Monday, 24 January 2011

Confidential Agenda (Week ending 28 January)

AFRICAN UNION: The big tests for diplomacy and democracy
Intensive rounds of negotiations and trade-offs start this week in Addis Ababa leading to the grand summit of the African Union on 30-31 January. The assorted ambassadors, foreign ministers and heads of state have to work their way through an unusually full agenda: the headline items will be the post-election crisis in Côte d'Ivoire, the post-referendum negotiations for the establishment of an independent Southern Sudan following the overwhelming vote for secession, and the rumbling crisis in Zimbabwe, where the power-sharing government is due to hold a constitutional referendum and national elections.

Côte d'Ivoire is the most serious test of the AU's commitment to uphold free and fair elections. So far both the AU and the Economic Community of West African States (Ecowas) have been united in their insistence that the results released by the UN-backed Commission Electorale Indépendante – announcing that Alassane Ouattara had won 54% of the vote and Laurent Gbagbo had won 46% in the second round of the presidential elections – must be upheld. They do not recognise a subsequent announcement by Côte d'Ivoire's Conseil Constitutionnel which reversed the electoral commission's verdict.

Already the AU and Ecowas – along with the United Nations Security Council – have called for the diplomatic isolation of Gbagbo, who refuses to vacate the presidential seat. Teams of lobbyists from both the Ouattara and Gbagbo camps are due to press their cases in Addis Ababa, as the AU comes under pressure to resolve the worsening crisis there and avert the threat of a return to war.

Although the AU recognises Ouattara as the legitimate winner of last year's presidential elections, there are differences over strategy: Nigeria and Senegal support the use of 'legitimate force' to oust Gbagbo; South Africa and Ghana want renewed mediation and negotiations; and Angola (a key supporter of Gbagbo, along with Israel and Russia) wants fresh elections.

No one is disputing that the Southern Sudanese have voted overwhelmingly for secession in the referendum held from 9 to 15 January. But there will be some hard bargaining about the division of the oil revenues and citizenship rights over the next six months in the run up to the formal declaration of the South's independence in July.

The biggest dispute and one that will drag in the AU is the status of the oil-rich enclave of Abyei which sits on the border between North and South. Initially, the people of Abyei were meant to have their own referendum, on the same day as the South, to decide whether they would stay with the North or join a newly independent South. That didn't happen because Northern and Southern negotiators couldn't agree on voting eligibility criteria there. Now there is talk of some kind of backroom deal on Abyei as tensions in the area heat up again.

Back from his annual trip to Malaysia and denying reports of ill-health and emergency operations, Zimbabwe's President Robert Mugabe says he's determined to hold fresh elections this year – regardless of whether the three sides in the power-sharing government can agree on a new constitution. Already there are reports of political violence in areas that support Prime Minister Morgan Tsvangirai's Movement for Democratic Change.

The MDC says there can be no question of national elections before a new constitution is in place and, along with many Zimbabweans, fear a repeat of the appalling political violence in the run up to the second round of presidential elections in 2008. Last week, the national election commission said that over a third of the people on the register have died, and that a full voter registration process would be necessary before credible elections could be held.

CÔTE D'IVOIRE: The cocoa test
Calls on 24 January for a month long ban on the export of Ivoirian cocoa by Alassane Ouattara, the UN-recognised President of Côte d'Ivoire, is designed to add to financial pressure on his rival Laurent Gbagbo. The calls follow Ouattara's success in ousting Philippe-Henri Dacoury-Tabley, the Ivoirian governor of the Banque Centrale des États de l'Afrique de l'Ouest, who had been approving payments to Gbagbo's regime despite regional sanctions against it.

Ouattara calculates that the cocoa ban – which would mean the loss of tens of millions of dollars of taxes and tariffs paid to the Gbagbo regime – will put further pressure on his rival. Already the European Union has imposed sanctions on Côte d'Ivoire which prohibit the raising of finance to buy Ivoirian cocoa and the use of Ivoirian ports. However, we hear that most of the oil companies (such as Lukoil) , cocoa traders (Bolloré and Cargill) and service companies (Bouygues) have continued to collaborate with Gbagbo. Now Ouattara is threatening that these companies could lose their licences when he comes to power if they don't suspend cooperation with Gbagbo. A fresh idea but one that could be tremendously difficult to enforce and monitor.

