UPDATE 3-Observers call Azerbaijan vote unfair, opposition plans challenge
* Monitors cite ballot-stuffing, flawed counting
* Re-elected president Aliyev thanks Azeris for support
* Opposition says it will take results to court
* U.S. says vote "fell short of international standards"
By Lada Evgrashina and Margarita Antidze
BAKU, Oct 10 (Reuters) - Opponents of Azerbaijan's President Ilham Aliyev said on Thursday they would go to court to challenge his election to a third term, rejecting the result of a vote that international monitors said was seriously flawed.
Aliyev, who succeeded his father a decade ago as leader of the oil-producing former Soviet republic, won a third five-year term with nearly 85 percent of the vote in Wednesday's election.
Standing before a national flag on state television, he thanked Azeris for their support and said he would ensure security in the South Caucasus, where tensions still simmer with neighbouring Armenia over a disputed territory.
Opposition candidate Jamal Hasanly said he aimed to challenge the official result in the Constitutional Court, alleging violations including ballot stuffing and multiple voting. "This election was neither free or fair," he said.
Aliyev, 51, has overseen an economic boom that has raised living standards in the Caspian Sea nation, which pumps oil and gas to Europe, bypassing Russia. He has allowed Washington to use it as a transit point for sending troops to Afghanistan.
But he has faced criticism at home and abroad over his treatment of opponents. Media are tightly controlled, protests quashed, and one rights group said a pre-election crackdown had doubled the number of political prisoners.
International monitors from the Organisation for Security and Cooperation in Europe (OSCE) said the vote was marred by a "restrictive media environment" and allegations of intimidation of candidates and voters.
"The limitations placed on the fundamental freedoms of assembly, association, and expression, the lack of a level playing field, the allegations of intimidation, all came in the lead up to an election day that our observers found to be seriously flawed," OSCE official Tana de Zulueta said.
Monitors reported clear indications of ballot-stuffing at 37 polling stations, and said the counting was assessed negatively at an unprecedented 58 per cent of stations observed.
An OSCE news conference degenerated into chaos as journalists from pro-government media drowned out the observers and shouted "The OSCE is biased."
The U.S. State Department said Washington agreed with the OSCE that the election "fell short of international standards". In a statement, it urged the Azeri government to respect freedom of peaceful assembly, association and speech and to prevent violence in the post-electoral period.
Hasanly, 61, a former lawmaker who has united Azerbaijan's fractured opposition for the first time in a presidential election, told journalists: "When (officials) announce the final official results of the election and declare Ilham Aliyev as the president, we will address the Constitutional Court with a demand to cancel the election results."
A gaping divide between the rich and poor and allegations of corruption, which Azeris say pervades many aspects of life, has led to an increase in unrest, and the opposition plans a rally on Saturday.
But few expect sustained protests over a vote whose results many saw as a foregone conclusion because of Aliyev's tight grip over the South Caucasus nation of 9 million.
Aliyev said he has reduced poverty drastically. But with an average monthly salary of 500 manats ($600), few Azeris can afford the designer boutiques and five-star hotels that dot the capital Baku, on the shore of the Caspian.
Rights groups say Azerbaijan's strategic location between Russia and Iran, its oil reserves, Europe-bound energy pipelines and support role for U.S. operations in Afghanistan have cushioned it from Western criticism.
Aliyev has dismissed accusations of human rights abuses and says Azeris enjoy full democratic freedoms. He won the presidency in 2003 and 2008 in votes that international observers said fell short of democratic standards.
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