January 12, 2012 / 11:34 AM / in 7 years

FACTBOX-Key political risks to watch in Ivory Coast

ABIDJAN, Jan 12 (Reuters) - Ivory Coast President Alassane Ouattara’s ruling coalition won a landslide victory in Dec. 11 parliamentary elections boycotted by the opposition FPI party, boosting his hand in governing the war-scarred West African state.

It was the culmination of a year which saw the outbreak of civil war after ex-president Laurent Gbagbo refused to accept Ouattara’s 2010 poll victory, with some 3,000 people killed and a million fleeing their homes.

Gbagbo is being held at the Hague-based International Criminal Court on charges of crimes against humanity. His supporters want abuses by both sides to be prosecuted.

Despite signs of a faster-than-expected economic recovery and improved security, Ivory Coast remains a long way from re-gaining its role as the economic locomotive of the region.

Here are the main factors to watch:

POLITICS

Ouattara’s RDR party took 127 of the National Assembly’s 255 seats while the allied PDCI party of Henri Konan Bedie, a 2010 presidential candidate, took 77 seats.

While the overall impact of the result is to consolidate Ouattara’s power, it has also highlighted tensions in the ruling coalition of the two parties. PDCI officials have complained about electoral fraud they allege boosted the RDR score, and are pushing for greater weight in a re-shuffled government. The key issue is whether they can dislodge ex-rebel leader Guillaume Soro from the premiership, a post they say Ouattara has pledged to the PDCI.

What to watch:

- The future of Soro. After having tenaciously clung on to the prime ministerial position since 2007, Soro is an undoubted political heavyweight and widely seen as a future presidential candidate. If Ouattara grants the premiership to the PDCI, he may well look to keep Soro on board by backing him as president of parliament. Soro turns 40 in May, meaning he will pass the minimum age hurdle for the post.

- Coalition relations. The Soro question and the fraud complaints are putting new strains on the RDR-PDCI coalition. Dissatisfaction within the PDCI may prompt some to start making overtures to the pro-Gbagbo FPI opposition - opening up a new source of opposition for Ouattara.

- Political reconciliation. The FPI poll boycott showed how far Ivory Coast has got to go to create an inclusive political system. International observers see this as critical to lasting stability and are watching how Ouattara does on this score.

SECURITY

Efforts to restore the rule of law after five months of chaos are starting to take effect but security remains a concern. A newly launched military police has had some success in reducing the level of harassment of civilians by soldiers, and in Abidjan there are fewer of the informal police roadblocks common in the Gbagbo era, used to systematic extort money from motorists.

Ouattara has yet to convince all Ivorians he can restore law and order and is unlikely to do until the rebels have been properly integrated into Ivorian society. A gradual process of recruiting them into the regular army has begun.

What to watch:

- 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.

- Pro-Gbagbo elements hiding in neighbouring Ghana, including militia leader Charles Ble Goude, though they are not an imminent threat. Seka Seka, the bodyguard of Gbagbo’s wife Simone - thought to have been behind many killings of political opponents - was captured off a plane during a stopover in Ivory Coast on a flight from Guinea.

- Security in the volatile far west. Gunmen continue to operate in a region providing a fifth of cocoa output, rife with inter-ethnic conflict and awash with guns.

- Dutch diplomat Bert Koenders, who replaced U.N. mission chief Y.J. Choi, whose stand against Gbagbo marshalled world leaders to help end the crisis.

ECONOMY AND INVESTMENT

The crisis and foreign sanctions strangled the economy. Finance Minister Charles Koffi Diby forecasts the economy will have shrunk 5.8 percent in 2011, versus a 2.6 percent expansion in 2010. The IMF estimates 2012 growth at 8-9 percent.

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

Energy and mines minister Adama Toungara said in July the state plans to invest $500 million in power generation by 2015 and is making huge efforts to woo mining companies, mostly gold producers.

Randgold Resources inaugurated its Tongon gold mine in northern Ivory Coast in October. The mine started pouring gold last year and expects to reach its 270,000 ounces a year target by the end of this year.

Ivory Coast produced a record 1.5 million tonnes of cocoa in 2010/2011 and this season also started well. However, weekly volumes have started to drop due to unfavourable weather and the 2011/12 total is seen falling short of 2010/2011.

Ivory Coast 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.

Foreign investors remain cautious and many will want to wait to see if stability can stick. Ivory Coast said it plans to resume payments on its defaulted $2.3 billion Eurobond in June but it remains unclear when it will catch up with arrears.

What to watch:

- Cocoa. The planned re-regulation is a fundamental overhaul of the sector which could help define its fate, and help it avoid what some predict will be a slow decline. But cocoa exporters, whose cooperation is vital for the reform, are seeking changes to the plan.

- Eurobond. A $2.3 billion bond has been in default since late January 2011. Diby says Ivory Coast will resume repayments this year but investors are still waiting for a clear sign on arrears.

- Debt relief. Some 42 percent of Ivory Coast’s budget spending goes on servicing its debt. Ivory Coast is aiming to secure an IMF-backed accord on debt relief in the second half of this year but the IMF has said progress will depend on how it put in place the cocoa reform and other poverty-reduction measures.

- Tax collection. Former rebels are still collecting taxes in parts of the north they have run since the 2002-03 war. Steps to restore central government authority are crucial.

- Gold. The mines minister has said gold production capacity will almost double 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.

- 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.

- Bourse. The West Africa’s franc-zone BRVM bourse has returned to Abidjan after it was forced to close. The exchange lists stocks with a market capitalisation of $6 billion plus $800 million worth of bonds. ($1 = 513.3490 CFA francs) (Writing by Mark John; Editing by Ben Harding)

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