April 12 (Bloomberg) -- The capture of Ivory Coast’s former leader Laurent Gbagbo may mark the end of 11 years of conflict that culminated in a battle for the largest city, Abidjan, stalling the economy of the world’s largest cocoa producer.
Gbagbo, 65, was able to defy world opinion and hold onto power after his defeat in a Nov. 28 election to Alassane Ouattara because he enjoyed widespread support in the mainly Christian south, winning almost 46 percent of the national vote.
It took a siege of his home by a combination of French, United Nations and rebel forces to finally end his decade-long rule. Now Ouattara, 69, a former International Monetary Fund director, inherits a banking system closed by four months of international isolation, a cocoa industry in danger of losing its dominance of the global market and a treasury that defaulted on a $2.3 billion bond.
“The economy should restart quickly,” Janvier Litse, the African Development Bank’s regional director for Ivory Coast, said by telephone from London today. “The donors should support the government. The priority right now will be to ensure that there is security. Without security nothing can happen.”
Ivory Coast’s economy will probably contract 7.5 percent this year, after growing about 2.6 percent last year, the IMF said in a report today. It expects growth to rebound to 6 percent next year.
The European Union lifted restrictions on the country’s ports on April 8. A.P. Moeller-Maersk A/S, the world’s largest container shipping line, said one of its vessels is likely to arrive in Abidjan next week. CMA CGM SA, the world’s third-biggest container shipper, said its first ship would arrive in Ivory Coast April 18.
Cocoa for July delivery rose $40, or 1.3 percent, to $3,068 a ton on ICE Futures U.S. as of 1:59 p.m. in New York.
Prices are not expected to fall considerably because of the disruption the political impasse has caused to the trade, Luis Rangel, a vice president at ICAP Futures LLC, said.
“Cocoa prices should come down by another $100, but not more, as there is a logistics nightmare waiting for the supply chain on the ground -- banking, storage, trucking, workers, cash,” he said from Jersey City, New Jersey. “No one will return until the guns are silenced.”
Sporadic gunfire was heard today in Abidjan, a city of 4 million people and incidents of looting were reported in several suburbs even after a televised call by Gbagbo for his supporters to lay down arms.
“People are still a bit scared to go out, but there are more people outside than the previous days,” said Florentine N’Gouan, a resident of the Cocody neighborhood, where Gbagbo’s home is located. “People walk, essentially to get some food.”
After Gbagbo was captured, armed militia took over the main police station in the suburb of Yopougon and declared it their headquarters, said resident Marc Gbah.
“Since then, they are firing around and looting,” he said. “It’s like an urban revolt. The Republican Forces came here this morning and were getting shot at. Some were killed. It’s a very chaotic situation.”
“Dozens of militias armed with Kalashnikovs and RPG’s are killing and looting,” said Georgette Kla, another Yopougon resident “There is sustained gunfire. Seriously injured people are dying at home because they can’t get medical help. The population is being terrorized.”
UN peacekeepers are patrolling Abidjan in an effort to quell the insecurity, Hamadoun Toure, a spokesman for the peacekeeping mission, said in a phone interview from Abidjan. “We are receiving numerous calls from all parts of the city,” he said. “Residents report numerous cases of looting.”
The UN special representative for Ivory Coast, Choi Young-jin, met with Gbagbo today, Toure said. “The special representative told him the UN forces will contribute to ensure his protection and make sure he will be treated with dignity,” he said.
In a televised speech late yesterday, Ouattara said he had ordered the start of legal proceedings against Gbagbo, his wife and his staff. He was moved out of Abidjan to another location in Ivory Coast and remains protected by the UN, said Farhan Haq, a spokesman for the agency in New York.
Gbagbo weathered a coup attempt in 2002 and a subsequent civil war that left the country split between a rebel-held north and government-controlled south. The insurgents became the Republican Forces this year, backing Ouattara and sweeping south in the past month before entering Abidjan on March 31.
The conflict means Ivory Coast missed out on a wave of foreign investment in Africa from nations such as China, crimping economic growth to an average of 1.1 percent between 2002 and 2009, compared with 5.6 percent in neighboring Ghana. To make up for the lost decade, Ouattara pledged tax cuts during the election in November, while donors considered scrapping $3 billion of Ivory Coast’s $14 billion debt.
France will give 400 million euros ($580 million) in aid to help the country recover from the crisis, Christine Lagarde, France’s finance minister, said in an e-mailed statement. The European Union will contribute 180 million euros to the reconstruction effort, Agence France-Presse said, citing a person it didn’t identify.
Ivory Coast’s dollar-denominated Eurobonds due 2032 rose 1.1 percent to 53.25 cents on the dollar as of 5:54 p.m. in Abidjan, according to data compiled by Bloomberg.
UN staff have found 536 bodies in western Ivory Coast since the end of last month, Reuters cited Navi Pillay, the UN’s High Commissioner for Human Rights, as saying. A three-member panel, led by Thai law professor Vitit Muntabhorn, will investigate allegations of human-rights abuses during the conflict, the news agency cited Pillay as saying.
Ouattara, who has a Ph.D. in economics from the University of Pennsylvania, served as director for the IMF’s African department between 1984 and 1988 and governor for the Central Bank of West African States over the next two years. That bank cut ties with Ivory Coast in January, leading the banking industry to grind to a halt.
“The key priority right now is to have the Central Bank of West African States resume its cooperation with the Ivorian branch,” Samir Gadio, an emerging-markets strategist at Standard Bank Group Ltd., said from Lagos yesterday. “That’s critical because without the banking system there’s no way the economy can be on a recovery path.”
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