By Daniel Wallis

NAIROBI, July 12 (Reuters) - Ethiopian officials have accused a medical charity of spreading hearsay after it halted activities in a remote region bordering Somalia citing repeated obstructions, intimidation and arrests.

The Swiss section of Medecins Sans Frontieres (MSF) pulled out of the Fiiq area this week, saying it was unable to help locals caught in a conflict between the Ethiopian army and separatist Ogaden National Liberation Front (ONLF) rebels.

But the regional government said development in the area would not be hampered by what it called baseless allegations.

In a statement to Ethiopia's state news agency ENA late on Friday, it accused the charity of "disseminating hearsay which stands in sharp contrast to the realities on the ground."

"Some international media organisations are showing carelessness to professional ethics as they carry one-sided information supplied to them by MSF," it said, adding that the regional authorities were providing all necessary assistance to groups that were committed to development.

Ethiopia, an important U.S. ally in the region, launched a new offensive in Ogaden after ONLF rebels killed more than 70 people during a raid on Chinese-run oil field in April 2007.

It routinely rejects criticism of its tactics in the rocky, arid region as a campaign of defamation by "anti-peace" forces.

MSF-Switzerland said on Thursday that "repeated administrative hurdles and intimidations" had prevented it from helping vulnerable locals in Fiiq, where it started a programme at the end of last year.

"The authorities' attitude towards humanitarian organisations has translated into recurrent arrests of MSF- Switzerland staff without charge or explanation," it said.

Since January, its medical teams had only been able to work for 10 weeks in Fiiq town and five weeks in its outskirts, where the needs were greatest, because of a lack of work permits.

"Despite continuous attempts to improve working relations with the authorities, (we) can only regret the absence of any room to bring independent and impartial assistance," said Hugues Robert, who runs the Ethiopia programme in Geneva.

Last month, U.S.-based Human Rights Watch said donors who gave the Addis Ababa government more than $2 billion a year in aid needed to speak out against what the group called widespread and systematic atrocities by Ethiopian forces in Ogaden. (Editing by Jon Boyle) (For full Reuters Africa coverage and to have your say on the top issues, visit: http://africa.reuters.com/)

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