By Sayed Salahuddin and Adam Entous
KABUL/ WASHINGTON (Reuters) - President Hamid Karzai is expected to announce on Tuesday he will accept a run-off in Afghanistan's disputed election, Western sources said, after a U.N.-backed watchdog invalidated thousands of votes for the incumbent leader.
The August 20 vote, marred by allegations of fraud, has fanned tension between Karzai and Western governments whose troops are fighting a resurgent Taliban in Afghanistan.
The allegations have also complicated U.S. President Barack Obama's deliberations on whether to send thousands more U.S. troops to try to turn the tide in the eight-year war.
U.S. Secretary of State Hillary Clinton said she expected word from Karzai on Tuesday and hoped for a quick solution.
"I am going to let him do that but I am encouraged at the direction that the situation is moving," Clinton told reporters. "I am very hopeful that we will see a resolution in line with the constitutional order in the next several days."
Analysts have long said Karzai, a member of the Pashtun community that is Afghanistan's largest ethnic group and its traditional rulers, would likely win a second round.
Karzai indicated in private meetings this week, including with Senator John Kerry, he would be open to taking part in a run-off with his man challenger, Abdullah Abdullah, but did not commit to a specific timetable, Western sources told Reuters.
But officials cautioned that Karzai could still change his mind and there was likely to be intense political haggling.
Zalmay Khalilzad, a former U.S. ambassador to Afghanistan, said from his conversations with Karzai this week, the Afghan president was also open to a power-sharing deal with Abdullah.
"He wants to form a government in which Abdullah and some of his folks are included. The difference was the timing," said Khalilzad, who met both politicians during his visit to Kabul.
Abdullah, a former foreign minister, said he was ready to go to a second round and would discuss with Karzai what to do if a run-off proved impossible due to poor weather and security as the Afghan winter closed in.
U.N. Secretary-General Ban Ki-moon urged Karzai on Monday "to respect the constitutional process and he was pleased to hear that the president will fully respect the constitutional order," U.N. spokeswoman Michele Montas said.
Ban plans to brief reporters on Tuesday and is expected to provide further details about his discussions with Karzai.
POLITICS AND MILITARY STRATEGY
Uncertainty over the post-election picture has complicated military strategy for the United States and its allies, with NATO saying more clarity was needed before the alliance decides on any substantial increase in troops.
In Washington, the leading Senate Democrat on military matters said Obama should wait until the election process is concluded before deciding whether to send more U.S. troops.
Senator Carl Levin, chairman of the powerful Senate Armed Services Committee, also said he believed Washington could show its resolve without sending significantly more troops and indicated many fellow Democrats in Congress agreed with him.
"It's important to a counter-insurgency strategy, which I believe is the likely strategy that is going to be followed here, that this be resolved in a credible way," Levin said at the Reuters Washington summit.
Casualties are rising among the 68,000 U.S. troops already in Afghanistan and Americans are tiring of war. The U.S. and NATO commander in Afghanistan, General Stanley McChrystal, has recommended sending 40,000 additional soldiers.
There are fears of ethnic violence if it is perceived that Karzai's camp was behind widespread fraud. With violence at its worst since U.S.-led forces ousted the Taliban in 2001, analysts say continuing political uncertainty and infighting will only embolden the militants.
The Obama administration said the world wanted Afghan leaders to show the electoral process was legitimate and it was obvious that allegations of fraud had to be investigated.
"None of this is going to work without credible partners," White House spokesman Robert Gibbs told reporters.
The U.S. group Democracy International said a report by the Electoral Complaints Commission showed the number of votes invalidated by the U.N.-backed group pushed Karzai's total below the 50 percent needed to avoid a run-off.
Democracy International and the Washington-based U.S. Institute of Peace both said the ECC's audit showed Karzai had about 48.3 percent, with Abdullah's total rising to about 31 percent from 28 percent.
Provisional results had given Karzai 54.6 percent.
"Democracy International ... believes the ECC audit decisions should result in a run-off election, according to Afghanistan's electoral law," it said in a statement.
Alexander Thier, Afghanistan and Pakistan director for the U.S. Institute of Peace, said ECC data showed the group threw out votes from 210 of some 350 polling stations sampled.
"Everything we are hearing is pointing at the second round. That is what we are bracing for," a Western diplomat in Kabul said.
Under Afghan law, the Afghan government-appointed Independent Election Commission must accept the findings, recalculate the tallies and then announce final results.
Abdullah said he was "fully prepared to go to the second round."
"There are security problems, the issue of winter. If that is the case I am open to discuss it and find the solution. We will just open the door and then find out the issues that we need to discuss," he told Reuters. "What are the things that we can do to bring legitimacy?"
The picture could be thrown into further disarray if the Afghan election commission rejects the ECC finding, which a member of Karzai's camp has already disputed.
"The main question right now is what the IEC is going to do now, whether they are going to accept it," the diplomat in Kabul said.
The ECC said further action was up to Afghanistan's election commission. The IEC could not be reached for comment on the report.
(Additional reporting by Jonathon Burch and Hamid Shalizi in Kabul, Sue Pleming, Arshad Mohammed and Jeff Mason in Washington and Louis Charbonneau at the United Nations; Writing by Maria Golovnina and Sue Pleming; Editing by John O'Callaghan)
