BELGRADE, Jan 8 (Reuters) - Serbia's main ultranationalist presidential challenger said the country will not go to war over Kosovo but must impose a trade embargo and scale back diplomatic ties with its Western backers if the province secedes.

The Radical Party's Tomislav Nikolic is running against pro-Western incumbent Boris Tadic in a closely fought Jan. 20 presidential election that is expected to go down to the wire in a second round two weeks later.

The election is being fought in the shadow of an imminent declaration of independence by ethnic Albanians in Serbia's breakaway southern province, which has been run by the United Nations since NATO drove out Serb forces in 1999.

Nikolic said Serbia should "cut all economic ties, transport, flow of capital, goods and people from Albanian-controlled parts of Kosovo."

"Their passports will not be valid here, so Kosovo Albanians will not be able to enter Serbia," he told the Belgrade daily Vecernje Novosti on Tuesday.

But the ultranationalist, whose party leader Vojislav Seselj is standing trial at the U.N. war crimes tribunal in The Hague, added: "We will not send our children to war."

All major parties in Serbia, and the main candidates for president, oppose independence for Kosovo. Analysts say Nikolic is softening his rhetoric to win over more moderate voters.

Nikolic's proposed measures appeared to be in line with analyst predictions of what the Serbian government of Prime Minister Vojislav Kostunica might do if faced with Western recognition of a Kosovo republic.

Nikolic said Serbia should expel ambassadors from those countries that choose to recognise Kosovo, which will likely include the United States and the major EU member states -- a move analysts say will halt Belgrade's EU accession bid.

Tadic has also said Serbia would not go to war over Kosovo, where the West intervened to halt the ethnic cleansing of Albanians in a two-year Serb counter-insurgency war.

Almost two years of negotiations between Serbia and leaders of Kosovo's 90 percent Albanian majority ended in deadlock in December.

The Albanians say they will declare independence within months and are counting on the major Western powers to overrule Serb and Russian opposition and recognise Europe's newest state.

Russia last year blocked a Western-backed plan for Kosovo's secession at the U.N. Security Council.

New EU president Slovenia said on Tuesday it backed signing a Stabilisation and Association Agreement (SAA) with Serbia, the first step on the road to full EU membership, possibly at the end of this month -- in what the West hopes will be a boost to Tadic's chances in the second round. (Reporting by Ksenija Prodanovic; editing by Matt Robinson)

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