By David Lewis
KINSHASA, Nov 21 (Reuters) - Congo's battered government has little choice but to open unpopular talks with dissident General Laurent Nkunda, but the rebel leader himself faces a challenge converting his military upper hand into political capital.
Nkunda's fighters have over-run the weak and chaotic national army in weeks of fighting in North Kivu province, displacing 250,000 people and sparking fears of a repeat of a 1998-2003 war that sucked in six neighbouring armies.
Nkunda met administrators on Friday to discuss taxation in a major eastern town captured during weeks of fighting. President Joseph Kabila, who has resisted talks, jetted off to visit allies including Angola, which sent troops to help in the 1990s.
Much of the fighting has now died down and Nkunda's rebels have pulled back from some positions as attention turns to talks proposed by U.N. peace envoy Olusegun Obasanjo, a former Nigerian president, who has just met both Kabila and Nkunda.
"The government has not been willing to negotiate but they haven't been able to force anything militarily. They have no choice (but to enter talks)," said a Kinshasa-based diplomat.
"Obasanjo's job is now to get them agree to this. The politics is catching up with the reality on the ground."
Nkunda began his rebellion in 2004, rejecting peace deals that ended Congo's last war, which killed some 5 million people, mostly from hunger and disease, and saying he had to protect fellow Tutsis from Rwandan Hutu rebels in the east.
Some of these Hutu rebels were part of the militia that crossed into Congo after taking part in the 1994 genocide, which killed 800,000 Tutsis and moderate Hutus.
But Nkunda has now broadened his cause, saying he wants to liberate all Congolese. he says they have been failed by Kabila, who won historic post-war elections in 2006.
"They (the rebels) were frustrated at not having direct talks with the government, so they flexed their muscles," said another diplomat who has followed the crisis.
"If they sense they are not being taken seriously, they will flex them again. The government doesn't seem to have been any match for them, militarily, politically or strategically."
The U.N. Security Council voted on Thursday to send 3,000 extra peacekeepers to Congo to help protect civilians after its mission there was heavily criticised during the fighting.
The troops will take weeks to arrive. Ideas of a European bridging force have been floated but not yet got off the ground.
Meanwhile, Nkunda's men have pulled back from positions captured at the weekend, saying they wanted to foster peace.
Congo's government maintains it will only talk to Nkunda within the framework of a January peace deal that involved a number other minor groups and has collapsed.
"This is the (rebels) trying to play the good guy while Kinshasa blocks the idea of negotiating," said one Congolese analyst.
"NO MORE MASSACRES"
Aid workers have been unable to reach many of North Kivu's displaced, who now number more than 1 million.
"The pullback is an important gesture but people forget how much new terrain he has taken since August," said Anneke Van Woudenberg, a senior researcher at Human Rights Watch (HRW).
Nkunda has almost doubled the amount of territory he controls to seize most of Rutshuru territory, including the main town of the same name, where he briefed administrators on Friday about his ideas on taxation and his movement's ideals.
"This is not a town he will pull back from in a hurry. He controls road accesses and he can still strangle Goma," Van Woudenberg said.
North Kivu's capital, Goma, lies 70 km (45 miles) south of Rutshuru.
As in the last war, when all sides were accused of plundering natural resources, watchdogs have stressed the role of gold, diamond and cassiterite mines in the conflict.
Congo accuses neighbouring Rwanda, whose army invaded twice during the 1990s officially to hunt the Hutu rebels, of backing Nkunda. Kigali rejects the charges but, in turn, accuses Kinshasa of using the Hutu rebels to bolster its forces.
Nkunda is widely seen by many Congolese as a Rwandan stooge and will also have to shake accusations that his men have committed serious human rights violations.
"Nkunda cannot forget that he has to try and convert a military victory into a political one," said another diplomat.
"He can't have more Kiwanjas," the diplomat added, referring to the killing this month of dozens of civilians. Human rights groups have accused Nkunda's men of the massacre, which he blames on pro-government militia, known as the Mai Mai.
An arrest warrant has already been issued by the International Criminal Court for one of Nkunda's officers.
Despite reciprocated accusations of supporting each other's rebels, Rwanda and Congo appear to be working to heal wounds. In exchange for improved collaboration in resolving the question of the Hutu rebels, Rwanda might be persuaded to pressure Nkunda.
This would necessitate Congo and Rwanda abiding by a deal they struck in Nairobi last year and Kabila making concessions. "It is really time for genuine discussions with commitments from all sides," said HRW's Van Woudenberg.