Saturday, January 22, 2011

L'Abidjanaise, Part 6

Côte d'Ivoire... the crisis just keeps coming up "money" (and cocoa beans and other resources worth money).

From Renegade Ivory Coast leader Gbagbo won't pay off debts, say opponents, by Drew Hinshaw, January 19, 2011 (link in original is reproduced here):

Alassane Ouattara, the former International Monetary Fund economist that just about every world leader recognizes as Ivory Coast's president-elect, doesn't think his opponent will ever pay his bills.

Specifically, he doesn't think renegade President Laurent Gbagbo, who refuses to concede defeat in the country's Nov. 28 election, will honor the $29 million dollar payment that Ivory Coast owes its debtors by Jan. 29.

"If they wanted to pay, they would have done so," Mr. Ouattara told Bloomberg yesterday. He also said Mr. Gbagbo's administration has recently withdrawn millions of dollars "to pay salaries, to pay mercenaries, and to take money out of the country instead of paying what they have to pay to the London Club, so clearly they have no intention of paying," referring to the group of creditors who hold Ivory Coast bonds.

Telling the world's investors that they are not going to get paid for the loans they made to somebody tends to get people excited.

As a result of this, it is looking like there will be military intervention to replace President Gbagbo with internationally-recognized President-elect Ouattara. From As Ivory Coast stalemate worsens, so do the chances of military intervention, also by Drew Hinshaw, January 18, 2011:

At least 247 people have died since Ivory Coast's Nov. 28 election, which was supposed to end a 12 year conflict in the world's top cocoa producer. At least 49 people have disappeared, and those whisked away to secret prisons may number in the hundreds.

Those are the latest numbers from a United Nations mission that has been firebombed, shot at, and increasingly understood as an occupying army by defenders of Laurent Gbagbo, the renegade president who has escalated his refusal to concede electoral defeat into a once-in-a-generation-battle for the sovereignty of this former French colony.

And last week, the UN announced from Geneva that its agents have caught word of – but been blocked from visiting – a third mass grave, this one stuffed with 80 bodies buried less than 50 miles from the Liberian border; a line that 25,000 everyday Ivoirians have crossed since November, searching for a country where sporadically violent house searches, attacks on UN convoys, and tire-fire road blocks manned by gun-waving extortionists aren't the new norm.

"The question now being discussed within the UN is the urgency of military intervention, not only to protect UN peacekeepers," said UN High Commissioner for Human Rights Navi Pillay, who tried Rwandan war criminals in the 1990s.

So, the immediate crisis being peddled to the international community is one of allegations of mass graves and government brutality. Of course, this kind of approach didn't get any effective UN intervention in other crisis areas in Africa. But the underlying issue is accusations of government defaults on international loans, and money does get people in power excited and ready to intervene.

As a result of the instability, the price of Côte d'Ivoire's government bonds has varied considerably in recent weeks. From Negotiations trump armed intervention in Côte d'Ivoire, dated January 12, 2011:

Côte d'Ivoire 's 2,3b n in Eurobonds recorded their biggest jump on record yesterday after the finance ministry told bondholders it was "taking all necessary measures" to pay a 29m coupon payment that it missed on December 31.

The bonds rose 10,7% to 41,938c on the dollar yesterday in Abidjan, according to data compiled by Bloomberg. The government has a 30-day grace period to pay.

Côte d'Ivoire , the world's top cocoa producer, "does not have any other option than taking into consideration the commitments taken in the past", Ahoua Don Mello, a Gbagbo spokesman, said by phone from Abidjan.

Mr Ouattara refused to enter talks with Mr Gbagbo last week, telling the UK's BBC that an Ecowas-led military intervention would come "sooner than you think". Bloomberg

Interesting how Ouattara was confident in an imminent international intervention that would install him as President, even though, as we saw in Part 5, Ouattara himself approved of the Constitutional provision that made him ineligible for the presidency of Côte d'Ivoire.

It was recently predicted that Côte d'Ivoire's bonds might see some buying activity, considering how the price had gone down, and was then expected to rise again. From Ivory Coast Bond Yields May Top 20% on Crisis, Renaissance Capital Says, by Chris Kay, January 4, 2011:

Ivory Coast's dollar-denominated bond yields may rise to more than 20 percent as the country will prioritize paying state workers over bondholders, according to Renaissance Group.


A yield above 20 percent "is probably where you can start seeing some specialist buyers come in potentially to look at opportunities," said [David] Damiba [managing director in London for Renaissance Asset Managers, a unit of Moscow-based Renaissance Group], who doesn't hold Ivory Coast bonds. "Fifteen percent, considering what's going on down there, is actually not pricing risk in my view. Should the situation move a little bit I could participate."

Now, to exasperate the financial crisis, Gbagbo has lost access to his country's money, which is kept in a bank outside the country. From Ivory Coast: Regional bank ally of Laurent Gbagbo quits, January 22, 2011:

A key ally of Ivory Coast's disputed leader Laurent Gbagbo has resigned as head of the Central Bank of West African States amid regional pressure.

Governor Philippe Henri Dacoury-Tabley, an Ivorian, quit after a bank meeting on Saturday.

The bank said he had failed to implement an order to no longer accept Mr Gbagbo's signature for funds.

The internationally recognised new president Alassane Ouattara has been asked to designate a new bank chief.

Keep in mind how this crisis was generated. Recall from Part 5 concern of voter fraud. Skipping down in Ivory Coast: Regional bank ally of Laurent Gbagbo quits:

The country's electoral commission said Mr Ouattara had won - a position backed by the UN mission in Ivory Coast, which helped organise the poll.

