By Andrew Cawthorne

NAIROBI, July 2 (Reuters) - Europe's new envoy to Somalia praised the interim government on Monday for steps to reach out to political opponents ahead of a national reconciliation conference intended to end a bloody insurgency.

The comments by Georges-Marc Andre, the European Commission's new special representative for Somalia, contrasted with previous criticism from the bloc over the government's lack of inclusiveness and hampering of aid flows.

Reconciliation, particularly with Mogadishu's dominant Hawiye clan from which many of the Islamist insurgents come, is viewed by analysts as a vital precursor to peace in a nation in anarchy since the 1991 toppling of a dictator.

"You cannot make peace with your allies. You have to make peace with your enemies," said the Belgian, a veteran of peace processes around Africa including his last post in Burundi.

Andre cited for praise a Hawiye clan meeting under way ahead of the national meeting set for July 15, a government move to approach Somalia's exiled Islamist leadership, and a change in the ground rules of the upcoming reconciliation conference to allow political as well as social issues.

"It has been a slow process, but we have seen very positive steps forward, and we have to congratulate President (Abdullahi) Yusuf and his government for these openings," he told Reuters.

CEASEFIRE HOPE

The envoy, who joins a clutch of senior diplomats overseeing the world's relations with Somalia from Nairobi due to security reasons, also expressed hope a ceasefire could be worked out as a precursor to a possible U.N. peacekeeping mission.

A small African Union (AU) peacekeeping force, manned by just 1,600 Ugandans instead of an intended 8,000 soldiers from around the continent, has failed to stop bloodshed in Mogadishu.

An Islamist-led insurgency brings daily attacks on the government and its Ethiopian army allies.

"At the end of the day we hope for a United Nations peacekeeping force to be in place," Andre said. "But for that, a ceasefire is indispensable."

European diplomats and others were working to help create conditions for such a treaty, he said.

"In Burundi, there were seven ceasefires signed," Andre said, referring to the tiny central African nation's widely-lauded peace pact after a decade of civil war killing 300,000 people.

"A ceasefire can start with one group, then extend to others."

Andre said he hoped AU leaders meeting in Ghana would be able to agree on reinforcing their mission in Somalia, despite the competing priority of Sudan's Darfur conflict.

"The AU must continue to play a major role in Somalia. Darfur is crucial but from what I hear and witness, the Somalia issue is very much on the (global) agenda together with Darfur."

Andre said the European Union had already disbursed 200,000 euros for the twice-postponed Mogadishu reconciliation conference, and had another two million to offer in support.

It had given 15 million euros to the AU mission in Somalia, and was mobilising another four million to create a secretariat for the mission at the African body's headquarters in Ethiopia.

(Additional reporting by Bryson Hull)

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