Tuesday, November 25, 2014

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Ivory Coast: A Chocolate War?

While conflict escalates in the Ivory Coast, both Gbagbo and Ouattara are trying to use cocoa to their benefit. But at what cost to the country?
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Cocoa is stacking up in the Ivory Coast's docks

In one of Africa's most verdant tropical gardens, the Ivory Coast, cocoa is the most tasty bean. Some 800,000 farmers grow the 1.2 million tonne crop that makes the country the world's largest exporter. Since the 1960s, the country's economy has depended on cocoa exports, while the industry has pulled thousands of people from neighbouring countries across the Ivorian border. “Brown gold” is now at the centre of a post-election crisis where incumbent president, Lauren Gbagbo, is refusing to step down from power after Alassane Outtara won presidential elections last November. Fighting is spreading across the country, raising fears of civil war, while both sides are reported to have burned enemies alive. As a result, international demand for Ivorian cocoa has dried up and stocks are piling up in warehouses. Producers are being forced to sell their crops to rogue buyers for a pittance while in financial markets futures have reached new highs.

A history of racial tension

Lured by Ivory Coast's flourishing economy, between the 1960's and 1990 waves of migrants from Burkina Faso and Mali, many of whom were Muslim, moved to the country to work on cocoa plantations. In 1998, a census counted more than 2 millions immigrants – 14% of the whole population – mostly Burkinabé (54%) and Malians (18%). Between 1960 and 1980, Ivory Coast's economy thrived, fuelled by exports of soft commodities such as cocoa, coffee and palm oil. However, despite some efforts, Houphouët-Boigny's government did not address the country's economic dependence on these commodities, and when the cocoa market collapsed in the 1980s – prices fell by nearly two thirds in comparison with the late 1970s peak level - Ivorian economic growth was pared down.

New economic uncertainties proved to be fertile land for the seeds of nationalism: a growing resentment against immigrant farmers, chiefly Muslims who settled in the north, took hold. The concept of “Ivorite” - “pure” Ivorianess, introduced by president Henri Bedie - led to growing discrimination against immigrants and their descendents. As a result, in some rural areas immigrant farmers were prevented from accessing their own plantations.

On the edge of the new wave of nationalism were politicians. During his 1990 bid for the presidency Lauren Gbagbo publicly demanded a distinction to be made between Ivorians and non-Ivorians. As a result he quickly became a paladin of 'Ivority'. Meanwhile, the man who now claims the right to replace Gbagbo as the country's president, Alassane Outtara, became one of the most prominent victims of the xenophobic ideology. A former prime minister under President Félix Houphouët-Boigny, he was prevented from taking part in the 1995 presidential elections because of his Burkinabé mother. He instead headed to Washington where he spent several years as Deputy Managing Director at the IMF. When he came back and prepared to run in the 2002 presidential elections, his rivals again played on nationalist fears, unleashing the northerners' rage that led to the 2002-2007 civil war.

Eventually, Outtara was allowed to run in the 2010 poll and won.  His rival Gbagbo refused to hand over power, claiming irregularities in the elections. The United Nations Security Council, the African Union (AU) and the Economic Community of West African States (ECOWAS), recognized Outtara as the winner. However, since last November Outtara has been confined in the Golf Hotel in Abidjan. There he has set up his government, which he left for the first time last week to join an AU peace and security council in Addis Ababa. Meanwhile, Gbagbo is still ruling the country and both men are trying to use cocoa to usurp one another.

Cocoa politics

From his makeshift headquarters, Outtara put his international networks to use. He called for a ban on Ivorian cocoa exports to prevent his rival from continually accessing cocoa revenues to fund militias and public officers. Both the European Union and the USA, as well as corporations operating in Ivory Coast, such as leading commodity trader Cargill, stopped importing Ivorian cocoa. And, concerned at the prospect of losing trading rights in the future, a call from Outtara persuaded exporters operating in the country to temporarily shut down operations. As a result, 475,000 tonnes – over a third of annual output – of unexported cocoa beans are now sitting at Ivorian docks.

Ivory Coast's political impasse and its effect on cocoa exports drove benchmark May-delivery cocoa futures – financial contracts that allow buyers to get a fixed amount of one commodity at a fixed price at a fixed date - to a 32-year high of $3,775 a tonne on March 4. Fraternité Matin, a local newspaper that supports Gbagbo, reports Ivorian farmers are struggling to sell cocoa for $450 a tonne: the ban on exports has curtailed international sales for Ivorian cocoa, leaving growers only the chance of selling beans to rogue buyers who smuggle them into Ghana's ports.

Gbagbo is trying to address the impasse by coordinating a push to nationalise the country's cocoa industry. He announced a plan under which the state will be the only buyer of cocoa from farmers which it will then sell on international markets. Ghana has run a similar model since 1947 with some success: a state-run marketing board is in charge of buying and marketing the cocoa bought from farmers, with the result that farmers currently gain a higher price through the state than from the Fair Trade initiative. Gbagbo has already dispatched diplomats to look for markets beyond Europe – talks are ongoing with Russia and China. However, analysts have reacted sceptically, pointing to Gbagbo's lack of resources to implement the plan. He has lost the support of banks and the international community, and it is believed that - due to the cocoa export ban - he is running out of money. According to a French diplomatic source Gbagbo is already unable to pay salaries to his supporters.

An uncertain future

Meanwhile, the country is falling into chaos. Gbagbo militias shot several women during a march through Abidjan on March 8, International Womens Day. Four were killed. Pro-Outtara forces are clashing with Gbagbo's militias, with some 370,000 people having already fled the capital. In the north, rebel groups have seized some government-held cities, while thousands of displaced citizens are heading to bordering countries like Liberia. A recent International Crisis Group report warned that “the most likely scenario in the coming months is armed conflict involving massive violence against civilians, Ivorian and foreign alike, that could provoke unilateral military intervention by neighbours, starting with Burkina Faso”.

If Gbagbo and Ouattara do not reach an agreement soon – and the spreading violence fosters scepticism as to whether that is possible - the playing of the cocoa card on the political table will inevitably jeopardise the country's economy and any recovery from the current turbulence. The longer cocoa beans are left to lie on the docks, the higher the risk that their quality will be affected. And, as analysts have observed, if farmers are discouraged from harvesting crops by the lack of a market to sell their beans, the next harvest will be in danger, threatening one of Ivory Coast's main sources of wealth. The cocoa card will then prove to be a losing one for Gbagbo, Outtara and the whole country.

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