Kenya Police Seal Capital in Fourth Day of Clashes (Update9)

Jan. 3 (Bloomberg) -- Kenyan police sealed Nairobi and broke up protests with water cannons and baton charges in a fourth day of clashes over last week's disputed presidential election.

Opposition leader Raila Odinga, who says the Dec. 27 ballot was rigged and accuses the government of ``genocide'' in the deaths of about 300 people, postponed a rally in the capital today after police dispersed protesters near Kibera, a slum area southwest of the city. Reports of violence outside the capital tapered off.

``The police response has been so brutal you can't see people protesting for too long,'' Thoko Kaime, deputy head of the Africa division of London-based Exclusive Analysis, which analyzes political risk, said in an interview.

Violence has swept through Kenya, sub-Saharan Africa's fifth-biggest economy and the world's largest black-tea exporter, since President Mwai Kibaki won the election and was sworn in for a second five-year term on Dec. 30. Kenya's Attorney General Amos Wako called for an independent body to verify the results of the poll.

The Nairobi Stock Exchange halted trading today after less than two hours of business, while the shilling gained 0.2 percent against the dollar after losing more than 8 percent over the last week.

Business Confidence

Kenya's debut Eurobond sale will probably be delayed by the violence, Fitch Ratings said. An initial stock offering of 25 percent of Safaricom Ltd., the country's biggest mobile-phone company, also is likely to be pushed back, Fitch analyst Richard Fox in London said in a report today.

``Wider business confidence will also suffer, further contributing to slower growth,'' Fitch said. ``These negative economic implications also increase the pressure on key political actors to enter into dialogue.''

The U.S. and the European Union are pressing the two sides to jointly resolve the crisis. Secretary of State Condoleezza Rice, who spoke earlier with EU policy chief Javier Solana, doesn't want to specify a particular way of ending the violence, spokesman Sean McCormack told reporters in Washington today.

``Fundamentally, this needs to be a made-in-Kenya solution,'' McCormack said.

`Ethnic Angle'

The violence, the worst since an attempted coup in 1982 in which at least 2,000 people died, exposed tensions among Kenya's more than 40 ethnic groups. Kibaki is a Kikuyu, which makes up about a fifth of the population and is the largest group, while Odinga is a member of the Luo. Until now, the country has been regarded as politically and economically stable.

``There is a real ethnic angle to this,'' Kaime said. ``There is a real grievance related to the politics. The Kikuyus have dominated politics.''

Jomo Kenyatta, the first post-independence leader of Kenya, was Kikuyu and ruled from 1963 to 1978. While his successor, Daniel Arap Moi, was from the minority Kalenjin group, he had influential Kikuyu ministers and ``remained in power playing these groups off against each other,'' Kaime said.

Images on Nation TV, the broadcaster owned by Nation Media Group, showed armed police standing in front of groups of protesters chanting opposition party slogans on the outskirts of the city. Police used water cannons to disperse protesters, according to images shown on APTN, the television branch of the Associated Press.

Police Clashes

Armed police entered Nairobi's central business district earlier today and ordered pedestrians to leave the city. The few shops that were open shut down, while motorists moved their cars off the streets into basement parking areas.

Odinga's opposition Orange Democratic Movement postponed today's rally because the gathering was banned and the party was unable to provide security for its supporters, said spokesman Ahmed Hashi.

``We saw that this would cause more insecurity and we want peace,'' Hashi said in a telephone interview from Nairobi. ``The ODM is interested in peace and we don't want this situation to continue.''

Kibaki appeared on national television late today to announce he will visit areas affected by the violence and that he is prepared to hold talks with opposition parties. ``I am ready to have dialogue with concerned parties once the country is calm,'' Kibaki said, adding that those who felt aggrieved by the election results should challenge them in court.

Restraint Urged

Archbishop Desmond Tutu, the Nobel peace laureate from South Africa, is leading a delegation trying to end the violence in Kenya, after holding talks with Odinga in Nairobi. The U.S. is sending Assistant Secretary of State Jendayi Frazer to Kenya to meet with Kibaki and Odinga, spokesman McCormack said.

British tour operators have suspended departures to Kenya up to and including Jan. 5 on the advice of the U.K. government's Foreign and Commonwealth Office, the Federation of Tour Operators said in a statement published on its Web site. Alternative holidays or refunds are being offered to customers booked with the firms.

Kenya received 1.25 million tourists in the first nine months of 2007, generating 49.2 billion shillings ($724.6 million) of revenue, according to the Kenya Tourism Board.

Standard & Poor's yesterday cut Kenya's long-term local currency rating one level to B+ from BB- and said it may lower the credit rating further. S&P said it also may reduce the country's long-term foreign-currency ranking.

Kibaki, 76, came to power in December 2002 in Kenya's first change of government since the country gained independence from Britain. He campaigned for a second term in office on a track record that included economic growth accelerating to an 18-year high during his leadership and pledged to expand free primary education.

Odinga's election campaign targeted poor, urban voters who feel the government hasn't done enough to improve living conditions, while also promising to fight corruption. The 62- year-old led the vote count for three days before the result was announced.

To contact the reporters on this story: Eric Ombok in Nairobi via Johannesburg at pmrichardson@bloomberg.net; Ed Johnson in Sydney at ejohnson28@bloomberg.net.

To contact the editor responsible for this story: Simon Casey on scasey4@bloomberg.net.