The cocoa ban is a high risk strategy for Ouattara. If it doesn't work, he looks weaker internationally. If it does work, the first people to suffer will be the country's more than three million cocoa farmers. In the short term, the signs are that the Gbagbo apparatchiks will tough it out regardless.

It now looks probable that Côte d'Ivoire will not make its US$29 million payment due by the end of this month on its $2.3 billion eurobond. Last week a Gbagbo official said that the bankers would have to recognise Laurent Gbagbo as the legitimate president if they wanted payment. The non-payment will trigger a default and raise the prospects that property of the Ivoirian state could be seized around the world in lieu of the debt service.

NIGERIA: Defying the doubters

The successful flotation of Nigeria's $500 million ten year eurobond – after a 30-year absence from the international markets – shows the power of Africa's biggest oil-producer to pull in financiers almost regardless of political risk. The ten year bond with yields of 7% is priced about 1% higher than bond issues from Ghana and Gabon, some three years ago. Nigerian officials say that is due to market conditions.

Although some financiers have been complaining about poor financial controls in Nigeria that have allowed the government's excess crude account, where surplus oil revenues are deposited, to be depleted to less than $1 bn. from a high point of $20 bn., three years ago. Under the management of Central Bank Governor Lamido Sanusi and Finance Minister Segun Akanga, foreign reserves had edged up to $33 bn. by the beginning of 2011 but are still more than $10 bn. lower than a year ago.

BRITAIN/AFRICA: Business doubts over bribery law

British companies are lobbying the Conservative-Liberal Democrat coalition to dilute some of the provisions of the anti-Bribery Act due to come into force in April. They have already succeeded in getting the government to hold it back for six months.

British corporate lobbyists complain that other countries hold their companies to a lower standard and that United Kingdom PLC will be left standing by unscrupulous competition, that reporting requirements are too onerous, that the Serious Organised Crime Agency will be paralysed in the fight against real crime because its in-tray is clogged with bribery accusations, that small firms are being discriminated against, and that giving Christmas presents would become criminal etc.

PricewaterhouseCoopers warned that, under the act, a case of Champagne or a gold fountain pen could be interpreted as a bribe. It seems the government sympathise with these gripes although the law's provisions had all-party support when it was passed last year. The act was supposed to be Britain’s answer to charges of hypocrisy that it was demanding stricter anti-corruption measures in African and other countries than it had at home.

The government’s 'Growth Review will try, according to the London Daily Telegraph, to 'soften its impact'. The Ministry of Justice has been promising “guidance notes” on compliance procedures but so far no details have emerged.

In fact, as with the US Foreign & Corrupt Practices Act, a company has a defence against strict liability if 'adequate procedures' against bribery, such as a compliance code, are in place. This would leave only those with direct knowledge of the crime facing prosecution or, possibly, companies which never instituted any internal anti-bribery guidelines or didn’t take them seriously. The guidance notes will be coming out soon and will give some insight to the coalition government's attitude towards corruption.

TANZANIA: Kikwete gets tough on dissenters

Shock waves continue after the shooting of at least two people during a rally of the Chadema opposition party in Arusha on 5 January. There were many arrests, including Chadema's Freeman Mbowe and three other MPs, all of whom have now been released. Police opened fire on the marchers, supposedly because they were not sticking to the agreed route.

Even the police don't claim they were attacked or fired at, however, investigations are now under way to determine whether crimes were committed by or against the demonstrators and some protesters are being charged.

Wilbrod Slaa also addressed the rally; fiancee came away with a gashed head. The government is gambling that its heavy-handed repression of the rally, which was peaceful until the police opened fire, will cause the protesters to take fright and go home.

