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* Better local policing, effective laws needed
* Individuals and small groups present a new challenge
* Centralized intelligence, cutbacks hurt anti-terror fight
By Alexandria Sage and Chine Labbé
PARIS, Jan 28 (Reuters) - France needs more robust local policing, better intelligence sharing and the ability to infiltrate small radical Islamist groups if it hopes to fight new security threats at home, France's top anti-terrorism judge told Reuters.
Paris' centralized intelligence system - which for nearly two decades helped protect France from a major terrorist attack until a radical Islamist killed seven people last year - is designed to target organised groups like al Qaeda but not the new breed of individuals posing a threat, Marc Trevidic said.
"Today we're fighting groups that are much less powerful than before, who theoretically can't carry out really big attacks, but who on the other hand are much more difficult to detect," Trevidic told Reuters.
Trevidic's comments come as France's intervention in Mali to rid its former African colony of Islamist insurgents has prompted French authorities to increase security measures against a possible reprisal attack on its own soil.
Abroad, France has already provoked the ire of extremists. Islamist militants said an attack that killed 38 hostages two weeks ago on a gas plant in Mali's neighbour Algeria, another former French colony, was a response to France's intervention in Mali.
In France, insufficient local police surveillance, inadequate communication between local and national authorities, and cost-cutting at the law-enforcement and judicial levels mean that self-radicalised individuals may slip through the cracks of what was once considered a watertight system, said Trevidic.
"It's really a challenge and we don't really have the structure adapted to this evolution right now," said the outspoken magistrate, who arrived for the interview accompanied by two bodyguards.
In an example of what Trevidic calls the "individual jihad" threat faced by France, al Qaeda-inspired gunman Mohamed Merah shot dead seven people, including three children, in and around the southern city of Toulouse in March 2012.
Trevidic said the profile of that French-born radicalised Islamist, later shot by police, represented a new security challenge for France - how to identify individuals or small groups operating relatively independently.
Doing that is all the harder with France's hierarchical, centralised system that is still geared towards increasingly obsolete enemies - established international groups, such as pro-Palestinian groups in the 1980s or al Qaeda over the last decade, he added.
The country's intelligence system underwent even further centralization in 2008 after two domestic security agencies were merged.
France has long been a target for Islamist militants because of its colonial history in North Africa and difficulty integrating its large Muslim minority, which at five million represents Europe's largest.
France was the target of a number of attacks throughout the 1980s while in 1995, eight people were killed in bombings of the Paris Metro by Algeria's Armed Islamic Group (GIA) which tried to overthrow the Algerian government.
Until the Merah killings 17 years later, many in France believed its anti-terrorism system kept it relatively insulated from attacks seen elsewhere, such as the 2005 bombings in London and Madrid or the Sept. 2011 attacks in the United States.
"We were living under the idea that our system was infallible, that we'd found a magic potion and there was no problem anymore and that we were better than the others," said Trevidic, estimating that two attacks a year on average were thwarted before the Merah attacks.
Typically, France in the past focussed its intelligence manpower on cells of 20-30 individuals, Trevidic said, adding: "But if you have to fight against 30 little groups of three individuals each, you can't do that."
Trevidic's book "Terrorists: The 7 Pillars of Folly" describes challenges including the increasingly young age of the terrorism suspects to the long case backlogs.
The Merah case opened the floodgates to a wave of arrests, and at least 20 potential cases were later thrown out for lack of evidence, Trevidic said. Some laws passed in the wake of those attacks were similarly poorly thought out, he added.
"It's so French. There's a problem, we pass a law, and so everything's fine," he deadpanned.
He singled out as unworkable a bill introduced by ex-President Nicolas Sarkozy last year allowing police to arrest people who visit combat training camps in such countries as Pakistan or Afghanistan. Previously, they could only act when offences were suspected or committed inside France.
The measure became law in December.
Trevidic said that in practice, French authorities would be dependent on intelligence from other countries - some of them hostile - to build a case against a French citizen who in theory may never had committed any crime on French soil.
Trevidic suggested that the law be tightened against those in France who recruit minors to fight on their behalf.
But given the rise of "individual jihad" and the challenges for law enforcement, the French public will have to get used to the idea that a new Mohamed Merah could attack again, he said.
"100 percent success, 100 percent prevention, this just doesn't exist against any crime." (Writing By Alexandria Sage. Additional reporting by John Irish; editing by Mark John and Jon Boyle)