UPDATE 3-Ethiopia's acting PM to remain at helm until 2015
* Hailemariam Desalegn to be sworn in within two days
* Meles Zenawi's death leaves gaping political hole
* Body lying at prime minister's private residence
By Aaron Maasho
ADDIS ABABA, Aug 22 (Reuters) - Ethiopia's acting prime minister Hailemariam Desalegn will run the country until an election in 2015, showing that the ruling party is determined to ensure a swift and smooth transfer of power following the death of Meles Zenawi.
Meles, 57, died late on Monday in a Brussels hospital after a long illness, leaving a gaping hole in Ethiopian politics and depriving Western powers of a trusty ally in the fight against Islamist militants in the Horn of Africa.
"He (Hailemariam) will be the prime minister until 2015. He is to be sworn in and he is to finish the five-year term of government and that is indisputable," government spokesman Bereket Simon told Reuters.
Parliament would be summoned within the next two days and Hailemariam would be sworn in as prime minister, Bereket said.
Crowds of mourners, many holding candles, gathered to witness Meles' casket arriving in the capital, Addis Ababa, late on Tuesday. His body is now lying in his private residence as preparations are made for a state funeral.
Bereket said that the ruling Ethiopian People's Revolutionary Democratic Front (EPRDF) party, a coalition of region-based parties, would hold a party congress at an undisclosed date to nominate a leader but said there was no scenario under which Hailemariam would not remain as premier.
After taking power in 1991 from Mengistu Haile Mariam's military junta, guerilla fighter Meles became one of the central political figures on the continent and drove domestic economic growth into double figures.
An astute economist, Meles advocated a blend of heavy state spending and foreign private investment, focussing lately on energy and infrastructure projects, although Ethiopia remains one of the world's biggest recipients of aid and average incomes are roughly a third of those elsewhere in sub-Saharan Africa.
Many Ethiopians complain that while he forged closer business ties with global powerhouses such as China, that did not translate into more jobs for Ethiopians and that despite a burgeoning middle class in urban areas, some three quarters of the country's population still live on less than $2 a day.
Speculation had been rife that a potentially divisive race for the top post would follow Meles' death. Asked whether all coalition members of the party had approved Hailemariam's selection, Bereket said: "They have no problem with this."
Analysts said Meles' succession appeared a done deal but said there might still be horse-trading going on behind the scenes that might flare up and destabilise the party.
A sombre mood hung over Addis Ababa under leaden skies.
Flags flew at half mast across the sprawling capital of Africa's second most populous country, and residents crammed around stalls in the rain to read newspaper headlines that hailed the late leader.
Privately owned Daily Monitor ran the banner: "Grief Across Nation" while state-run Ethiopian Herald proclaimed "Visionary Leader of Monumental Legacy: We salute, we celebrate you."
Talk of Meles' succession filled Addis Ababa's cafes as the country looked ahead to an era without an austere politician who ruled firm-handed for more than two decades.
The EPRDF has scrambled to assure citizens and foreign allies the policies of the former bush-fighter-turned-economic-reformer would be continued.
"Meles' death won't have an impact. The government has laid the foundations for a peaceful transition through the constitution," said Mikael Demiss, an accountant at one cafe.
While Meles' supporters mourned him as the saviour of a long-suffering nation, opponents hailed the death of an autocrat one group described as a "genocidal tyrant".
Rights groups criticised him for cracking down hard on dissent but the West generally turned a blind eye to the repression, reluctant to pick a fight with a partner in the fight against al Qaeda-linked groups in Africa.
More than 150 opposition politicians and their supporters have been detained since lawmakers approved in 2009 new anti-terrorism legislation. Journalists have also been targeted.
Mehari Tedla Maru of the Institute for Security Studies think-tank in Addis Ababa said Meles' death was unlikely to trigger a power struggle within the EPRDF.
But he said Meles' hold on power was so complete any successor would be unable to match his abilities and reputation as a towering political figure.
"While a power vacuum is less likely, the competence vacuum will be severe," Mehari said.
Across the street, Elias Maereg swept the floor of a boutique selling men's clothes.
"I only hope that all that has been achieved in the country during the past 20 years can be maintained," he said.