The Economic Stakes of the Ivorian Standoff

The crisis of Ivory Coast seems to be far from an end as the incumbent president Laurent Gbagbo refuses to stand down and recognize himself as the loser of the runoff in November.

The president-elect Alassane Ouattara continues as a prisoner in a hotel in the center of the state’s capital Abidjan, while leaders of the West African states are paying visits to Gbagbo trying to talk him some sense into him, with no visible effect, however.

As the military intervention is closer than ever, violence in the streets continues between the security forces loyal to Gbagbo and the supporters of Ouattara.

More than ten people lost their lives in the clashes in the district of Abobo, in the capital city.

Even so, the incumbent president seems very little impressed with the situation and with the threats made by those who visit him to advise him to leave office.

Among them, Kenyan Prime Minister Raila Odinga was the one with whom went the hopes of those who are still expecting a smooth end of this standoff.

Odinga promised Gbagbo free passage and a peaceful retirement if he left office.

Gbagbo promised Odinga to lift the siege from around the hotel where Ouattara is being kept under the surveillance of the U.N. peacekeepers.

Odinga was confident Gbagbo began to see it his way. When he got home, he found out Ouattara was still under house arrest.

On January 17, the West African defense ministers will gather to decide what to do with Ivory Coast. The military intervention is on the table and is loudly advocated by important leaders like Odinga himself and the Senegalese president Abdoulaye Wade.

Ouattara himself demanded that the legitimate force enter Ivory Coast to make him president.

Gbagbo promised that if that came to pass, the international force would meet a deadly resistance. Analysts think he may not make empty threats.

On one hand, politically speaking, African Union cannot afford Gbagbo to ignore the result of democratic elections, otherwise he may be a “trend setter” for other incumbents who may see it as a way to stay in power until they got tired of it.

On the other hand, economically speaking, Ivory Coast is the No. 1 cocoa producer in the whole world, which would explain why West Africa is ready to go to such great lengths to ensure democracy is observed (their tenacity is commendable and could be inspirational even for countries in European Union, like Romania, for instance, where the presidential runoff in 2010 was decided pretty much the same way, with the difference that the then-incumbent remained in office to the present, and no military threat was made).

Christian Science Monitor is focusing on the importance of this particular thing: that Ivory Coast is the leader of cocoa production in the world.

The newspaper considers that the real war in Ivory Coast is being waged on the bank halls, and the winner is expected to be Ouattara, former deputy manager director of International Monetary Fund.

There are five aspects Christian Science Monitor is outlining, without the knowledge of which the understanding of the implications of this conflict may not be fully fathomed.

The first one is the dependence of Ivory Coast on the former colonist, France. The country has as currency the African CFA Franc, a banknote that is being used in the other countries of West Africa, and depends upon France.

The African Franc is being produced in the capital city of Senegal, Dakar. On Christmas Eve, the leaders of the Central Bank in Dakar told the press they no longer recognized Gbagbo as president of Ivory Coast.

For Gbagbo this announcement means more than any threats made by Odinga or the Ecowas to remove him by force.

If the Central Bank does not acknowledge him as president, he is practically cut off from the financial apparatus of his own country.

The second economic implication is that Ivory Coast owes money to other countries or international institutions.

A $29 million interest payment on a $2.3 billion bond was due December 31, and is still unpaid.

A spokesman for the incumbent president said that the money will be paid as soon as president Gbagbo was recognized as the rightful president.

Bearing in mind the first aspect related to the decision of Central Bank in Senegal, it is likely that Gbagbo couldn’t pay his debts even if he wanted to.

That brings up a third aspect, that of Gbagbo’s ability to pay his army and government. At the present time he seems supported by the army and the security services. What will happen when he no longer has money to pay them?

One of the assets that would explain how Gbagbo is still in power is that the country’s cocoa fields lie in the zones controlled by his supporters.

However, since the entire state apparatus is living off the cocoa production, it is to be expected that cocoa be smuggled at the Ghanaian border, where the people can earn twice for their product than in their own country.

In a desperate attempt to stay in power, Gbagbo is playing the card of autarky, trying to create a national currency, which would give him some room for further action.

Meanwhile, U.N. Secretary-General Ban Ki-moon warned that the developments in Ivory Coast could lead to a new war and advised the leaders of the country to refrain from any action that could escalate the situation.