* Rebels seeking to win broad popular support locally
* Residents tired of war, graft, want change but are wary
* Region's vast mineral wealth fuelled conflict for years
* "We're hostages to the situation" says local policeman
By Richard Lough
GOMA, Democratic Republic of Congo, Nov 24 (Reuters) - Hours before rebels captured the eastern Congolese city of Goma on Tuesday, more than a thousand prisoners hammered a hole through the prison wall and escaped.
"This is going to have a big impact on the security of the city," said a local magistrate who was afraid to give his name.
The mass prison break highlights the challenges the M23 rebel movement now faces in holding and administering Goma and the expanding territory it has captured in a region long fought over for its rich mineral deposits.
The M23 insurgents rolled into this neglected lakeside town at the foot of a volcano after government forces abandoned their positions. U.N. peacekeepers, after using helicopter gunships against the rebels, said they could not defend the city, arguing they had a limited mandate.
But the rebels need security and a functioning administration if they are to win broader support.
In a sign that nerves are still stretched taut, a mid-afternoon burst of gunshots this week sent residents scrambling for cover in the city's mud-choked back streets.
"Normally this road is one big traffic jam, you can't move. But look at it today," said Georgette Bithondo, selling petrol in plastic bottles. "We're suffering, we're scared."
Behind her, porters sat idly on their wooden carts. Banks and many shops remain closed four days after the rebels entered.
Food prices are rising too. A measure of beans, a staple food, now costs 1,000 Congolese francs ($1.07), from 800 francs a week ago, while flour is up more than half at 500 francs a measure in markets - all this in a country where 80 percent of the population live on less than a dollar a day.
African Great Lakes region leaders, who fear the escalating eastern Congo rebellion could drag the African continent's heart into a wider war, called on M23 on Saturday to abandon their offensive and quit Goma.
Congo and U.N. experts accuse neighbour Rwanda of backing and directing the rebels, a charge strongly denied by Kigali.
Yet some among Goma's one million people are ready to give the rebels a chance to succeed where President Joseph Kabila's national administration, 1,000 miles away to the west in Kinshasa, has failed.
North Kivu province, of which Goma is the capital, and much of eastern Congo has experienced two decades of conflict between marauding rebels, militias and government troops that has inflicted killings, rapes and lootings on millions of its traumatised civilian population.
Popular anger at the national government's slow pace of reform, corruption and rights abuses runs so deep that M23 may even find a receptive audience.
Their plan, simply, is to persuade local administrators to work for them.
"You don't have to do much to win the trust of people here. The situation was so bad before," said Jean-Pierre Kabirigi at the Goma-based Pole Institute, a socio-political think-tank.
"But they have to be quick and they have to start with the question of security."
Asked how long the rebels had to show progress, Kabirigi said: "One month, I would say."
Goma is not short of sceptics.
"We've known other rebellions which happened in the same way. Look how those turned out," said 18-year-old Lorraine Kitme, a trader in the city's main Virunga market where row after row of wooden stalls lay empty much of the week.
"M23 arrive, say they're here for the people, but they'll stab us in the back," Kitme said.
Rebel commanders have urged the city's civil servants to go back to work. At Goma's main border crossing into Rwanda, dozens of trucks were still stranded in no-man's land on Saturday awaiting entry into the import-dependent city.
"Return to your work and be brave in your job," Vianney Kazarama, an M23 spokesman told a senior immigration officer. "We will not tolerate corruption and impunity."
"Yes, my colonel," came the meek reply.
Immediately after winning control of Goma, the rebels embarked on a charm offensive, seeking to win the support of the police, public sector workers and disenchanted youth.
At Goma's ramshackle town hall two days ago, hundreds of mostly young men gathered to hear a rebel commander call for their backing. Cautious applause met his appeal for unity.
Next door, a middle-ranking civil servant removed a photo of President Kabila from its hanging, fuming at his meagre salary and Kinshasa's failure to develop Goma's dilapidated road and power networks.
"We want change and I have faith in M23. We're going to try and go with them all the way," the civil servant said, declining to be named in case the government later retook Goma. Several colleagues nodded in approval.
Asked whether an M23-led administration would bring change, he said: "That's what we're waiting to see. We're tired of this misery."
His sentiments are echoed across the city, which has been without power from the national grid and running water after government forces apparently sabotaged the network as they fled.
On Thursday, some 600 police defected to the M23. The rebels say hundreds more police officers have also joined their side and will be responsible for law and order, not their own fighters - an assertion met with some doubt
"We don't know if we can trust what they say. But we're hostages to the situation. We have no choice, we have to work and earn a salary," said one police officer who gave his name as Jean-Paul.
More complicated will be how the rebels collaborate with the U.N. peacekeepers who are still present in Goma.
So far, the rebels have not troubled the blue-helmets who continue their armed patrols, but there have been no talks between the two groups.
"They are a partner in peace ... but at a certain point in time they got lost wanting to protect a illegitimate administration (of President Kabila)," Seraphin Mirindi, a rebel commander, told Reuters.
"With this diplomatic offensive, we expect to start talking with MONUSCO (the U.N. peacekeeping force)," Mirindi said.
MONUSCO spokesman Mounoubai Madnodje said the force did not deal with armed groups.