LISBON, Jan 10 (Reuters) - Long-serving Angolan President Jose Eduardo dos Santos is expected to confirm later this month that he will lead his MPLA party in a general election in the third quarter of the year.
This is unlikely to dispel intense speculation over a possible future successor to the 69-year-old leader, who is the second longest-serving ruler in Africa after Equatorial Guinea's President Teodoro Obiang Nguema Mbasogo.
With Dos Santos apparently ready to go ahead with a re-election bid, the focus is on the MPLA's choice for No. 2 on its candidate list for the election to be announced this month. This may signal the choice of a successor.
Anti-government protests last year showed that Angolan youths, inspired by uprisings in North Africa that toppled several leaders, are ready to take their grievances about human rights, social conditions and high unemployment to the streets.
But Angolan authorities have demonstrated they are willing to respond with force.
On the economic front, technical problems in oil production have led the government to slash its growth estimate for 2011, highlighting the need to diversify the economy.
Dos Santos strengthened his 32-year grip on Angola with a new constitution in 2010 that bolstered the presidency, but the MPLA's decision not to quash talk about a succession signalled that for the first time he may be considering a handover of power.
In September, the Angolan weekly Novo Jornal cited sources in the MPLA to report that Dos Santos had selected Manuel Vicente, the 55-year-old head of state oil company Sonangol, as his successor to take over before or after the election.
But the president said in November that he himself was "available to fulfil any mission for the party".
In December, Dos Santos re-appointed Vicente for another term as Sonangol CEO, leading observers to conclude he may have had second thoughts about the succession plan, possibly swayed by resistance from within the MPLA.
According to the constitution, the person in the first slot on the winning party's electoral list for a general election becomes president.
With Dos Santos expected to lead the party in the election, the key question concerns his choice for deputy. Possible candidates for the No. 2 job are reported to include current Vice-President Fernando da Piedade Dias dos Santos and several ministers. Vicente can not be ruled out either.
Analysts say that Dos Santos and his ruling party may well keep any plans for a succession under wraps until after they have secured an election win.
The main opposition UNITA party is in disarray because of a leadership dispute and the MPLA is favoured to win the election.
Watch out for:
- MPLA announcement of list of candidates for election
- Any comments from Dos Santos on succession plans
Several anti-government demonstrations staged last year showed that a burgeoning youth protest movement has not been deterred from voicing its discontent but also that the government is ready to clamp down on such dissent.
A rally in September resulted in violent clashes in the capital Luanda, leading to 24 arrests and injuries to protesters, journalists and police.
A court swiftly sentenced 18 of the protesters to up to three months in jail, drawing criticism from opposition parties and international human rights organisations. A second rally calling for those arrested to be released was blocked by police moments after it started.
The protesters scored a victory when a high court overturned the convictions in October. Two days later police blocked hundreds of youths from protesting in Luanda once again.
Inspired by the 2011 Arab Spring uprisings, the pro-democracy rallies have rattled the MPLA, which has responded with pro-government demonstrations. Senior party figures have accused the opposition of planning "a national insurrection".
Watch out for:
- Plans for more anti-government rallies, police reaction
The 2012 election will be only the second since the end of a 27-year civil war that pitted the Russian- and Cuban-backed MPLA against UNITA, which drew support from the United States and then apartheid South Africa.
The MPLA won the civil war in 2002, and then took 82 percent of the vote in a 2008 election. UNITA, split internally over its leadership, has little chance of winning the 2012 vote.
Senior UNITA figures in July demanded the resignation of party chief Isaias Samakuva, saying he had prevented the party from choosing its own leader freely.
He responded by suspending 12 of the dissenting members for 45 days, and called a party conference for December during which he was re-elected for another term. But analysts say the party remains divided and out of touch with most Angolans' concerns.
The internal struggle did not stop UNITA from manoeuvring for position against the MPLA, accusing it of stripping the national election committee of authority and transferring control of logistics to the government.
The parties reached a deal on the election law in December. However, although Dos Santos has promised a fair and transparent election, tensions could rise as the parties speed up their campaigns.
Watch out for:
- Details on elections logistics, oversight
- Rising tension in parliament before election
Dos Santos' government has long been accused of mismanaging oil revenues, avoiding public scrutiny and doing too little to fight graft. Transparency International ranks Angola as the 15th most corrupt country among 183 in the world.
Critics have also urged the government to reduce the huge influence of state oil company Sonangol, calling for an independent agency to ensure oil income trickles down to Angola's poor. An estimated two-thirds of Angola's 16.5 million people live on less than $2 per day.
New York-based watchdog Human Rights Watch last month urged the government to account for $32 billion in missing government funds, thought to be linked to Sonangol, which were spent or transferred from 2007 through 2010.
It cited an IMF report revealing that the spending and transfers were not properly documented in the budget.
In April, the usually tight-lipped government denied a report that funds equivalent to nearly a sixth of the annual budget - almost $6 billion - went missing in 2009, much of it via illicit "trade mispricing".
Dos Santos has become unusually vocal against corruption after his government turned to the IMF for a loan in 2009, but the government's decision-making process remains opaque, with access to key officials limited. The private media are also seen to be controlled by members of the government.
Watch out for:
- Government, Sonangol reaction to reported missing funds
- Government delivering on pledges to fight corruption
Lower-than-expected oil output in some fields due to technical problems forced the government to cut its growth estimate for 2011 to 3.4 percent from 7.6 percent.
However, the government expects the economy to grow 12.8 percent this year - a return to the fast pace enjoyed before the 2008 oil price slump - as oil fields come back on line and new projects start production.
Most analysts agree on double-digit growth estimates for 2012, but warn that downside risks include further technical glitches and a possible drop in oil prices and in demand amid a slowing global economy.
Still, international oil companies are undeterred from ambitious long-term investment in Angola, and last month signed deals to explore ultra-deepwater blocks which promise huge discoveries similar to those made off Brazil.
Central Bank Governor Jose de Lima Massano has won international respect since his appointment last year, particularly for stabilising the kwanza and cutting inflation to 11.28 percent in November from 15.3 percent at the end of 2010.
He has also introduced a benchmark interest rate to guide monetary policy, attain price stability and boost savings.
Watch out for:
- Oil output recovery in next months
- Monetary policy decisions to curb inflation
Oil has helped Angola pick up the pieces after a devastating civil war to become sub-Saharan Africa's third-biggest economy after South Africa and Nigeria.
Despite moves to diversify and invest in sectors such as agriculture, oil still accounts for 90 percent of Angola's export income but employs less than 1 percent of its people.
The IMF and rating agencies have warned that Angola is still too exposed to oil price fluctuations.
Should it fail to reduce its dependency on oil, it risks becoming another Nigeria, where quarrels about the distribution of wealth have fuelled civil unrest.
Watch out for:
- Diversification plans in 2012 budget (Editing by Pascal Fletcher)