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COTE D'IVOIRE: The economic squeeze – Briefing

DAKAR, 7 January 2011 (IRIN) - IRIN has produced a series of briefings exploring the crisis in Côte d’Ivoire triggered by contested elections in November 2010. Both Laurent Gbagbo and Alassane Ouattara are laying claim to the presidency, with Gbagbo refusing to yield to international pressure to step down. The series takes a look at the UN’s position, issues of human rights, as well as the stances of the African Union, ECOWAS, western governments and the EU and World Bank.

Aside from some high profile dissenters in France, the EU has largely maintained a strong collective position on Côte d’Ivoire. The announcement from Abidjan on 6 January that the accreditation of British Ambassador Nicholas James Westcott (based in Accra) had been revoked shows the scope for retaliatory diplomacy. Both British Prime Minister David Cameron and Foreign Minister William Hague had been happy to support sanctions and push for the replacement of the Ivorian ambassador in London. Similarly, Canadian Ambassador Marie Isabelle Massip, who was also asked to leave, represents a government that has come out in favour of pressure against Gbagbo. Both Canada and the United Kingdom have rejected the expulsion orders as illegal.

What position did the EU take on elections?

The EU sent 120 observers to monitor the elections. The Mission d' Observation Electorale de l'Union Européenne (MOE UE) was headed by Romanian MEP Christian Preda. The mission’s preliminary report issued two days after the second round of voting on 28 November noted a much more difficult atmosphere compared to the first round, with a curfew heightening tensions. The mission also regretted episodes of violence and intimidation around the country which had prevented some people from voting. The MOE UE complained that state media regulatory bodies had failed to ensure equal access to the airwaves, with Gbagbo getting more coverage than Ouattara on state radio and TV. Preda earlier criticized the Independent Electoral Commission (CEI) for being obstructive towards observers.

Just prior to the second round, the EU’s high representative for foreign affairs, Catherine Ashton, warned against a radicalization of the political campaigning, urged a more peaceful approach from parties and encouraged state media to show its impartiality.

How did the EU react to the dispute in Abidjan?

The EU’s first statements on the political deadlock in Côte d’Ivoire echoed concerns voiced by the UN, African Union and the Economic Community of West African States (ECOWAS). Meeting in Brussels on 13 December, the EU Council on Foreign Affairs congratulated Ouattara on his victory, stressed the wishes of the Ivorian people should be respected and supported the positions of the EU and ECOWAS. The Council also announced its decision to impose travel bans and a freezing of assets on those “who obstruct peace and national reconciliation and… threaten a proper conclusion to the electoral process”. A plenary session of the European Parliament on 16 December called on Gbagbo to step down and hand over power to Ouattara. Ashton, who had outlined the possibility of punitive measures earlier, made it clear the EU would follow through with sanctions if there was no response from Gbagbo and his supporters.

Who is on the EU sanctions list?

The 19 Ivorians named on the EU’s sanctions list agreed on by the European Council on 22 December included both Laurent and Simone Gbagbo, long-time close Gbagbo associates, including regular Gbagbo spokesman Pascal Affi N’Guessan, and military adviser Kadet Bertin. The president of the Conseil Constitutionel, Paul Yao N’Dre, was accused of having “knowingly validated false results”.

Other targets included three pro-Gbagbo militia leaders, based in the west, senior commanders from within the security forces and several prominent media figures, some accused of helping spread disinformation, others of issuing material designed to incite hatred. Brief accounts of the offences allegedly committed by those targeted feature briefly in the EU’s own Official Journal, but details are often limited. For example, some of those on the list are accused of simply being involved in suppression of “popular risings” in February, November and December.

Following a meeting of political and security ambassadors on 29 December, the EU announced on 31 December that another 59 names had been added to the list, drawn mainly from the new administration.

What do the sanctions consist of?

Those listed will be denied visas to get access to EU member states. In the case of Gbagbo and wife Simone, financial assets in EU countries have been frozen. Interviewed in the Ivorian press on the impact of sanctions, Gbagbo’s minister of interior, Emile Guiriéoulou, was highly dismissive, arguing that the measures proposed were “a red rag that the EU waves in front of African leaders, thinking it will make us afraid”. Guiriéoulou also said that Gbagbo did not take his holidays in Europe so would not be inconvenienced by the visa ban.

What is the EU’s stake in Côte d’Ivoire?

The EU remained Côte d’Ivoire’s most important development partner through the period of conflict and division. The 10th European Development Fund (EDF) had allocated 254.7 million euros from its multiannual indicative programme for 2008-2013, highlighting areas like governance, security, the consolidation of peace, judicial reform and regional integration.

Around 41 per cent of Côte d’Ivoire’s annual trade is with EU members. In November 2008, Côte d’Ivoire signed a “stepping stone” Economic Partnership Agreement (EPA) aimed at giving the country duty free quota free access to the EU market, while also committing Côte d’Ivoire to long-term liberalization of imported products.