But Mr Gbagbo's supporters said that the New Forces rebels who control the north had rigged the poll in favour of Mr Ouattara.

The Constitutional Council, headed by an ally of Mr Gbagbo, then annulled votes in these areas and declared Mr Gbagbo the winner.

These allegations were detailed in Manufacturing a president in Cote d'Ivoire from late in 2010:

The independent electoral commission during these past elections was composed of a total of 461 members, out of which only 42, that is 9 percent, are pro-Laurent Gbagbo, who is Cote d'Ivoire's incumbent leader. And that is 91 percent, are pro-Alassane Ouattara and the opposition.

The president of the commission, Youssouf Bakayoko, is pro-Ouattara. To offset this imbalance, it was agreed upon that the commission function by consensus and that ballots should be counted both manually and electronically.

The country's constitution stipulates that the electoral commission should announce the temporary results consensually agreed upon within 72 hours. The Constitutional Council is the only legal authority that will announce the final results, taking into account all irregularities and complaints. It is important to note that the government did disarm all militias in the southern zone under its control. The rebel forces in the north of Cote d'Ivoire did not disarm.

The current deadlock in Cote d'Ivoire stems from the massive fraud that the electronic tally-ups revealed from the votes in the areas of the country still under the control of the armed rebellion. The voting records submitted from these areas showed that there were more voters than were registered.

And, from the testimonies of African election observers, accredited by the Independent Electoral Commission, voters were intimidated, pro-Gbagbo voters were physically attacked (including cases of murder), and ballots were being supervised, stuffed, and carried by rebel forces, contrary to election rules. The tally-up of the Bandama voting district under the control of the rebellion was a textbook showcase of vote rigging and a well-defined example of where the electoral commission was having problems finding a tally consensus.

Apparently, the Constitutional Council did exactly what it was supposed to do in not certifying an election result reported by the Independent Electoral Commission. In fact, observers accredited by the commission were among those reporting rampant abuse - including concerns about voting machines (something many American citizens can relate to) and "Chicago-style" politics wherein more votes are tallied than there are registered voters (not to mention murder, rape and intimidation of pro-Gbagbo voters).

So, in the wake of the agreement to end the previous civil war, Ouattara's forces refuse to disarm as they are supposed to, then are accused of voter fraud in the area they control. This, then, allows an election where Ouattara is declared the winner by a commission packed with his supporters, which, in turn, provides the pretext for the international community to declare Ouattara the winner.

Next, the international community cuts off Gbagbo's access to the country's money, and accuses him of not wanting to pay the country's debt.

Mix in accusations of brutality on the part of Gbagbo's people, overlook similar accusations against Ouattara, and we have the stage set for the international bankers to install their guy in charge of the world's main supply of cocoa beans, the third largest supplier of coffee, plus some diamond, gold and petroleum reserves thrown in for good measure.

Oh, and the potential money to be made by trading in billions of dollars and billions of euros worth of Ivorian government debt... you know, once the price gets down to a certain level, many funds that hold those bonds sell automatically, or are required to sell; people in the know, like Mr. Ouattara and the people backing him, can make a killing.

Finishing Renegade Ivory Coast leader Gbagbo won't pay off debts, say opponents:

Perhaps the best treasury bond buy around

That said – if you're the gambling type – today might be the day to purchase Ivorian treasury bonds.

Right now, the slips of paper are fetching dismal prices in whatever weird nooks of the financial universe such instruments are sold. In 10 days, when the country misses that $29 million payment, they could be next to worthless. Yet Standard Bank and the Economist Intelligence Unit are both recommending that traders take a second glance.

If and when Ouattara finally unpacks into the country's presidential palace, those bonds "would go to levels above where they were before" the election, a Standard Bank economist told Bloomberg.

It's a sign that outside of Ivory Coast, those who have the most to gain or lose from its crisis – the people who own its debt – see Gbagbo as a marked man; a former history professor carving his way into the subject he used to teach.

Concluding with Manufacturing a president in Cote d'Ivoire:

In addition to those tally irregularities, the spokesperson of the Independent Electoral Commission, acting without the consensus of (and in spite of the objections of) the Constitutional Council, unilaterally invalidated all the absentee votes from the 28 districts of France (nominally because of fighting among Ivorians in three voting areas in Paris) in both the initial election and the run-off election.

These votes, as well as the voting irregularities in the northern region of Cote d'Ivoire, where the African election observers had also documented beatings, killings, intimidation, and women being publicly stripped of their clothing, should have been submitted to the Constitutional Council for review.

Because of all these irregularities, and because the Electoral Commission could not constitutionally proclaim, within the constitutionally prescribed deadline period, the provisional results that were to be validated by the Constitutional Council, its mandate was terminated, leaving the Constitutional Council to handle these matters.

But, while that procedure was in progress, the president of the defunct Independent Electoral Commission was ushered to the headquarters of the opposition candidate at the Golf Hotel to illegally proclaim Ouattara the winner before the French state and foreign media and the U.N. representative.

The Constitutional Council stated that the defunct Independent Electoral Commission had no right to declare Ouattara the winner, as constitutional electoral procedures had not been followed.

It deemed illegal the U.N. representative's ratification of would-be provisional results that were illegally proclaimed. The U.N. representative was to ratify the final results that the Constitutional Council would have certified.

The Constitutional Council then analyzed all irregularities and tallies, partially validated some of them and, after the adjustments were completed, proclaimed Gbagbo the winner. Cote d'Ivoire thus descended into a post-electoral nightmare.

Nightmare for some, but a wild dream for others...

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