic Republic of Congo, in which millions of people have died from violence, hunger and disease.
Founded by members of the Interahamwe Hutu militia that organised the slaughter of 800,000 Tutsis and moderate Hutus in Rwanda in 1994, the FDLR's ranks have dwindled over the last decade to less than 2,000 rag-tag fighters.
But its presence in eastern Congo remains an irritant to Rwanda's Tutsi leadership, which has held power since the genocide, and has prompted years of meddling by Kigali in its larger neighbour, fuelling instability and bloodshed. Experts say removing the FDLR is essential for peace in the Great Lakes region.
Now Congo's army, supported by a tough new U.N. Intervention Brigade and emboldened by its defeat of a rival Tutsi-led rebellion, has pledged to finally eradicate the Hutu group.
Backed by artillery from the U.N. brigade, the army in February started pounding positions held by the FDLR on the roads climbing into the steep hills of Congo's North Kivu province, driving the militia from roadblocks used to extort money from locals.
When the guns fell silent, it became clear the rebels had not gone far from the main town of Tongo, retreating less than five km (three miles) from army lines. Unconcerned by the army's efforts, FDLR troops in camouflage uniforms lounged near clearings where their wives tended plots of coffee and beans.
"There's nothing to fear here," said Bosco, commander of the group of fighters, using the Kinyarwanda language of Rwanda. One of his fighters, too young to have held a gun when the 1994 genocide took place, agreed: "Whatever happens, we will stay."
The stuttering campaign against the FDLR underscores how complex a task it will be to defeat it. Speaking the same language as villagers, inter-married with them and forming part of the local economy, FDLR fighters have woven themselves into the fabric of life in eastern Congo and use the population as its human shield.
"The challenge is to isolate these people and allow the Congolese army to continue its operations," said Brigadier General Anil Kumar Samantara, commander of U.N. operations in North Kivu.
AMNESTY FOR LEADERS?
Colonel Olivier Hamuli, spokesman for Congo's army, said that a full offensive against the FDLR had not yet begun. Reuters witnesses saw Congolese army trucks carrying troops down the winding, hairpin road as they pulled back toward the provincial capital Goma.
Congo's last war officially ended in 2003 but its mineral-rich east has seen no peace since then. The local population has been preyed upon by the FDLR, a series of Tutsi-led rebel groups backed by Rwanda, and the ill-disciplined and rapacious army.
The army scored a rare success in November by defeating the M23 rebels, the latest incarnation of the Tutsi-commanded insurgency, a year after they had humiliated the government by seizing Goma. The U.N. Intervention Brigade was instrumental in this, deploying helicopter gunships and artillery barrages but such tactics are of limited use against the FDLR.
"M23 was very visible. They weren't using guerrilla tactics," Samantara said. "It won't be like that with FDLR as they're living among the local villagers in difficult and unknown territory."
Previous attempts to eliminate the FDLR, first by Rwanda when it occupied parts of eastern Congo and later by joint Rwandan and Congolese operations, have failed. Rebels have melted away into North Kivu's dense parks and jungle, and civilians caught in the crossfire have paid a heavy price.
"Military offensives have been effective in the past but they displaced over a million Congolese and killed hundreds of others. That's not a price we should be willing to pay," said Jason Stearns, a project director at the Rift Valley Institute.
Stearns suggested that an agreement to relocate FDLR commanders in a third country with an amnesty agreement could help to end the rebellion peacefully. Only a handful of top commanders need be covered by such a deal, he said.
"It would not mean amnesty for war crimes or crimes against humanity," he said. "The package would need to be tailored to individual cases. But we're only talking about 100 people here."
Kigali refuses talks with the group, saying the FDLR wants to continue the slaughter of 1994. The rebels say few of their members took part in the genocide and they are fighting for democracy in their homeland.
From bases in Congo, the FDLR has launched a handful of attacks on Rwanda, a tiny nation with one of Africa's best armies, but the last was in 2012. FDLR numbers have plummeted due to a U.N. demobilisation programme that has repatriated 25,000 fighters and their dependents to Rwanda since 2002.
The repatriations have slowed to a trickle, however. The U.N. mission in Congo said that in the week March 25 to April 2 only six FDLR fighters gave themselves up for reintegration.
Complicating matters, Kinshasa's forces have long fought alongside the FDLR against Rwanda's army and its proxies in eastern Congo. Accusations and counter-accusations over the FDLR have fed tensions between Kinshasa and Kigali.
General Victor Byiringiro, interim FDLR president, said his men had held their positions on the ground but the group had in December pledged not to fight against Congolese, Rwandan or U.N. troops in return for talks. "We ask for a dialogue to allow us to deal with Rwandan problems linked to democracy," he said.
Rwandan officials, asked about the recent attacks on FDLR positions, remain sceptical over Congo's willingness to eliminate the militia. "There were no military operations. Who is fooling who?" said Brigadier General Joseph Nzabamwita, a spokesman for Rwanda's army and Defence Ministry.
Civilians in Tongo, a gateway to the Masisi's fertile hills, welcome the respite from rebel occupation but they have little doubt they would return if pressure is not sustained.
"The government must reinforce their positions and keep going," said Semasaka Murara Bulenda, Tongo's local chief. "If the FDLR return, they'll want to settle scores with locals."
Bulenda has reason to fear reprisals. Human Rights Watch documented the deaths of at least 100 Congolese civilians following the last major offensive against the rebels in January 2009, a joint operation by Congolese and Rwandan troops.
Enjoying more regular pay, U.N. supplies and better leadership, Congolese troops took some steps towards improving their battlefield reputation with the defeat of M23.
However, Samantara, the U.N. commander, said there were already signs of slippage. "We've seen an increase in negative incidents committed by army soldiers since January - looting against the civilian population, and some rape cases."
This does not pass unnoticed by those caught in-between.
"The FDLR treat us fairly well but the army soldiers harass us," said Christina Sengyuva, a woman working in the fields near Tongo. "If I had to choose between the two, I would prefer to live with the FDLR than with the army." (Additional reporting by Chrispin Mvano in Goma and Jenny Clover in Kigali; Editing by David Lewis, Daniel Flynn and Giles Elgood)
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