* National institutions "extremely limited"
* Cuts would imperil security response
* Instability in Liberia could spill across West Africa
By David Lewis
MONROVIA, Sept 5 (Reuters) - The United Nations must resist pressure to cut back its mission in Liberia too soon, or risk instability before elections next year, its top official in the country told Reuters.
A big U.N. force has overseen the nation since the end of fighting in 2003 and cuts are being sought because of the operation's cost, U.N. Liberia mission chief Ellen Margrethe Loj said at the weekend.
But limitations of local funding and institutions must be taken into account and ethnic clashes were a threat to stability with potential consequences for all of West Africa, Loj said.
The U.N. Security Council will vote this week on a proposal to keep the 9,400 soldiers and policemen now in the country until elections are held at the end of next year, before re-assessing cuts to the mission.
"The Security Council is definitely looking to the possibility of (the mission) being further reduced as soon as possible because it is a very costly operation and we have now been here for seven years," Loj said.
"But we have to look at that in relation to the capability of the Liberian institutions to operate independently on their own. It is relatively a very big mission but it is also a country where the national capacity is extremely limited," she said.
The mission in Liberia costs $500 million a year to run, a figure that dwarfs the government's planned budget of $350 million for this year. Other donors provide three times as much again in aid projects.
Peacekeepers are still filling in for Liberia's army, which was scrapped at the end of the war and will not be operational again until U.S.-backed training is complete in 2012. The U.N. is also rebuilding the police force.
Asked what the implications of cuts would be, Loj said: "Then we will not be able to respond to security incidents in various part of the country."
In February, U.N. soldiers and policemen had to help Liberian police put down violence that was sparked by allegations over a ritual killing but degenerated into clashes between mainly Christian Lorma and Muslim Mandingo communities in the north.
Two neighbours, cocoa-growing Ivory Coast and ore-exporting Guinea, are also recovering from conflict and political crises, and Loj warned that instability knew no borders.
"If Liberia destabilises, it also has consequences for the whole West African region."
"HOUSE IN ORDER?"
In the years since the guns fell silent after 14 years of virtually constant conflict, Liberia has secured billions of dollars in mining contracts, mostly in its iron ore concessions.
President Ellen Johnson-Sirleaf was elected in 2005 and has won wide international praise for her efforts to rebuild a country in tatters. Johnson-Sirleaf plans to stand for re-election next year but will have to win over many frustrated with the slow pace of progress.
Loj said the 2011 poll would be a gauge as to whether the Liberians had "got their house in order."
"Tremendous progress has been made in Liberia but it is still fragile. There are still many of the underlying tensions on ethnic grounds, land, the huge unemployment and lack of trust in the system," Loj said.
"There is a tendency, when there is a dispute, or a crime is committed ... that the Liberians like to take the law into their own hands and then we get the violence and the disturbances," Loj warned.
Loj said the pressure for further cuts had served to intensify talks between the U.N. and Liberian authorities on handing over responsibilities. New foreign investment in the country would help, but the country was still hugely dependent on the rest of the world for help.
It was difficult for decision-makers in air-conditioned offices in New York to grasp the extent of the destruction in the country, she said.
"It has been proven over and over again that you settle the conflict, you think, and then you turn your attentions somewhere else and then the conflict re-emerges 5-10 years later." (Editing by Charles Dick)
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