By William James and Kylie MacLellan
LONDON (Reuters) - When the once mighty Scottish Labour party selects a new local boss on Saturday, national party chief Ed Miliband will be holding his breath: The decision could make or break his chances of winning power in wider Britain.
The winner of Scotland's Labour crown will have to unite the divided party while attempting to tackle Scottish nationalists who have seen support surge since Scots voted not to quit the United Kingdom in a Sept. 18 independence referendum.
At stake are precious Labour seats in the May 7 national election that polls indicate will be the closest in a generation.
If Labour stumbles in Scotland, it could scuttle Miliband's hopes of unseating Conservative Prime Minister David Cameron or force Miliband to seek support from arch rivals in the Scottish National Party (SNP) to allow for a minority Labour government.
"Labour is plainly in trouble in Scotland," Peter Kellner, president of polling firm YouGov, told Reuters. "If the SNP break through and take 20 or more Labour seats then it makes it very, very hard for Ed Miliband."
An opinion poll in October showed the surge in support for the SNP could leave Labour with just four of Scotland's 59 seats in Britain's parliament, compared with the 41 they won in 2010.
The referendum, in which Labour joined forces with Cameron's Conservatives in the fight to stop Scotland ending its 307-year union with England, exposed the cracks in Labour's Scottish stronghold.
Labour's failure was laid bare when it was left to former Labour prime minister Gordon Brown, rather than the local party, to rally fellow Scots against independence. Brown, 63, is now stepping back from frontline politics.
Enter Jim Murphy, a Glasgow-born 47-year old Labour lawmaker who Miliband once demoted. Murphy's fiery speeches and sleeves-rolled-up style propelled him into the media spotlight during the pro-union campaign.
Murphy toured the streets of 100 Scottish towns, hosting often difficult debates from atop an upturned crate of Irn-Bru - the bright orange fizzy drink popularly referred to as "Scotland's other national drink", behind Scotch Whisky.
If the referendum exposed Labour's weakness in Scotland, the leadership battle in Scotland has exposed some of the Labour party's national demons.
Murphy is the favorite and has the support of elected Labour members but he has opponents. He is, for example, considered a follower of deeply unpopular former Labour prime minister Tony Blair.
The unions have backed Murphy's main rival, Neil Findlay. A former bricklayer and member of the devolved Scottish parliament, Findlay has a lower public profile but sits on the left wing of the party.
Miliband, 44, has been coy about where his support lies.
A victory for Findlay might help soothe Miliband's fractious relationship with his trade union financial backers and align more comfortably with the left-leaning agenda he is promoting to try and win in May.
But party figures concede that while Murphy sits somewhat to the right of the Miliband politically and the two are not close friends, his brand of heart-on-sleeve pro-union patriotism may help reconnect with lost voters.
The leadership of the Scottish Labour party will be announced on Saturday morning, determined by a ballot of three electoral colleges - the trade unions, elected Scottish Labour politicians, and the party's grassroots members in Scotland.
Whoever wins the contest, Labour's man in Scotland will have to both convince voters that Labour will keep its promise to give more powers to Scotland and seek to grab control of the electoral agenda.
"It's going to be very tough," said John Curtice, polling expert and politics professor at Strathclyde University.
(Editing by Guy Faulconbridge/Jeremy Gaunt)