(Reuters) - The final leg of Egypt´s transition from military to civilian rule has turned into a bitter power struggle that is feeding a sense of crisis and confusion among Egyptians, who fear their democratic dawn could be at risk.

Just weeks before a presidential election in May, divisions are hardening in a nation polarized by the rise of Islamist groups that were banned under Hosni Mubarak and attempts by members of his administration to reassert influence.

The struggle for control of Egypt that began in the streets last year has moved to the courts and the Islamist-controlled parliament. How the next few weeks proceed will determine the course of political change that will influence the whole region.

"There is some serious gamesmanship going on to gain the upper hand over the future," said a foreign diplomat, working in Cairo. "I don´t think anyone could say it is going smoothly ... We´ve had these kind of crunch points before ... but each time they´ve managed to pull it back."

The web of rivalries between Islamists, secular-minded reformists and Mubarak´s old guard has thrown up big challenges for a process that has been far from easy and is being further muddied by a spate of politically driven legal battles that have halted work on a new constitution and thrown into doubt the candidacies of several presidential front-runners.

On Thursday the Muslim Brotherhood and other lawmakers flexed their muscle in parliament, passing a law preventing top officials who served under Mubarak from becoming president.

This would prevent former Vice President Omar Suleiman and Mubarak´s last premier, Ahmed Shafiq, from running. However, the legislation is unlikely to win the approval of the ruling military council, which is necessary for it to come into force.

The political heat is set to rise further on Friday as the Muslim Brotherhood heads back to Tahrir Square, the cradle of the revolt against Mubarak, for a protest also aimed at stopping Suleiman from contesting the vote that starts in May.

The last-minute candidacy of Suleiman, a former spy chief, has unnerved secular-minded reformists as well as the Islamists. Both worry that a Suleiman presidency would mark a major blow to hopes for democracy in the Arab world´s most populous nation.

While his critics say Suleiman could only win through subterfuge, his candidacy appears to have struck a chord with voters alarmed at the rise of Islamist influence and who see the former army man as the best hope for an end to a year of chaos.

Itself seeking the presidency, the Brotherhood is expected to draw thousands to the square on Friday. But in a sign of the polarization that has split the reform movement, at least one revolutionary youth group has decided to boycott the Islamist demonstration and will instead take part in one next week.

CASE AGAINST MUBARAK

Looming over Egypt´s fast-changing political landscape is the fate of 83-year-old Mubarak himself. The verdict in the case against him on charges of ordering the killing of protesters against his rule and corruption is due on June 2.

The trial´s outcome will be crucial to the public mood just weeks before the top two candidates in the first round of the presidential vote face off in a June run-off that is expected to follow the initial poll.

"There is a sense of uncertainty about the future steps in the transition," said Mustapha Kamel al-Sayyid, a political scientist who described the current phase as the most difficult since Mubarak left power. "This is an important political battle with every side trying to use whatever means it has."

It has been more than a year since the Egyptian army took over power from Mubarak, after the popular uprising put an end to his 30 years in power.

A council of generals pledged to shepherd the country towards democracy but then themselves became the focus of criticism from reformists who still distrust them, seeing the army as an extension of the former air force chief´s rule.

That mistrust has fed spasms of lethal violence pitting the revolutionary youth against the security forces. It has been two months since the last bloodshed in Cairo´s streets. The courts and parliament have instead become theatres for conflict.

The weak state of the economy, hit by political and social instability, has added to the sense of turmoil.

Talks over an International Monetary Fund loan needed to stave off a financial crisis stumbled in large part due to a power struggle between Islamists and the army-led government.

Drafting a new constitution - a key part of the transition plan - has been another victim of the fierce fight for power that is defining politics in post-Mubarak Egypt.

A legal challenge from Egyptians who argued the Islamists abused their parliamentary majority to secure control has technically frozen the process.

That has reduced the already slim chances of a constitution being ready by the time a new president takes office. The court hearing the case halted moves towards forming the 100-person body pending a ruling on the legality of the Brotherhood-chaired body.

"A FEW OBSTACLES TO DEMOCRACY"

The Brotherhood has been under fire from critics for not taking a more conciliatory stance to the groups that have boycotted the assembly in protest at the poor representation given to women, Christians, youth groups and others.

The Islamists offered concessions to draw others back into the process but these did not convince critics who argued the Brotherhood´s late decision to contest the presidency was yet another sign of a its plan to dominate Egypt.

Based on events of the past year, some believe the odds still favor the army handing over power as scheduled on July 1.

"If Egypt muddles through somehow to a presidential election that produces a fair result and the constitutional process gets back on track, then come July 1 we´ll all be saying these were serious difficulties but Egypt proved us wrong," said the foreign diplomat, who declined to be named.

Yet more confusion seems inevitable. Delays to the drafting of the constitution mean the incoming president´s powers will be defined by the temporary constitutional declaration that has governed the interim period and which has been blamed for the legal chaos of the transition.

Legal wrangling is also muddying the outlook for the presidential election. There is doubt over the candidacies of some of the front- runners due to legal challenges over whether they are eligible to run.

The Brotherhood´s candidate, Khairat al-Shater, is the focus of one such case, brought by a socialist rival who says the Islamist should not be able to run due to past criminal convictions said by his aides to have been trumped up. The group has a back-up candidate ready just in case.

"It is not clear whether we will have the most important candidates in the elections and it is not clear whether we will have a constitution in time," said Sayyid, the political science professor. "In the long term I am optimistic. In the short term, we are going to see a few obstacles to democracy," he said. (Writing by Tom Perry, editing by Peter Millership and David Stamp) (© Thomson Reuters 2012. 04/12/12)