May 10 (Reuters) - Zimbabwe's opposition leader said on Saturday he would participate in a run-off election in the hope of unseating veteran President Robert Mugabe.

Morgan Tsvangirai, leader of the Movement for Democratic Change who emerged ahead of Mugabe in the first round on March 29, said he would contest the run-off only if international observers and the media had full access to ensure a fair vote.

WHEN IS THE RUNOFF?

The Zimbabwe Electoral Commission (ZEC) will set a date. By law, a second round should be held within 21 days of the result, published on May 2. However, the ZEC has the power to extend it.

WHAT OPTIONS DOES TSVANGIRAI HAVE?

Tsvangirai had raised doubts over whether he would take part in the run-off and has been out of the country since just after the vote, trying to keep up international pressure on Mugabe.

If he refuses to take part because his conditions are not met, then Mugabe would retain power. Tsvangirai said he would contest a second round only if it was monitored by international observers. Political analysts say Mugabe is unlikely to budge.

WHO WOULD WIN A RUN-OFF?

On the face of it, Tsvangirai would appear to be in a strong position to win a fair election. However, the opposition, human rights groups and Western countries accuse Mugabe of launching a campaign of violence and intimidation to try to secure victory in a second round.

WHAT IF MUGABE STAYS IN POWER?

Zimbabwe's economic crisis is likely to worsen and analysts say there will be few prospects of serious political change.

Western sanctions have failed to weaken Mugabe and he is likely to tighten his grip on power by purging opponents within and outside his party.

Official results show the ruling ZANU-PF lost control of parliament to the opposition for the first time in a parallel vote on March 29, which would make governing more difficult for Mugabe. A minority ZANU-PF cabinet would face problems passing legislation, which would need cooperation from the opposition.

The opposition does not have the two-thirds majority needed to impeach the president or change the constitution.

WHAT IF TSVANGIRAI WINS?

Analysts say the end of Mugabe's rule would probably bring badly needed international aid. The U.S. ambassador to Zimbabwe has said Zimbabweans should expect a package worth billions of dollars if a democratic government that embraces free markets is formed.

Tsvangirai has spoken in broad terms about creating conditions for foreign investment of $10 billion. He has not spelled out how he would ease Zimbabwe's economic crisis marked by severe shortages of basic goods and the world's highest inflation rate of 165,000 percent.

WHAT IF THERE IS PROLONGED POLITICAL DEADLOCK?

Zimbabwe could slip at least briefly into the kind of violence that affected Kenya after the disputed December election, although Mugabe's security forces are likely to quickly end unrest.

Talk has been floated of a possible national unity government as a way out of the crisis, but each side would insist on leading such an administration. (Reporting by Harare bureau; editing by Andrew Dobbie)

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