* Madagascar could face world criticism after change of power * Foreign development aid could be frozen By Richard Lough ANTANANARIVO, March 18 (Reuters) - Madagascar risked criticism from around the world on Wednesday after a swift change of leaders that flouted the Indian Ocean island's constitution. The military's appointment of opposition leader Andry Rajoelina as president of a transition government followed weeks of violent street protests by his followers and a decisive show of force by the army on Monday. While President Marc Ravalomanana resigned, analysts said he had effectively been given no option. Under the terms of the constitution the head of parliament's upper house should have taken over and held elections within two months. Instead, Rajoelina, who at 34 is six years too young to be president according to the constitution, now heads a transitional government which has pledged to hold presidential elections within two years. "This turn of events is a severe blow for the country, the rule of law, and international donors (who will surely suspend development aid)," said Philippe de Pontet, Middle East and Africa analyst at Eurasia group. The African Union had demanded the constitution be respected "scrupulously" and the European Union had warned development could be frozen if Ravalomanana was forced out. The United States also threatened to cut off assistance if any "extra-constitutional" action was taken to end the crisis. "All sides need to search for a resolution consistent with the democratic process and the constitution," said State Department spokesman Robert Wood. The fact the army refused to take over, as Ravalomanana had requested, means the African Union may not brand the succession a coup. That would mean automatic suspension from the AU. But after recent coups in Mauritania and Guinea as well as the killing of Guinea-Bissau's leader, Ravalomanana's fall also raises doubts over the durability of other African democracies. That could further damage investor sentiment towards the continent, which had improved in recent years partly as a result of a decrease in the frequency of coups and a perception that democracy was becoming better entrenched. Still, some analysts said the departure of Ravalomanana would no doubt end the violence for now, and soothe the concerns of foreign investors in the important mining and oil sectors. "The transitional government will probably not take aim at foreign investors in the extractive industries, in part because it will be desperate for those revenues," said de Pontet. The political crisis killed at least 135 people and the country's $390 million-a-year tourism sector is nosediving in a country where many live on less than $2 a day. Some analysts said the importance of preventing Madagascar sliding further into poverty and chaos might soften responses from donor nations. "The international community has already said it won't accept a non-constitutional solution, but with so many people below the poverty line I can't see the international community abandoning Madagascar in the long run -- and (Rajoelina) knows this," said Lydie Boka at France-based risk group StrategieCo.
Madagascar's opposition leader Andry Rajoelina walks at the presidential palace in Antananarivo, March 17, 2009. Madagascar's President Marc Ravalomanana handed power to the military on Tuesday after a months-long power struggle ...
