Ivory Coast's Gbagbo Faces Financial `Asphyxia' as Sanctions Begin to Bite

Ivory Coast’s incumbent President Laurent Gbagbo is coming under financial attack as European Union sanctions threaten cocoa shipments and the West African central bank moves to cut off his access to funds.

The EU measures, expanded last week, ban most trade between the bloc and Ivory Coast, the world’s top cocoa producer and Africa’s third-largest coffee grower.

The “priority is on the economic asphyxia of Gbagbo’s regime,” said Maja Kocijancic, spokeswoman for the EU foreign policy chief, Catherine Ashton, in an e-mail on Jan. 19.

Gbagbo, 65, has ruled the country for a decade and refuses to cede power to 69-year-old Alassane Ouattara, the internationally recognized winner of the Nov. 28 election. The EU’s blockade includes a travel ban on Gbagbo, his wife, and other officials including Paul Yao N’Dre, the president of the Constitutional Council that overturned Ouattara’s win and declared Gbagbo victor.

Ivory Coast shipped 3.57 billion euros ($4.8 billion) of mainly agricultural products to the bloc in 2009 and bought 1.47 billion euros of EU goods such as fuel, machinery and chemicals, according to the European Commission in Brussels.

The bulk of the EU’s imports from the West African nation go to Germany, the Netherlands and France, according to the commission. About half of all EU exports to the African country come from France, followed by Belgium, Germany, the Netherlands and Italy.

Photographer: Sia Kambou/AFP/Getty Images

Ivory Coast’s incumbent President Laurent Gbagbo. Close

Ivory Coast’s incumbent President Laurent Gbagbo.

Photographer: Sia Kambou/AFP/Getty Images

Ivory Coast’s incumbent President Laurent Gbagbo.

Cocoa Gains

The law says “no funds or economic resources shall be made available, directly or indirectly, to or for the benefit” of any of the people or entities on the list, including the ports in Abidjan and San Pedro. Most of the country’s cocoa beans and coffee are shipped from the two ports, which are helping to fund Gbagbo’s “illegitimate government,” the EU said.

Cocoa for March delivery rose for the fourth day yesterday, adding 2.5 percent, to $3,178 per metric ton in New York. The price of the beans has risen 14 percent since the November vote.

Attempts by the African Union and the Economic Community of West African States, which have both sent envoys to Ivory Coast for talks with Gbagbo, have so far failed to resolve the crisis, even after Ecowas threatened to use force if necessary to oust Gbagbo.

Ministerial Visit

Guillaume Soro, who was chosen by Ouattara as prime minister, arrived in Nigeria’s capital, Abuja, yesterday to meet with President Goodluck Jonathan, the current chairman of Ecowas, the News Agency of Nigeria reported. Soro was being received as the prime minister of Ivory Coast during his visit because Nigeria recognizes Ouattara as the legitimate winner of the poll, Idi Hong, Nigeria’s minister of state for foreign affairs, told the news agency.

Ecowas leaders are due to meet in Bamako, Mali tomorrow to take further steps to prevent Gbagbo from accessing the country’s accounts at the regional central bank.

Gbagbo will be removed as a signatory at the Central Bank of West African States, Kenyan Prime Minister Raila Odinga, an African Union-appointed mediator, said in an e-mailed statement Jan. 20. The measure will “begin the crippling of his regime,” Odinga said.

Ouattara says Gbagbo has withdrawn about 80 billion CFA francs ($164 million) from the central bank since the institution said on Dec. 24 it would only recognize people approved by Ouattara for transactions. The withdrawals have frustrated Ouattara, who was hoping that Gbagbo would lose the support of the military if he couldn’t pay their wages.

Daily Withdrawals

Gbagbo’s government is “withdrawing money on a daily basis” from the central bank account, said Ahoua Don Mello, an adviser to Gbagbo, in an interview Jan. 17.

The eight members of the monetary union, of which the central bank is a part, share a common currency, the CFA franc, which is pegged to the euro. Ivory Coast is the biggest economy in the Ouagadougou, Burkina Faso-based group.

Ivory Coast’s dollar-denominated bonds rose the most in more than a week today, reducing its yield by 71 basis points, or 0.71 percentage point, to 16.69 percent as of 7:10 a.m. in Abidjan.

At least 260 people have been killed in violent clashes that followed the election, according to the United Nations, which has a peacekeeping mission in the country. About 68 people are missing.

To contact the reporters on this story: Jennifer M. Freedman in Geneva at jfreedman@bloomberg.net; Olivier Monnier in Abidjan via Accra at ebowers1@bloomberg.net.

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net; Antony Sguazzin at asguazzin@bloomberg.net.

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