By Andrew Cawthorne

NAIROBI, Sept 25 (Reuters) - Nearly two years after being driven from Mogadishu, Islamists have re-taken swathes of south Somalia and may have their sights again on the capital.

The insurgents' push is being led by Al Shabaab, or "Youth" in Arabic, the most militant in a wide array of groups opposed to the Somali government and military backers from Ethiopia, an ally in Washington's "War on Terror".

"Shabaab are winning. They have pursued a startlingly successful two-pronged strategy -- chase all the internationals from the scene, and shift tactics from provocation to conquest," said a veteran Somali analyst in the region.

"Before it was 'hit-and-run' guerrilla warfare. Now it's a case of 'we're here to stay'," he added, noting Shabaab was "flooded with money" from foreign backers.

The Islamist insurgency since early 2007, the latest instalment in Somalia's 17-year civil conflict, has worsened one of Africa's worst humanitarian crises and fomented instability around the already chronically volatile Horn region.

Shabaab's advances are galling to Washington, which says the group is linked to al Qaeda and has put it on its terrorism list. Western security services have long worried about Somalia becoming a haven for extremists, though critics -- and the Islamists -- say that threat has been fabricated to disguise U.S. aims to keep control, via Ethiopia, in the region.

Some compare the Somali quagmire to Iraq in character, if not scale, given its appeal to jihadists, the involvement of foreign troops and the tactics used by the rebels.

In August, in its most significant grab of a gradual territorial encroachment, Shabaab spearheaded the takeover of Kismayu, a strategic port and south Somalia's second city.

This month, its threats to shoot down planes have largely paralysed Mogadishu airport. And in recent days, its fighters have been targeting African peacekeepers.

"The only question is 'what next?" said a diplomat, predicting Shabaab would next seek to close Mogadishu port and take control of Baidoa town, the seat of parliament.

Analysts say Islamists or Islamist-allied groups now control most of south Somalia, with the exception of Mogadishu, Baidoa where parliament is protected by Ethiopian troops, and Baladwayne near the border where Addis Ababa garrisons soldiers.

That is a remarkable turnaround from the end of 2006, when allied Somali-Ethiopian troops chased the Islamists out of Mogadishu after a six-month rule of south Somalia, scattering them to sea, remote hills and the Kenyan border.

The Islamists regrouped to begin an insurgency that has killed nearly 10,000 civilians. Military discipline, grassroots political work, youth recruitment and an anti-Ethiopian rallying cry have underpinned their return, analysts say.

With the Islamists split into many rival factions, it is impossible to tell if an offensive against Mogadishu is imminent. Analysts say Shabaab and other Islamist militants may not want an all-out confrontation with Ethiopian troops, preferring to wait until Addis Ababa withdraws forces.

WORLD "NUMB" TO SOMALIA

Ethiopian Prime Minister Meles Zenawi is fed up with the human, political and financial cost of his Somalia intervention, but knows withdrawal could hasten the fall of Mogadishu.

The insurgents may also resist the temptation to launch an offensive on Mogadishu until their own ranks are united.

"Opposition forces at the moment are internally debating whether or not it's time for a major push," the diplomat said.

Meanwhile, the rebels attack government and Ethiopian targets in the city seemingly at will. Of late, they have also been hitting African Union (AU) peacekeepers, who number just 2,200, possibly to warn the world against more intervention.

Estimates vary but experts think Ethiopia has about 10,000 soldiers in Somalia, the government about 10,000 police and soldiers. Islamist fighter numbers are fluid but may match that.

The Islamists' growth in power has gone largely unnoticed outside Somalia by all but experts. For the wider world, Somalia's daily news of bombs, assassinations, piracy and kidnappings has blurred into an impression of violence-as-usual.

Even this week's horrors, including shells slicing up 30 civilians in a market, registered barely a blip outside.

"The world has grown numb to Somalia's seemingly endless crises," said analyst Ken Menkhaus.

But "much is new this time, and it would be a dangerous error of judgement to brush off Somalia's current crisis as more of the same," he said. "Seismic political, social, and security changes are occurring in the country."

The United Nations has been pushing a peace agreement in neighbouring Djibouti that would see a ceasefire, a pull-back of Ethiopian troops -- the insurgents' main bone of contention -- then some sort of power-sharing arrangement.

Diplomats see that as the main hope for stability, and moderates on both sides support it in principle. But Islamist fighters on the ground have rejected the process, and negotiators failed to agree on details last week.

A U.S. expert on Somalia, John Prendergast, said the world had taken its eyes off the conflict at its peril.

"Somalia truly is the one place in Africa where you have a potential cauldron of recruitment and extremism that, left to its own devices, will only increase in terms of the danger it presents to the region, and to American and Western interests."

One effect of the conflict impinging on the outside world is rampant piracy off Somalia. Gangs have captured some 30 boats this year, and still hold a dozen ships with 200 or so hostages.

The violence is also impeding relief groups from helping Somalia's several million hungry. Foreign investors, interested in principle in Somalia's hydrocarbon and fishing resources, barely give the place a second thought in the current climate.

Source: Reuters