(Reuters) - A surprise decision by Egypt´s Muslim Brotherhood to field a candidate in the presidential election signals a new assertiveness by the traditionally cautious group that risks splitting the Islamist vote and aiding rivals from the era of Hosni Mubarak.

The new approach has become increasingly apparent in the Brotherhood´s standoff with the ruling military council, which has rejected the Islamist group´s demand for the army-backed cabinet to be sacked so it can lead the formation of a new one.

Now it has named as its presidential candidate Khairat al-Shater, 61, a millionaire businessman who drew up strategy for the group often from his prison cell. He was last released after the fall of Mubarak, the last in a line of presidents to come from the military who cracked down on the group.

The rise of Islamists is being closely watched in the West, long wary of their influence in Egypt, the first Arab state to make peace with Israel and recipient of $1.3 billion in annual U.S. military aid. But U.S. and other officials have lined up to meet Brotherhood officials, including Shater.

The Brotherhood worries its achievements could be reversed if it does not secure the presidency, believing dominance of parliament and the assembly drafting a new constitution are not enough protect its future.

After decades of repression, the Brotherhood is determined not to relinquish the dramatic political gains that have brought it closer to power than ever before in its 84-year history.

"This issue has been imposed on us by circumstances," said Mahmoud Ghozlan, a member of the Brotherhood´s executive bureau, referring to the group´s U-turn in putting forward a presidential candidate after previously pledging not to.

"The people did not just elect us to parliament to issue legislation and monitor the government but to improve their lives. People ask us every day: ´we elected you, what have you done for us?´" he told Reuters.

The Brotherhood complains that its hands are being tied by the army´s refusal to let it take charge of government, pushing it to seek the top executive office in the most populous Arab country.

Yet the new found assertiveness hints at concerns that run deeper than simply responding to the constituents of its new members of parliament. For decades, the Brotherhood opted for caution over confronting Mubarak, for fear overwhelming force could deliver a crushing blow from which it would struggle to rebuild.

CHANGING TACK

That situation has changed in the months since Mubarak was driven from office by a popular uprising and with each political gain made by the Islamist group since then, leading up to the decision to field a presidential candidate.

"The Brotherhood could have either shown their longstanding caution and slow deliberation approach which is what they are known for or done what they are deciding now which is to really go all in," said Shadi Hamid, director of research at the Doha Brookings Center in Qatar, who has followed Islamists for years.

The Brotherhood was banned under Mubarak and its members routinely rounded up. It skirted the ban to get some members into parliament, but did not take its challenge to the streets. Youths who put national pride above religion launched the anti-Mubarak uprising, with the Brotherhood coming out in force only days after it erupted. Yet it has changed tack since then.

"There is the sense that they have been waiting for this for more than 80 years, for the time to be more assertive," said Hamid.

It is, nonetheless, an uncharacteristically high risk strategy. First, the Brotherhood will have to rebuild trust with Egyptians, including its voters, after backtracking on its decision not to seek the presidency. At the time, it said it did not want to appear to be hogging power in the new Egypt.

"They don´t stick to promises. I regret giving them my vote, that won´t happen again," said Ramadan Ahmed, 38, who backed the Brotherhood´s party in the parliamentary poll.

Many Egyptians, tired of Mubarak´s one-man and one-party rule, now worry the Brotherhood could deliver more of the same.

Fielding Shater could split the votes for Islamists in a race where two other main Islamist candidates to his right and left have built a strong following. That growing popularity may have contributed to the Brotherhood´s determination to act.

DEFIANCE

Hazem Salah Abu Ismail, a Salafi following a strict interpretation of Islam, has drawn big crowds that may have unnerved the Brotherhood, typically more pragmatic in its ways.

Even the Salafi al-Nour party, which came second in the parliamentary vote behind the Brotherhood, has not endorsed him. Nour´s head Emad Abdel Ghaffour told Reuters Abu Ismail´s candidacy faced "strong legal appeals", after media reports questioned whether he met all the criteria to stand.

The other main Islamist candidate is Abdel Moneim Abol Fotoh, who was expelled from the Brotherhood last year when he defied their initial decision not to run. That action and his reformist views preclude Brotherhood backing.

Shater might squeeze out other Islamists with the huge resources of the Brotherhood´s grassroots network built up over decades with social support to communities, but he could also open the field to rivals with ties to Mubarak´s era.

"Egypt needs a statesman to rise. Here the comparison will be between a statesman and a businessman," Amr Moussa, former head of the Arab League and foreign minister to Mubarak in the 1990s, told an Egyptian television channel, taking a swipe at Shater´s business background.

In a poll in the state-run Al-Ahram newspaper on Monday, researched before Shater´s bid was announced, Moussa was leading with 31.5 percent, ahead of Abu Ismail with 22.7 percent.

In third place was Ahmed Shafiq, Mubarak´s last prime minister and a former air force commander.

´KINGMAKER, NOT THE KING´

Though Shater has the Brotherhood behind him, he does not have the name recognition of other leading candidates as he worked behind the scenes, often courtesy of Mubarak´s security forces, who put him behind bars for several years.

"He does not have the same charisma compared to other candidates. He was a kingmaker, not the king himself," said political analyst Khalil Anani.

For the ruling military council, in a tussle with the Brotherhood over its call to sack the army-appointed cabinet, Shater´s candidacy could open the way for any candidate they prefer by splintering the Islamist vote.

On the other hand, even if he wins, Shater is at least a known quantity to them even if not necessarily a welcome one. He could be preferable to other Islamists such as Abu Ismail, who as Brookings´ Hamid said, could prove a "loose cannon".

A Brotherhood lawyer said the army had dropped two court convictions against Shater, prerequisites for him to run, a move that has fuelled popular talk of a behind-the-scenes pact, although Brotherhood and the army deny any such dealings.

"What is important for the army is that it keeps its position in the new state intact as it has been previously. The army does not engage in politics or back a candidate over another," an army official told Reuters.

The army wants its privileges protected, business interests secured and immunity from prosecution, say diplomats.

The Brotherhood´s pragmatic approach, whatever power it attains, may ensure those demands are met. But trust of the army is still in short supply in the group.

(Additional reporting by Tom Pfeiffer, Dina Zayed and Marwa Awad; Writing by Edmund Blair; Editing by Giles Elgood) (© Thomson Reuters 2012. 04/02/12)