By Hasmik Mkrtchyan
STEPANAKERT, Azerbaijan, July 19 (Reuters) - Breakaway Nagorno-Karabakh elects a new leader on Thursday in a vote set to stress the separatist region's self-proclaimed independence from Azerbaijan.
Azerbaijan and Armenia -- both Soviet republics at the time -- began fighting in the late 1980s over the mountainous, predominantly Armenian-populated territory within Azerbaijan.
Karabakh seceded from Azerbaijan and proclaimed an independence that the rest of the world has not accepted.
Many of the Azeri minority fled during the fighting which claimed more than 35,000 lives before a ceasefire was brokered in 1994, and the region is now populated almost entirely by ethnic Armenians, who enjoy Armenia's backing.
No international organisations will monitor the vote, in which five hopefuls are running for "president" to replace Karabakh's current leader, Arkady Gukasyan, who is due to step down after holding the post for two five-year terms.
Bako Saakyan, a 46-year-old former head of Karabakh's security service who is openly supported by the incumbent, is the favourite. His main rival is the region's "deputy foreign minister" Masis Mailyan, aged 39.
"The authorities have declared their support for Saakyan. This means it is namely him who will become the next president," said a taxi driver in the Karabakh capital, Stepanakert.
Both leading contenders are adamant on the main issue -- full independence for Karabakh.
Saakyan says he wants to make the sliver of land and its 140,000 people "an example of democratic rule" to persuade the international community to recognise Karabakh's independence.
"Creating civil society is the way towards resolving the Nagorno-Karabakh issue," he has said during his campaign.
The Organisation for Security and Cooperation in Europe has been trying to broker a peace deal between Azerbaijan and Armenia since the 1994 ceasefire.
Mailyan said he hopes that eventual international recognition of Serbia's rebel province of Kosovo, populated mainly by ethnic Albanians, will create an important precedent leading to officially accepted independence for Karabakh.
"The Kosovo precedent, if it occurs and if international recognition finally takes place, is of interest to me because an unrecognised state will thus become recognised, irrespective of what its mother country has to say," Mailyan told Reuters.
"This means we have a chance to become independent -- according to a new scenario."
At least 25 percent of the enclave's 91,000 voters have to take part for the 8 a.m. to 8 p.m. (3 a.m. to 1500 GMT) election to be valid.
A candidate scoring more than 50 percent of the votes cast in the first round wins outright.