December 1, 2010 / 11:59 AM / 7 years ago

FACTBOX-Key political risks to watch in Ivory Coast

ABIDJAN, Dec 1 (Reuters) - Ivory Coast's long delayed presidential election did not produce a clear winner in the first round, forcing President Laurent Gbagbo and opposition challenger Alassane Ouattara into a Nov. 28 run-off.

Now the country nervously awaits results of a poll meant to draw a line under the political crisis that has persisted since the 2002-2003 civil war, but which has also awakened old tensions and led to outbreaks of violence.

ELECTIONS

Gbagbo came out ahead in the first round with 38 percent of the vote compared to 32 percent for Ouattara. Both have vied for the 25 percent won by third-placed Henri Konan Bedie: he has endorsed Ouattara but it is not clear how many of his voters will follow his instruction.

The United Nations said the second-round was democratic despite some irregularities and outbreaks of violence. Yet the election commission has so far failed to provide meaningful partial results from the vote, with opposition accusing Gbagbo of blocking their publication because he knows he has lost.

Gbagbo's party has said it will challenge the results in the rebel-held north, where Ouattara did well in the first round, because of alleged intimidation by New Forces rebel soldiers.

Security forces deployed heavily on Nov. 30 around the election commission's office in Abidjan. Journalists who had been waiting for results inside the building were told to leave.

In theory, the deadline for publishing results is Wednesday.

What to watch:

- A major dispute over the outcome is now almost inevitable. Neither side is keen to accept to defeat despite repeated urgings from international partners that the results be respected. Gbagbo's camp has already made it clear they do not think the results from the north will be credible.

- The constitutional council. Ultimately it will be down this body to rule on any legal challenges to the result. Constitutional council President Paul Yao N'Dre is a staunch Gbagbo ally and member of his party thought likely to rule the way the president wants. He overruled opposition challenges to the first round within three days of the provisional results.

- Unrest. Both rival camps are able to mobilise supporters onto the streets, with unpredictable consequences. Five members of the security forces and at least seven others were killed in violence in the run-up to the vote, according to reports.

- The role of the army. After the Nov. 28 vote the military began withdrawing 2,000 soldiers from northern rebel-held zones to redeploy them in Abidjan. The significance of the move was not immediately clear. But it would imply that is where authorities see the flashpoint. Security forces deployed around the election commission's office on Nov. 30 as it was due to begin announcing partial scores.

- The impact on financial and cocoa markets. Any outcome seen creating stability could provide a solid base for increased cocoa sector productivity and attract fresh investment. However in the short term ,tensions surrounding the vote have prompted some cocoa exporters to suspend trade, a factor which helped push cocoa futures prices higher after the vote.

ECONOMY

The World Bank and IMF have praised Ivory Coast's steps towards balancing its budget and clearing defaulted debt.

Ivory Coast is nearing the completion point for billions of dollars of debt relief and has issued Africa's biggest Eurobond CI049648839=, $2.3 billion, swapped for defaulted debt.

Growth was sluggish for years, but picked up as cocoa hit 30-year highs. Analysts forecast 4.5 percent growth next year.

What to watch:

-- Debt relief. The World Bank has tied relief of $3 billion of Ivory Coast's external debt, which it estimated at $12.5 billion in 2008, to elections. IMF officials say Ivory Coast is meeting the fiscal and macro-economic requirements, but more work remains to be done. [ID:nLDE68S222]

-- Eurobond. The bond is due in 2032 and is listed on the Emerging Markets Bond Index (EMBI). It underperformed peers, but its yield has eased to around 10 percent with the poll. Standard Bank thinks a peaceful vote will take it down to 7 percent.

Longer term, there is the possibility of default in a nation with a history of it. Analysts say 50 percent default risk has already been priced in.

-- Budget. The government revised its 2010 budget expenditure in October to 2,896 billion CFA francs ($5.95 billion) from 2,481 billion francs previously, driven up partly by costs of the peace process. Most analysts expect a deficit.

-- Rackets. Armed men in uniforms rule the streets. The Chamber of Commerce says racketeering by army, police, customs and rebels costs business up to $600 million a year.

COCOA

Despite fears that the crisis would dent supplies, the flow of cocoa from the world's top grower has largely held up, although closures for the electoral period and a dispute with farmers over prices have slowed what ought to have been a bumper crop.

Longer term, the lack of investment in supporting farmers and renewing ageing plantations over the past eight years is starting to take its toll. The sector's administrators were sacked in 2008, leaving an interim body in charge.

What to watch:

-- Temporary shutdowns. During the first round, cocoa exporters and shippers took much of the week following the election off, fearing widespread violence when the results were announced. The same has happened after the second round -- the question will be, for how long?

-- Volumes. A pre-election surge in arrivals took the official tally to 332,007 tonnes by Nov. 21, ahead of the some 321,000 tonnes at the same point in the previous season. So far, markets have not been spooked by the unrest and analysts have not raised major concerns about a disruption in supplies.

-- Fears over long-term structural decline have given rise to estimates of future crops as low as 700,000 tonnes.

-- Delays in reforms. The reform committee is behind schedule and proposals will take time, even if the winner starts implementing them immediately. Proposals by Gbagbo's side include returning to state price stabilisation. Ouattara has a similar policy. If donor demands for lower taxes are met, farmers will earn more, which would encourage more cultivation.

-- Advances such as disease-resistant cocoa or fertiliser subsidies could help stem the decline in production.

INVESTORS

While other countries in West Africa endured years of post-independence turmoil, Ivory Coast, under the watchful eye of France, became the region's biggest economic success.

However, the so-called 'Ivorian Miracle' was built on cocoa, now in decline, and the crisis scared investors, though some remain, led by hardy Lebanese and French.

The nation hosts West Africa's franc-zone BRVM bourse .BRVMCI and remains a hub for finance, industry and shipping.

What to watch:

-- Gold. Randgold Resources (RRS.L) poured its first gold from its Tongon mine in November. The government wants to diversify away from cocoa. A government forecast seen by Reuters puts gold output at 11.7 tonnes in 2010, up two-thirds on last year. Canada's Etruscan Resources EET.TO and Australia's Equigold have permits. Some 100 requests are being considered.

-- Agriculture. Despite falling cocoa volumes, there remain opportunities not only in cocoa but also rubber and other crops. Coffee and cotton production fell after the war, as they grow in rebel zones. If polls unify the nation, they could take off.

-- Oil. Ivory Coast produces 50,000 barrels per day from three fields operated by Canadian Natural Resources (CNQ.TO) (CNQ.N). Offshore may hold fields such as Ghana's huge Jubilee reserve, but little exploration is going on, partly because firms have their hands full with other regional finds.

-- The BRVM. The index is worth just over $6 billion, with another $800 million of bonds, but volumes are small. Though it was hit hard during the global crisis as foreign investors withdrew, it is generally isolated from world markets.

(Editing by Giles Elgood) ((tim.cocks@thomsonreuters.com; Abidjan Newsroom +225 05377550))

For political risks to watch in other countries, please click on [ID:nEMEARISK]

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