By Francis Kwera

KAMPALA, March 12 (Reuters) - Ugandan rebels have welcomed comments by President Yoweri Museveni suggesting their leaders would avoid prison and not have to face an international court if they sign a peace deal.

Despite coming close to a final accord with the government, Lord's Resistance Army (LRA) representatives insist any deal hinges on the International Criminal Court dropping war crimes charges against their leader Joseph Kony and two deputies.

Museveni said on Tuesday a peace deal would allow the LRA commanders to atone for crimes through a traditional "blood settlement", avoiding prison and judgement by the ICC.

"President Museveni is now speaking the right language. We would appreciate it if he goes ahead and implements what he is talking about," said the LRA's chief negotiator David Nyekorach-Matsanga by telephone from the Hague.

Elders from the LRA's Acholi tribe have long called for Kony and his henchmen to face "Mato Oput" justice.

The ritual involves a murderer facing relatives of the victim and admitting his crime before both drink a bitter brew made from a tree root mixed with sheep's blood.

The two-decade rebellion by the LRA, who spread terror through killings, mutilation and the kidnapping of children, has little direct impact on one of Africa's fastest-growing economies, but ending it permanently would be a major coup for Museveni.

The conflict has killed tens of thousands of people and uprooted close to 2 million in the coffee-exporting nation of around 30 million.

Kony has refused to emerge from hiding for fear of arrest and analysts say his signature on a final deal would help boost chances of the deal sticking.

In a government statement issued late on Tuesday, Museveni said Uganda could "save" Kony from an ICC trial.

"We can save him because we are the ones who sought assistance from the ICC," the president was quoted as saying.

AGREEMENTS

The two sides have signed a string of documents clearing the way for a final deal, and in one, they agreed to set up a special crimes court to replace prosecutions by the ICC.

Uganda poses a dilemma for the court, which could be accused of bowing to politics if it drops charges and obstructing peace if it does not. The prosecutor has said he will not drop charges and the matter would be for the court's judges to decide.

The government has said it will only ask the ICC to scrap indictments once a peace deal is signed.

Museveni's remarks in London came after the ICC asked for more information on the jurisdiction of the proposed Ugandan court in a letter to the government dated Feb. 29.

The letter, seen by Reuters, requested clarity on "the exact competence attributed to the special division of the High Court of Uganda".

Underlining the fragility of the peace process, a local legislator and other officials said LRA fighters raided a remote border in Central African Republic last week and abducted 80 residents.

Matsanga dismissed the report as "lies".

"I am in constant touch with Gen. Kony. He is in southern Sudan and no single soldier is in Central African Republic," Matsanga said. "That is just a bunch of fabricated lies."

(For full Reuters Africa coverage and to have your say on the top issues, visit: http://africa.reuters.com)

(Editing by Katie Nguyen)

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