(adds talks on sanctions, Kenyan ambassador) By Huw Jones STRASBOURG, France, Jan 14 (Reuters) - The European Union could cut its aid to Kenya over concerns about disputed elections, the EU's top aid official said on Monday. Another EU official said the 27-nation bloc, one of Kenya's top donors, was considering suspending all aid and imposing sanctions if mediation efforts to resolve the crisis failed. "It's difficult to continue the same level of budgetary support if we see that the election has not been fully respected," EU Development Commissioner Louis Michel told a meeting of the European Parliament's development committee. The crisis has dented Kenya's democratic credentials and rattled Western donors. Post-election turmoil, in which hundreds have been killed, has hit the country's economy as well as supplies to east and central African neighbours. "We are not in a situation we can call business as usual by any means," Michel said. "We have to adapt our relations." The EU provided 290 million euros ($431.1 million) in aid to Kenya between 2002 and 2007. A further 383 million euros are planned for 2008-2013. Leading a group of "Eminent Africans", former United Nations Secretary-General Kofi Annan was due in the east African nation on Tuesday to try to kick-start dialogue between President Mwai Kibaki and his rival Raila Odinga, who have not met since a Dec. 27 vote the opposition says was rigged. The second EU official said that if Annan's mediation failed the European Union would consider tougher steps. "We are working on an options paper, all the possible scenarios are on the table, including the possibility of suspending aid and of taking sanctions," said the official, who requested anonymity. EU ambassadors would work on these options on Tuesday, the official said. The EU and the United States have urged Kenya's rival political parties to work to form a government. Michel said he had been unable to reach Kibaki for talks. "I have attempted to contact him in vain for days on end. I get to his front office but am never transferred to the president -- either the line goes dead or he does not pick up the phone," he told the lawmakers. Michel said Kenya was vital for regional stability and its crisis had implications for countries such as Uganda and Rwanda. Kenya's ambassador to Belgium, Marx Kahende, told the same meeting that a negotiated solution was possible. "We remain optimistic that ongoing efforts, including the engagement by Kofi Annan ... will yield an acceptable solution to all parties," Kahende said. "Democracy can't be built in a void ... Maybe NATO forces are required, I don't know," he said. EU observers reiterated concerns over the election. "The accuracy of the result is in doubt," said Liberal lawmaker Alexander Graf Lambsdorff, who was the European Parliament's chief observer at the Kenyan election. (Reporting by Huw Jones and Ingrid Melander; Editing by Caroline Drees)
A mother helps her child prepare for school in Nairobi's Mathare slum January 14, 2008. Schools in the capital re-opened on Monday, after post-election violence delayed the start of the new ...