The European Investment Bank (EIB) resumed lending operations with Côte d’Ivoire in 2009 after a 10-year rupture, signing an agreement on debt relief and signalling its readiness to provide loans and technical assistance for infrastructural reform and private sector growth.

Several European countries closed their embassies after the initial crisis of 2002, and then again after the mass demonstrations and anti-French looting in November 2004. Among EU members with embassies in Abidjan are: Italy, France, Germany, Spain and Belgium. Norway and Switzerland, both non-EU countries, have embassies in Côte d’Ivoire.

Gbagbo was on an official state visit to Italy in September 2002 when the insurgency broke out in Côte d’Ivoire, which split the country between a government-led south and rebel-controlled north.

The economic squeeze

Prior to the post-elections crisis, the economic outlook for Côte d’Ivoire had looked to be improving, with growth of 3.8 percent in 2009 and good predictions for expanding revenues from cocoa and oil exports. The economic costs of conflict had proved high. Real GDP per capita fell by 15 percent between 2000 and 2006; there had been a substantial increase in poverty; Côte d’Ivoire’s ranking on the UN’s Human Development Index (HDI) slipped from 154th in 1999 to 166th in 2007.

What is Côte d’Ivoire’s current standing with the IMF and World Bank?

The World Bank had pulled out of Côte d’Ivoire in 2004 over the non-payment of arrears, but returned in 2008 after the Ouagadougou Peace Accords. The World Bank had embarked on a Country Assistance Programme for 2010-2013, focusing on good governance, infrastructural development, improved exports, agricultural development and a revitalized private sector. The International Development Association (IDA) had a portfolio of 10 investment projects worth US$737 million ($245 million still to be dispersed).

More on the crisis
 Back to square one
 Political impasse sparks food price hikes
 The UN's mission impossible?
 Wounds reopened - the price of breakdown
 Countdown to deadlock
In March 2009, the IMF agreed to provide $565.7 million under a Poverty Reduction and Growth Facility (PRGF) arrangement, focusing on economic regeneration, while the World bank and IMF allowed Côte d’Ivoire to qualify for debt relief under the enhanced Heavily Indebted Poor Countries (HIPC) Initiative. Both institutions praised the government’s efforts on poverty reduction and financial management. The debt relief offered, around $3 billion on a total external debt of around $12.8 billion was premised on the successful holding of elections. HIPC status allowed Côte d’Ivoire to enter into debt arrangements with both the Paris Club and London Club. France and the USA also agreed to important debt relief measures.

Despite encouraging noises from donors and partners, it had been repeatedly made clear that economic recovery depends on political normalization. Within days of the crisis erupting, the head of the IMF, Dominique Strauss-Kahn, was warning that the IMF could not work with an unrecognized government. In a statement issued on 22 December, the World Bank confirmed it had closed its office in Abidjan and stopped lending and disbursing funds to Côte d’Ivoire. It joined the African Development Bank (AfDB) in backing ECOWAS and the AU in urging Gbagbo to step down.

What has been the response of African banking institutions?

AfDB stays away: The crisis in Côte d’Ivoire has shattered the AfDB’s hopes of moving its headquarters back to Abidjan, having relocated to Tunis in February 2003 amid serious security concerns. The AfDB held a major meeting in Abidjan in May 2010 and its leadership had strongly hinted that it was looking to move back. Relations with the Gbagbo government were good, particularly after Côte d’Ivoire cleared its debt arrears to the AfDB.

UEMOA moves against Gbagbo: There appears to have been a continuing behind-the-scenes battle for control of Côte d’Ivoire’s financial assets. Along with the other seven members of the Union Economique et Monétaire Ouest Africain (UEMOA), the West African Economic and Monetary Union, Côte d’Ivoire’s monetary policy depends largely on the Dakar-based Banque Centrale des Etats de l’Afrique de l’Ouest (BCEAO), the Central Bank of West African States. The BCEAO in turn is linked to the French treasury.

A UEMOA Council of Ministers meeting in Bissau on 23 December called on the BCEAO to reject Gbagbo’s signature on all financial documents, confirming that only Ouattara’s signature would now be judged valid. The move drew fierce criticism from Gbagbo’s supporters, who questioned the legality of the UEMOA’s directive, noted Ouattara’s past BCEAO associations, and accused the UEMOA of engaging in a French-backed conspiracy. It is not clear to what extent the BCEAO has followed the Bissau directive, which has huge implications for the organization of Côte d’Ivoire’s finances. The current head of the BCEAO is Philippe Henry Dacoury-Tabley, an Ivoirian.

Gbagbo’s supporters have talked of introducing a new currency, the Monnaie Ivoirienne de la Résistance (MIR), with Simone Gbagbo and youth leader Charles Blé Goudé among those championing the idea.

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Sources: RTI, European Union, Reuter, Afrique en Ligne, Official Journal of the European Union, Abidjan Tribune, EIB, World Bank, IMF, UEMOA, BCEAO, Le Patriote

Theme (s): Aid Policy, Economy, Governance, Security,

[This report does not necessarily reflect the views of the United Nations]

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