(Adds UNHCR chief)

By Barry Moody

ACCRA, July 1 (Reuters) - An African summit on Sunday debated the dream of Libyan leader Muammar Gaddafi for a single state stretching from the Mediterranean to the Cape, but other leaders warned of tough obstacles on the way to that goal.

Gaddafi has long campaigned for a United States of Africa as the only way to address the continent's grinding poverty and myriad other problems, including the challenges of globalisation.

In an impassioned speech on the eve of the three-day African Union summit, he told cheering activists and students: "Our continent is backward, poor, suffering from illnesses, divided and exploited ... shall we allow such a situation to continue?"

Gaddafi ardently backs the immediate creation of a continental government, but most of his fellow leaders feel this is an unrealistic, if noble, dream that distracts from urgent crises in Sudan, Somalia and elsewhere.

That view is shared by many ordinary Africans canvassed by Reuters.

"The task before us is enormous. We are at the crossroads and at the same time at the threshold of a new era," said Ghanaian President and AU Chairman John Kufuor.

Alpha Oumar Konare, the AU's top diplomat, supported an integrated continent in his summit opening speech but said many problems must be overcome, including the future of existing pan-African bodies and regional economic blocs.

"A strong African leadership must grapple with these issues ... we need to take the bull by the horns, we need to move towards a new country that is Africa.

"We want to liberate the continent from misery and hardship and this is the aim of integration." Konare said.

PAN AFRICAN VISION

The summit coincides with the 50th anniversary of independence in Ghana, the first black nation in sub-Saharan Africa to end colonial rule under the iconic leadership of Kwame Nkrumah, himself a standard bearer for African unity.

"From Ghana came the cry of unity. So now from the same place, from the country of Nkrumah, Africa should become a reality," Gaddafi declared at a local university.

"Long live the United States of Africa, long live African unity," he said.

The Libyan leader, who says African unity should be decided by the masses and not leaders closeted in a conference hall, did not attend the summit's opening session.

U.N. refugee chief Antonio Guterres supported closer African integration, saying it would help avoid conflicts generating tens of thousands of refugees.

"What is evident is that on a continent that suffers from huge development problems, that still has so many conflicts, the solution to all these problems is political, economic and social integration," Guterres told Reuters on the summit sidelines.

Konare seemed to espouse the more gradualist view of many of the other summit participants in his opening address.

He said the leaders must first decide whether his weak AU commission should be given executive powers and whether the existing pan-African parliament should be transformed from a talking shop to a body with real clout.

"The AU commission, which should be the engine, does not have a well-defined status," Konare said.

He added that eight African regional economic communities must not be made into political blocs, which would hinder continental unity.

But he left open the door for "federations" between up to five of the strongest advocates of an immediate continental government, which include Senegal and other Sahelian states. (Additional reporting by Orla Ryan and Pascal Fletcher)

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