A week of fierce gun battles between forces backing Laurent Gbagbo and his rival Alassane Ouattara in a dispute over the presidency may bring the prospect of civil war in Ivory Coast ever closer.
A political stalemate over the disputed November poll has plunged the world's top cocoa grower into violent turmoil, as pro-Ouattara insurgents have seized control of parts of Abidjan and rebels running the north took a town in Gbagbo territory.
U.N.-certified results showed Ouattara won by 8 points but Gbabgo has refused to concede -- defying international pressure, Western sanctions and threat by West African leaders to use force to oust him if he does not step down.
Five presidents under an African Union mandate have given themselves an extra month, until the end of March, to come up with a solution, but with AK-47 and heavy weapons fire echoing through Abidjan on a daily basis, few hold out much hope.
Political violence has killed well over 300 people -- diplomats think the real figure may be a multiple of that -- and spawned some 130,000 refugees, 70,000 of them fleeing across the border into Liberia. Here are the main risks:
VIOLENCE ESCALATING
Despite mediation efforts, both sides are entrenched, with Ouattara accepting only Ggagbo stepping down and he refusing.
Although enjoying almost unanimous international backing, Ouattara and the government he has named remain constricted to a U.N.-protected hotel, which is blockaded by the security forces.
Gbagbo may be under U.S. and EU-imposed sanctions but he controls the main government buildings. Attempts at protests by his supporters were crushed. An armed uprising has destablised parts of Abidjan and clashes erupted between pro-Gbagbo forces and rebels controlling the north since 2002-3 civil war.
What to watch:
- A week of fighting with AK-47s, machine guns and heavier weapons in the northern suburb of Abobo has left insurgents in control of much of it and sporadic fighting has spread to other parts of Abidjan, including Koumassi, in the south.
- An unknown quantity are the army defections and desertions from Gbagbo's camp, which are believed to be weakening his base.
- Responding to a call by Gbagbo's youth leader Charles Ble Goude to help fight the insurgency, his "Young Patriots", angry youths armed with sticks, machetes and guns, have set up roadblocks everywhere. Some suspected rebels have been killed by mobs and motorists are sometimes robbed at these checkpoints.
- Fighting has also resumed in the west, a tinderbox of ethnic and land tensions, between pro-Gbagbo forces and allied militias. The rebels seized control of the small town Zouan-Hounien from across the ceasefire line last week and sporadic skirmishes have continued since.
- Whether the clashes will fizzle out into a new stalemate or tip Ivory Coast back to all out war is hard to say.
THE INTERNATIONAL DIMENSION
Few African poll disputes have attracted international attention like this. Gbagbo's inviting the U.N. to certify results, and then defying them brought condemnations from the U.N. Security Council, EU, United States and African leaders.
Rhetoric by Gbagbo's officials and state TV has denounced what they term an international conspiracy, led by Western powers, with the complicity of African nations. Foreigners are increasingly attacked by pro-Gbagbo youths.
What to watch:
- The United Nations mission is also under attack by the pro-Gbagbo military and Young Patriot civilians, whose strategy appears to be to provoke them into opening fire in order to spark a backlash, as with French forces in 2004.
- U.N. sources say two helicopter gunships they urgently needed have now arrived, which they believe to be a "game changer" in giving them superiority over hostile forces.
- ECOWAS has threatened to use force to oust Gbagbo, but many doubt the viability of this. Nigeria's Foreign Minister Odein Ajumogobia says that would need to be U.N.-led and would be more likely to involve an aerial and naval blockade than deploying troops to its cities.
- Angola was formerly a staunch Gbagbo ally, but is wavering. Angolan officials told the AU Gbagbo had requested money last month but they refused him.
- Meanwhile, an AU set up a panel of five heads of state -- from South Africa, Tanzania, Mauritania, Burkina Faso and Chad -- has yet to come up with a solution to the crisis.
- For now, the AU has not back-tracked on its decision to recognise Ouattara, but it is unclear what it can come up with that is more appealing than exile and immunity already offered Ggagbo. South African president Jacob Zuma is thought to favour a compromise like power sharing or a recount. There is talk the AU could propose a new poll, which is unlikely please anyone.
COCOA
This year's crop from the world's top grower appears to be a bumper one, but most exporters are unable to ship any out. A ban ordered by Ouattara on all new registrations for exports after Jan. 24 and EU sanctions on the port and the regulatory body have created turmoil and exports are greatly reduced.
Stocks of unexported cocoa at ports in top grower Ivory Coast reached 433,296 tonnes by Feb. 7, Coffee and Cocoa Bourse (BCC) data obtained by Reuters showed.
Fears of unrest have driven futures to 32-year highs.
What to watch:
-- The Gbagbo government has called on exporters to ignore the ban and threatened to tax them on stocks regardless, but it looks like exports are set to dry up, as there are few ships, little cash and no one wants to be seen violating sanctions.
-- The market will closely watch how beans already cleared for export actually leave the country's two ports. Exporters estimated arrivals last week at just 1,000 tonnes.
-- This raises the question of what happens to the rest, forecast overall at around 1.3 million tonnes. Smuggling out through Ghana, Liberia and Togo, via Burkina Faso, is rising.
-- Fears over long-term structural decline, caused by the lack of investment and reform in the sector, have given rise to estimates of future crops as low as 700,000 tonnes.
ECONOMY
Violence, instability, an international bank exodus and sanctions on cocoa have sent the economy into a tailspin.
A huge liquidity crisis ensued when pro-Gbabgo forces seized control of the local branch of West Africa's central bank, in retaliation for it no longer recognising his government, forcing it to cut off the country completely.
International banks closed up shop one after the other last month, complaining of problems clearing cheques and physical threats by pro-Gbagbo forces.
Gbagbo forcibly nationalised two French banks in the middle of last month and promised to re-open them to pay civil servants salaries, but has failed to do so yet.
Years of crisis left growth at close to zero since the civil war, but it picked up late last decade. Analysts now think the economy will contract sharply until the crisis is resolved.
What to watch:
-- Economic colapse? Sanctions -- ranging from EU measures against the port and cocoa bodies to regional leaders cutting off Gbagbo's access to the central bank -- are starting to bite.
These measures will make life harder for ordinary Ivorians as cash and imports dry up, potentially leading to unrest.
-- New Currency. Gbagbo's camp is looking at the possibility of pulling out the West Africa CFA franc zone as a way around restrictions. Analysts question the viability of any such move, which would also have a spillover across the region.
-- Eurobond. Ivory Coast defaulted on a coupon payment on a $2.3 billion Eurobond in late January, sending its yield soaring and freezing itself out of debt markets. The bond is listed on the Emerging Markets Bond Index (EMBI).
-- Bourse. The nation hosted West Africa's franc-zone BRVM bourse, but it was forced to close after pro-Gbagbo soldiers invaded its offices. It re-opened in Mali on Tuesday, but may well move back if the crisis is resolved. It is worth just over $6 billion, with another $800 million of bonds.
-- Debt relief. Talks with the World Bank and IMF to slash $3 billion off Ivory Coast's external debt are suspended. If Ouattara takes power, though, they could easily restart.
-- Gold mining firms, including Randgold Resources and Newcrest Mining, say the crisis hurt operations.
-- Oil. Ivory Coast produces 50,000 bpd from three fields operated by Canadian Natural Resources and does not so far affected by sanctions yet. Offshore may hold more oil but little exploration is going on.
source: http://www.forexyard.com/en/news/Key-political-risks-to-watch-in-Ivory-Coast-2011-03-03T083907Z-FACTBOX
