* Opposition says giving army orders * President defies resignation call * Economy suffering
(Adds details, background)
ANTANANARIVO, March 15 (Reuters) - Madagascar's opposition leader Andry Rajoelina said on Sunday that he had the army's backing and was giving the orders during a standoff with the Indian Ocean island's president.
He is urging President Marc Ravalomanana to step down in a crisis that has killed more than 135 people this year and threatens to derail Madagascar's economy.
"Of course it is me who is giving the army orders. I am in permanent contact with them," Rajoelina told Reuters by phone.
Ravalomanana said on Saturday he was in charge, not planning to step down and that national dialogue was the solution to the political crisis.
The army appears to be leaning away from Ravalomanana, according to some political observers, but there has been no confirmation from the army to back up Rajoelina's assertion he is giving the army orders.
In fact, Madagascar's army has remained traditionally neutral during various periods of political volatility since independence from France in 1960.
Diplomats are urging it to stay that way.
Ravalomanana defied a four-hour deadline by Rajoelina to step down on Saturday and his supporters guarded the presidential palace through the night.
"For now we are waiting for him to resign," Rajoelina added in a telephone interview. "If he doesn't, then we have other options ... I can't say if that means a military intervention."
The opposition leader said he expected important developments within the next day or two.
"We will let him leave quietly. I think the situation will evolve within the next 48 hours," he said.
PRESIDENT WEIGHING OPTIONS
Rajoelina, 34, a former disc jockey who was sacked as Antananarivo's mayor earlier this year, says Ravalomanana is an autocrat running the island like a private company.
The president's supporters call Rajoelina a maverick and troublemaker bent on seizing power illegally.
A Ravalomanana aide said the president was considering his choices to end the crisis, without giving details.
"We are working on the options. I can't answer any questions on the chance of further negotiations," he told Reuters.
While Rajoelina has tapped into widespread public discontent, especially with high levels of poverty, many inhabitants are fed up with the disruption this year's protests and unrest have brought to their lives and the local economy.
The $1 billion-a-year tourism sector is nosediving, and foreign investors in the important mining and oil exploration sectors are watching events nervously.
Madagascar's capital, a city of faded French grandeur perched on steep slopes, is one of Africa's poorest where many live without electricity or running water and eke out a tough existence on less than $2 a day.
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