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West Africa Gives Ouattara Control of Ivory Coast Cash

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Dec. 24 (Bloomberg) -- The Central Bank of West African States recognized Alassane Ouattara as Ivory Coast’s president, giving him control over state reserves previously governed by Laurent Gbagbo.

The seven finance ministers of the member states except Ivory Coast backed Ouattara at a meeting in Guinea-Bissau yesterday after the United Nations, the African Union and the Economic Community of West African States supported him as the winner of the Nov. 28 election, the central bank, or BCEAO, said on its website today. Gbagbo has rejected international calls to step down as the leader of the world’s top cocoa grower.

The finance ministers decided to “only allow the rightfully appointed representatives of the legitimate government of Ivory Coast to carry out any transactions on the accounts that are open in its name,” the BCEAO said.

Ouattara is holed up in a hotel, surrounded by the military that backs Gbagbo. Winning control over the nation’s financial reserves may undermine Gbagbo’s grip over the army, which has allowed him to defy international calls to step down, analysts including Kissy Agyeman-Togobo, a partner with London-based Songhai Advisory, said before the meeting.

“If Gbagbo is not able to access funds from BCEAO, that would be cutting off his lifeline and the army could very well turn,” Agyeman-Togobo said in an interview.

The West African franc, which Ivory Coast uses, is pegged to the euro in an arrangement with the Bank of France.

‘Big Step’

“It’s a big step, because it officially shows that Laurent Gbagbo doesn’t have the power anymore,” Anne Ouloto, a spokeswoman for Ouattara, said by phone from Abidjan. “When we lose the financial power, we lose the power.”

Yao Gnamien, an adviser to Gbagbo, didn’t answer calls to his mobile phone seeking comment today.

Political violence has left 173 people dead since Dec. 16, when security forces opened fire on Ouattara supporters as they protested in the commercial capital, Abidjan, according to the UN. The political standoff began when the Constitutional Council rejected the election results and declared Gbagbo the winner. The electoral commission had given victory to Ouattara, 68.

Abidjan was calm today, with many people doing their Christmas shopping. Charles Ble Goude, a pro-Gbagbo minister who is under UN sanctions for inciting youth gangs to violence, called for a rally in support of Gbagbo on Dec. 29.

Eurobonds

It remains unclear whether Ivory Coast will meet a $29 million interest payment on its Eurobonds on Dec. 31, said Max Wolman, a London-based portfolio manager with Aberdeen Asset Management Plc, which holds about $6 billion in emerging-market debt. Non-payment would leave the country in technical default, even though it has a 30-day grace period, he said.

“The uncertainty of non-payment is still there,” Wolman said in an interview from London today. “Ouattara’s still not the sworn-in president and it’s not clear who actually signs off on the payment.”

The Eurobonds, Africa’s biggest, have fallen for seven days, dropping to a bid price of 42.5 cents on the dollar today from 51 cents on Dec. 15, pushing the yield to 15.041 percent as of 12:06 p.m. in Abidjan. Bond yields move inversely to prices.

The political standoff has driven cocoa prices up 8 percent since the Nov. 28 runoff. The cost of the chocolate ingredient for March delivery fell for the first time in five days on London’s Liffe exchange, declining 1.2 percent to 2,016 pounds ($3,113) as of 11:56 a.m. local time.

The UN yesterday formally recognized Ouattara as Ivory Coast’s president, accepting his representative to the body in New York, Agence France-Presse reported.

To contact the reporter on this story: Franz Wild in Johannesburg at fwild@bloomberg.net.

To contact the editor responsible for this story: Peter Hirschberg at phirschberg@bloomberg.net.

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