Main political risks in Ivory Coast

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Ivory Coast is working to put a decade of political crisis and economic stagnation behind it with ambitious economic reforms and heavy investment in infrastructure aimed at restoring its status as a West African economic motor.

A revival is under way with help from western donors, and healthy growth is expected for several years to come.

But reconciliation lags following a brief but brutal civil war that erupted in the wake of former president Laurent Gbagbo’s refusal to accept the 2010 poll victory of his rival, Alassane Ouattara, now in power, Reuters reports.

A series of deadly attacks on villages in the country’s volatile west and the government’s claims on June 12 that it had foiled a coup attempt by exiled military officers underscore concerns over stability in the top cocoa grower.

Here are the main factors to watch:

POLITICS

Ouattara’s RDR party consolidated power with a landslide victory in December’s parliamentary polls, taking 127 of the National Assembly’s 255 seats. He has so far satisfied the expectations of both his political allies and the northern rebels whose military support allowed him to take office.

However, Gbagbo’s FPI political party boycotted the vote and attempts to launch talks to bring his supporters back into the political mainstream have stalled.

Former rebel leader Guillaume Soro was in March elected speaker of parliament, becoming next in line to the presidency. Ouattara appointed Jeannot Ahoussou-Kouadio, a veteran politician from the PDCI, to the post of prime minister. This was part of an agreement under which that party’s first-round presidential candidate, Henri Konan Bedie, throw his support behind Ouattara before the 2010 run-off.

What to watch:
– Political reconciliation. Gbagbo’s FPI has shunned several overtures from Ouattara’s administration to rejoin the political mainstream, including an offer last year of posts in the new government, underscoring how far Ivory Coast remains from an inclusive political system.
– FPI leaders have agreed in principle to direct talks with the government, seemingly abandoning a demand that Gbagbo be released from the International Criminal Court and that other party leaders in custody be freed as preconditions for dialogue.
– Recent events, including the arrest of one of the party’s top exiled leaders in Togo, could endanger the scant progress made so far. And any further ICC arrest warrants for the FPI leadership, still a possibility, could be a death knell.
– With parliament now in session, legislators must tackle some delicate issues at the heart of the Ivorian crisis, including controversial laws on nationality and land ownership.

SECURITY

Ouattara’s security forces had largely succeeded in restoring peace in most of the country.

Yet recent attacks along the western border with Liberia reminded Ivorians of the risks that remain. Seven United Nations peacekeepers were killed in one such attack in early June.

Thousands of pro-Gbagbo fighters and Liberian mercenaries, who fought on behalf of the ex-president, slipped across the border into Liberia following Gbagbo’s capture in April 2011.

New York-based Human Rights Watch has said those forces are launching cross-border raids, and Ivory Coast’s government said the gunmen who killed the peacekeepers and 10 civilians came from Liberia. Monrovia has not confirmed these reports.

The discovery of an apparent coup plot by exiled officers and a former Gbagbo adviser underscore the threats.

What to watch:
– Security in the far west. The Ivorian military and the country’s U.N. mission have reinforced security along the border, as have the Liberians and their peacekeepers. But the frontier is porous and their capacity to patrol it and avert attacks is limited.
– The Ivorian government would like to deal with the threat posed by pro-Gbagbo exiles once and for all. More arrests and extraditions are likely. But Ouattara also wants a solution to the armed threat across the border in Liberia, and defence authorities have already hinted they plan to send in troops.
– Military reforms. Diplomats are pressing Ouattara to disarm former rebels and slim down the array of security agencies. Success will hinge on his ability to break up fiefdoms and bring former foes into disciplined units.

ECONOMY AND INVESTMENTS

Strangled by the crisis and foreign sanctions, the economy contracted by 4.7 percent in 2011. The IMF estimates 2012 output to grow at 8-9 percent. Further growth will depend on the successful implementation of key reforms.

Ivory Coast received the equivalent of 5 percent of GDP in aid in 2011 and spending is geared to “big project” reconstruction. A third bridge over Abidjan’s lagoon will be built by France’s Bouygues, at a cost of 227 million euros ($285 million), to ease congestion.

The government has plans to invest $500 million in power generation by 2015 and is making efforts to woo mining companies, mostly gold producers.

Ivory Coast produced a record 1.5 million tonnes of cocoa in 2010/2011. This season started well but weekly volumes have started to drop due to unfavourable weather and the 2011/12 total is seen falling short of 2010/2011 on what is expected to be a weak April-to-September mid-crop harvest.

The government has announced its intention to return to a price-regulated system to guarantee minimum prices to farmers, a key condition for its hopes of winning IMF-backed debt relief. It launched forward-sales as part of that reform on Jan. 31.

Foreign investors remain cautious and many will want to wait to see if stability can stick.



What to watch:
– Cocoa. The planned re-regulation is a fundamental overhaul of the sector and could help it avoid what some predict will be a slow decline. While buyers are now participating in daily auctions, major questions concerning pricing scales and quality assurance remain.
– Debt relief. Some 42 percent of Ivory Coast’s budget spending goes to service its debt. Ivory Coast is aiming to complete an IMF-backed deal on debt relief, and, despite delays linked to slow progress with cocoa reform, the IMF has said it is on track for a decision by the end of June.
– Eurobond. Once a deal on debt relief is secured, Ivory Coast is expected to resume repayment of its $2.3 billion bond which has been in default since January 2011.
– Tax collection. Former rebels are still collecting taxes in parts of the north they have run since the 2002-03 war. Loosening their control of diamond mines and key routes used for smuggling other goods throughout the region will be crucial.
– Mining. The mines minister has said gold production capacity will rise to 13 tonnes a year by 2013 from current annual output of 7 tonnes, and pledged to make it much easier to obtain exploration permits. The government is required to draw up a new mining code as a precondition for debt relief.
– Oil. Five to seven exploratory drillings are currently planned, after a decade of stagnation. The country currently pumps 40,000 bpd but is thought to have vast untapped reserves offshore. A revised petroleum code could attract new companies to the under-exploited sector and possibly weed out a number of inexperienced operators who used political connections to acquire stakes during the Gbagbo years.
– Bourse. West Africa’s franc-zone BRVM bourse has returned to Abidjan after being forced to close during the crisis. The exchange lists stocks with a market capitalisation of $6 billion plus $800 million worth of bonds.