Ivory Coast's long road to peace

April 11, 2011 - 0:0

Ivory Coast is facing many huge challenges as Alassane Ouattara will inherit a divided country, an unsolved massacre and potential chaos in Abidjan. And cocoa and bond investors hoping for a swift return to normal could well be in for a bumpy ride.

A disputed November presidential election led to outright warfare between the rival presidential claimants, reigniting a civil war which had left the world's biggest cocoa grower mostly in limbo since 2001.
International sanctions imposed after Laurent Gbagbo refused to yield to the UN-certified winner barred him from deposits at the regional central bank, pushed his government into default on its debt and left cocoa rotting in warehouses. Commercial activity has all but ceased - and the economy is on the brink of collapse.
Despite questions over the killing of about 800 people in the western town of Duekoue as Ouattara forces advanced, the outside world is keen to help secure his rule. UN helicopters and French forces targeted Gbagbo's heavy weapons in the battle for Abidjan, but analysts say a greater threat comes from pro-Gbagbo urban militia who will retain their weapons if the incumbent president goes.
""In the short term, I think it will be very messy,"" said Hannah Koep, Ivory Coast analyst for consultancy Control Risks. ""Even if Gbagbo goes, his supporters are still very heavily armed and they will be very frustrated. The security situation in Abidjan is likely to be very unpredictable for some time to come. Beyond that, the challenges are monumental.""
Exports could resume relatively quickly, analysts say, but only after sanctions are lifted. An EU spokesman said that could happen as soon as power was transferred to Ouattara, a former prime minister and senior International Monetary Fund official.
""If you look at the way cocoa prices have fallen and bonds have rallied, you can see there is a market expectation things could get back to normal relatively quickly,"" said IHS Global Insight analyst Martin Roberts.
""Ouattara has always said his priority will be to put the country back together as quickly as possible ... but Gbagbo has probably tried to leave things in as much of a mess as he can.""
Ivory Coast defaulted on interest payments on a $2.3-billion bond earlier this year. The bond rose this week to its highest level since December on hopes that Ouattara victory could pave the way for repayment.
""That's a bit optimistic,"" said Graham Stock, chief strategist at Insparo Asset Management. ""The cost of the conflict is going to undermine the fiscal position for the new government. It's not obvious that debt servicing is going to be a priority.""
Ouattara's first objective will be securing the main city, analysts say - a task that requires him to keep divisions among his fighters to a minimum. Northern rebels have backed him, but strains could emerge once he is ensconced in the presidential palace or what remains of it.
The machinery of central government had been gradually returning to rebel areas, but it is unclear how much the recent conflict has set that process back. Abidjan, the commercial and political centre, has become a divided city, with Gbagbo's forces effectively kept out of Ouattara areas by sniping and occasional hit-and-run attacks.
In the short term, the situation is simply reversed, rendering reconstruction almost impossible. International banks already pulled out of Abidjan and other foreign firms have effectively ceased operations.
Tempting them back will be a challenge. In the longer term, much will depend on the outcome of investigations in Duekoue, where the UN says it has found a mass grave. Analysts say it is too soon to say what happened, with the area long prone to ethnic divisions and Liberian mercenaries' deeds.
""How much international support Ouattara enjoys depends a lot on what the end game itself looks like and what happens with the massacre probe,"" said Control Risks' Koep. ""If Ouattara's Republican Forces are implicated in atrocities it will make things much more difficult.""
Mandy Kirby, an analyst at political risk consultancy Maplecroft, said: ""In the next few months, there will need to be a real focus on building foundations of the rule of law. But Ivory Coast is an attractive investment destination."" (Source: timeslive.co.za)