BRUSSELS, Feb 8 (Reuters) - Ukraine needs to appoint a president quickly and avoid a legal battle over its election to convince the West it can forge coherent policies to pull it out of economic crisis and end years of infighting.
Western leaders, who see only minor differences in the policies of election rivals Yulia Tymoshenko and Victor Yanukovych, hoped a clear-cut result would improve the chances of the next president having a strong mandate.
Incomplete results from Sunday's presidential election put opposition leader Yanukovych on course to win but Tymoshenko, the prime minister, has indicated she may contest the result.
"We have the scenario most people didn't want in Kyiv -- it's tight and disputed. We need to see Ukraine's leadership is ready to move on beyond the past and it will not reflect well on its relations with the West if nothing changes," said Amanda Paul, an analyst at the European Policy Centre, a think tank.
"Ukraine faces important decisions on economic reform and relations with the West and Russia. It has already lost a lot of time in the last five years and it cannot afford to lose another day," said Paul, a specialist on Ukraine.
The former Soviet republic of 46 million people, squeezed between Russia and the European Union, carries Russian energy to Europe and is vital to its Western neighbours' economic and security interests.
Infighting among Ukraine's leaders and an economic crisis have shattered the optimism inspired in the West by the "Orange Revolution" in 2004, in which Yanukovych's initial victory was overturned because of widespread fraud.
Membership of the NATO military alliance is off the agenda for now and there is little appetite in the European Union for Ukraine joining any time soon. Many Ukrainians oppose NATO entry and say the EU has not shown much interest in Kyiv joining.
WEST WANTS CLARITY
Europe and the United States hoped the vote would at least provide clarity as to who is running Ukraine after years of squabbling between Tymoshenko and President Victor Yushchenko, her former ally in the Orange Revolution.
Political stability is also important to international lenders such as the International Monetary Fund to help Ukraine through its severe economic crisis.
Yanukovych said last month he would stand by a law passed late last year that raised the minimum wage and pensions, breaching promises to control spending. The IMF suspended its emergency lending programme as a result of the law.
"The IMF wants a coherent programme for it to resume lending, and this might take some time to emerge," said Andrew Wilson, a senior policy fellow at the European Council on Foreign Relations.
"At least there was little evidence of fraud in the election. Now the question is whether Tymoshenko decides on a legal challenge or not."
Tymoshenko had been expected to hold a news conference on the election result on Monday, but delayed it until Tuesday.
Election observers, headed by the Organisation for Security and Cooperation in Europe, said the vote met most of its international commitments.
"It is now time for the country's political leaders to listen to the people's verdict and make sure that the transition of power is peaceful and constructive," they said.
Although some analysts say Yanukovych could steer Ukraine closer to former Soviet master Moscow, he and Tymoshenko have both sought a balance between looking eastwards and westwards. Neither says a choice has to be made between Russia and the rich 27-country EU, and both say they want to integrate with Europe while improving ties with Moscow.
LONG ROAD TO EU AND NATO
Yanukovych has said he wants to renegotiate a gas supply deal with Russia, which sets market prices for gas, but could balance that with an idea of creating a consortium with Russia's participation to manage Ukraine's pipeline system.
Tymoshenko has set a goal of EU accession in five years and is seen as more enthusiastic about joining the rich bloc.
But EU accession is a long way off, especially while the Union faces its own economic troubles and some member states have a "Russia first" policy, under which they try not to upset Moscow in their dealings with Kyiv.
Kyiv's handling of a gas supply crisis in Europe last year, when Russia turned off the taps of pipelines running through Ukraine, further damaged the country's reputation in the EU.
"After the Orange Revolution there was huge enthusiasm about Ukraine - both within Ukraine and outside," Ukrainian political analyst Olexiy Garan told Euro News television. "However, from the European Union we did not see clear signals and did not see a clear action plan on how to draw Ukraine closer to Europe."
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