But Mbowe says that his party is still challenging the results in four parliamentary constituencies, not to mention the mayoralty in Arusha, and he says he will not let Kikwete's poll victory stand. Hundreds of thousands attended a rally in commemoration of the victims a week after the march, and no police were to be seen.

Even if the constituency challenges succeed, they are not going to change the government, and much as Chadema's vote increased, this was no 'stolen' election. But Chadema may well be embarking on a wide-scale civil-disobedience campaign, especially as Tanzanians look north to Kenya to see that 'impunity' is not always a permanent state of affairs.

Police Commissioner of Operations Paul Chagonja acknowledged that there is a right to protest but then told oppositionists provocatively to wait: 'those who want to get into power should wait until 2015 during another General Election'. In an effort at conciliation, the foreign minister, Bernard Membe, said that the police had used excessive force. However, there have been indications the police were going to charge Chadema leaders with criminal offences over the 5 January rally, which could well inflame matters.

SOUTH AFRICA: New BRIC member climbs the South-South ladder

Another key plank of African engagement with the global South goes ahead this month with South Africa's formal membership of the prestigious BRIC (Brazil-Russia-India-China) international club.

President Jacob Zuma's government having accepted a invitation to join the group at the end of last year. Although China had strongly backed South Africa's membership, all the other members supported it despite the much smaller size of South Africa's economy (its GDP in 2009 was $285 billion) in comparison to the other member states.

South Africa will effectively represent the African continent which has a GDP of some $1.4 trillion ranking it just above the national income of Brazil and Russia but still substantially below China and India.

South Africa alone barely qualifies in economic importance in the category of countries showing high economic growth, which were first grouped together for by a Goldman Sachs investment banker. South Korea, Indonesia, Turkey, and Mexico have weightier economies but are regarded as represented through existing members if the BRICS.

South Africa’s invitation came from China and was agreed during a regional trip by the People's Republic's Vice-President Xi Jinping last November. He was visiting South Africa, Angola and Botswana. China, already South Africa's biggest trading partner, sees the country as a gateway to other countries in the region.

Much less is known about what kind of institution BRIC is or may become since it has no legal form. Accordingly, it's hard to see what benefits South Africa can draw from membership beyond the recognition of the African continent's growing economic importance.

FRANCE/NIGER: Hostages test French policy

The killing of two young French hostages on 8 January by their captors is causing much anxiety in French security circles as the Nigerien and French governments dispute the circumstances. Defence Minister Alain Juppé cancelled a trip to Gabon to go to Niger, following the deaths.

For the second time, now, the first was French hostage Michel Germaneau also in Niger in July last year, French hostages have been killed by their captors during a rescue effort by French special forces acting in concert with government forces on the ground.

Vincent Delory and Antoine de Leocour, both 25, were kidnapped from a restaurant in Niamey, which either shows exceptional daring on the part of the kidnappers, thought with some certainty to be Al Qaida in the Islamic Maghreb (AQIM), or the possibility they can rely or local, possibly official, help. Early indications are that the men were murdered when the kidnappers saw the French helicopters homing in on their convoy, which had driven hundreds of kilometres and already crossed the border into Mali. President Nicolas Sarkozy has taken full responsibility for the rescue mission and so far is maintaining a firm stance.

There are questions about whether some Nigeriens have been working alongside AQIM. When the French forces engaged the kidnappers they killed two Nigerien gendarmes. Four AQIM were killed and two were captured; French officials say the gendarmes were operating with the AQIM force. The Nigerien authorities denied they were collaborating with the kidnappers and were in fact in pursuit, a difficult claim to sustain given the distance from Niamey.

France used to have a reputation for being a soft touch for ransom-seekers but is determined to change that. Yet after two failed rescue attempts, French forces in the Sahel are struggling against AQIM's growing presence in the region and shows of defiance. On 21 January, the Qatar-based Al Jazeera satellite channel broadcast a message from Al Qaida leader Usama bin Laden threatening still more attacks on French civilians and soldiers unless Sarkozy's government withdraws its troops from Afghanistan.