* Saturday's local elections first since alliance divorce
* Dispute centres on who should run for president in 2020
* Ivory Coast still recovering from years of instability
By Aaron Ross and Ange Aboa
ABIDJAN, Oct 12 (Reuters) - After more than a decade as allies, two of Ivory Coast's largest political parties face off in local elections on Saturday after an acrimonious divorce that is making Ivorians nervous ahead of a presidential poll in 2020.
The alliance struck in 2005 between President Alassane Ouattara's RDR and former President Henri Konan Bedie's PDCI was meant to dominate for generations and help heal the political rifts that led to civil war three years earlier.
But the pact that propelled Ouattara to presidential election victories in 2010 and 2015 collapsed last month as the parties bickered over whose candidate should be in pole position next time round.
Now, both the RDR (Rassemblement des Republicains) and PDCI (Parti Democratique de la Cote d'Ivoire) are casting Saturday's vote for hundreds of mayors and regional council seats as a test of strength heading into 2020.
"Two years from the presidential election, this will allow us ... to see how each political camp measures up," said Mamadou Toure, a government and RDR spokesman.
The local election campaign has been mostly smooth.
Residents flocked to rallies on dusty soccer fields to see candidates tout their achievements and, sometimes, hand out envelopes stuffed with cash. But some voters said the coalition split had heightened their concerns about a return to violence.
And the recriminations are starting. Ouattara's supporters have accused the PDCI of reverting to the tribal politics of Ivory Coast's blood-soaked past. The PDCI says Ouattara's government is drifting toward authoritarianism.
"The split doesn't suit us," Laminata Bane, a vendor outside an election rally in the economic capital Abidjan, said above the blare of pop music. "We don't want violence. We don't dare imagine that it's even possible."
At stake is the stability of francophone West Africa's largest economy and the world's biggest cocoa producer, which is still recovering from a short civil war that led to Ouattara's victory in 2010 over incumbent Laurent Gbagbo being confirmed.
Under Ouattara, a 76-year-old former central banker and senior International Monetary Fund official, economic growth has averaged more than 8 percent since 2012, trendy shopping centres have proliferated across Abidjan and investment has poured into agriculture and infrastructure.
Analysts say foreign investors such as agri-business giant Cargill or French conglomerate Bollore are keeping close tabs on the political situation, but there is little evidence they are cutting back on investment.
In twin votes of confidence, the African Development Bank returned its headquarters to Abidjan in 2014 after moving to Tunisia when the first civil war broke out, and a U.N. peacekeeping mission withdrew last year.
Still, progress remains fragile. New business registrations rose 18 percent in the first half of this year but they had slumped in 2017 amid a series of army mutinies that raised concerns about long-term stability.
The mutinies have stopped for now following multi-million dollar payments and buyouts that have cut the size of the army.
But less bullish observers say mutinies, the vast stocks of weapons unaccounted for after years of conflict and social discontent over only meagre improvements in living standards are all potential flashpoints.
They also say a falling out between Ouattara and Bedie, who served as president from 1993 until he was overthrown in a 1999 coup, was perhaps inevitable.
As president in the 1990s, Bedie, now 84, championed "Ivoirite", an ethnically-tinged definition of Ivorian identity that led Ouattara being excluded from presidential elections in 1995 and 2000, won by Bedie and Gbagbo respectively.
Ouattara's family ties straddle the borders with Burkina Faso and Mali and the notion that some residents from the north of Ivory Coast were not true Ivorians was one of the grievances that sparked the first civil war in 2002.
The political split this time comes amid accusations of broken promises.
The RHDP (Rassemblement des Houphouëtistes pour la Démocratie et la Paix) alliance had intended to field a single candidate in 2020, all but guaranteeing victory since the RDR and PDCI are two of the three main parties in Ivory Coast.
But the PDCI then accused the RDR of reneging on a promise to support its candidate in 2020. The RDR denied it had ever promised as much.
Since the breakup, RDR officials have accused the PDCI of again stoking ethnic divisions. After Bedie delivered a combative speech last month to 500 Baoule chiefs in his home town, an RDR official accused him of "a retreat to tribalism".
"We have experienced the consequences of Ivoirite: interminable political crises with their corollaries of thousands of deaths," Joel N'Guessan, an RDR vice president, said in a statement.
In another speech to supporters on Monday, Bedie accused the government of trying to sow discord within the PDCI by backing challenges to the leadership by dissident members. The PDCI, "cannot accept the lawlessness that this authoritarian regime wants to promote in this country", he said.
Further complicating the picture for 2020 is uncertainty over who will represent the RDR. Ouattara has served the two terms mandated by the constitution and Prime Minister Amadou Gon Coulibaly and Guillaume Soro, head of the National Assembly and former rebel leader, have been cited as potential successors.
But Ouattara said in June that a new constitution approved in 2016 cancels out the previous constitution's term limits and gives him the right to stand again.
RDR spokesman Mamadou Toure said Ouattara did not intend to run but he might reconsider if long-time rivals Bedie and Gbagbo, who is on trial in The Hague for alleged crimes against humanity during the 2010-11 war, were to stand - or if the stability of the country were threatened.
Ouattara has acknowledged the concerns about the 2020 elections both within the business community and among foreign envoys based in the country.
"I want to assure you ... that the 2020 election will take place in excellent conditions," he told business executives last month. "I will personally see to it." (Editing by David Clarke)