* PM's first visit to northern Mali since liberation
* Mayor of northern town arrested for drug trafficking
* Two Tuaregs die after torture by army - Human Rights Watch
By Cheick Diouara
GAO, Mali, April 11 (Reuters) - Mali's prime minister promised during a visit to the war-torn north on Thursday elections would go ahead in July despite fears his government is failing to reassert its control there after the ousting of Islamist rebels.
Diango Sissoko's visit to Gao was the first by a senior government figure since a French-led campaign freed northern Mali's largest town from al Qaeda-linked rebels in January.
Some 4,000 French troops, fighting alongside Mali's army and a regional African force AFISMA, have pushed the Islamists back into desert and mountain hideaways.
With France aiming to cut its military presence to 1,000 soldiers by year-end, the first 120 arrived back in France on Thursday.
Paris is pushing for presidential and legislative elections in three months. Mali has been mired in turmoil for a year, rocked by a Tuareg rebellion, an occupation of the north of the country by Islamic militants and a military coup.
"There is no question over the holding of elections in July. All the necessary steps are being and will be taken," Sissoko, part of a transitional government, told reporters in Gao.
However, analysts fear that preparations will not be completed by July and warn that a botched election could sow the seeds for further unrest and north-south conflict in the landlocked former French colony.
Hundreds of thousands of Malians have been displaced by the fighting and the north remains vulnerable to guerrilla-style counter attacks, despite the presence of thousands of African troops under the AFISMA banner. This is expected to become the backbone for a proposed 11,000-strong U.N. peacekeeping mission.
Michael Sheehan, U.S. assistant secretary for Special Operations and Low-Intensity Conflict, said this week the African mission was "a completely incapable force".
A French diplomatic source said some ${esc.dollar}25 million was needed to fund the electoral process and admitted it would not be perfect.
TUAREGS
Tuareg rebels remain in control of Kidal, a key town near the border with Algeria, complicating the political process. The MNLA say they are willing to drop their claims of independence for northern Mali in return for greater regional autonomy.
They have so far rejected calls to disarm and begin political negotiations and have accused the Malian army of carrying out revenge attacks on ethnic Tuaregs.
Human Rights Watch said on Thursday two Tuareg men arrested in February had died after being tortured by Malian soldiers in the town of Lere, near Timbuktu.
The Malian army announced the arrest of the mayor of the northern town of Tarkint, Baba Ould Cheick, in connection with cocaine trafficking. Cheick was a negotiator for the release of several hostages captured by al Qaeda's north African branch AQIM.
He was linked by investigators to the wreck of a Boeing 727 near Gao which was believed to have flown in South American cocaine before being burned by traffickers in 2009.
Malian authorities issued arrest warrants in February for leading Islamists, Tuareg rebels and suspected drug traffickers, including Ould Baba. A public prosecutor said some 200 people had been detained. (Additional reporting by Tiemoko Diallo; Writing by David Lewis and Daniel Flynn; Editing by Andrew Roche)
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