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February 21, 2011

Ivory Coast cocoa exporters fear being crushed as politicians fight

by Ange Aboa

Ivory Coast cocoa exporters said they feared for their future on Monday following reports that presidential claimant Alassane Ouattara would extend a one-month cocoa export ban if his rival refuses to leave power.

Exporters said they were feeling increasingly squeezed in the power struggle between Ouattara and incumbent leader Laurent Gbagbo, whose cocoa regulatory body has warned they must export and pay taxes or risk being sanctioned.

"We are neutral in this story, yet we're in a bad position because each of them wants us on his side, and it's not possible to be on both," said the director of a European export company in Abidjan.

"One camp wants us to stop exporting when we have billions (of CFA francs) worth of cocoa in stock. The other side demands the tax even if we don't export."

Gbagbo and Ouattara are embroiled in a dispute over a November 28 poll that both claim to have won. Ouattara was declared winner by the independent electoral commission and recognised almost universally by world leaders.

But Gbagbo has clung on with backing from a top court and has entrenched his position using the military and blockading the hotel in which Ouattara has set up a rival administration.

Exporters fear sanctions by Western and other nations that recognise Ouattara's ban, which is aimed at starving Gbagbo of the funds that are keeping him in power.

In an interview with the Financial Times published on February 14, Ouattara was quoted as saying he was committed to continue using economic sanctions to force Gbagbo from office and that he would extend the cocoa ban when it expires next week if his rival does not leave office.

ICE cocoa futures hit a fresh one-year high of $3,444 a tonne in early trading on Monday owing to fears the ban would be prolonged.

Adding to problems, the country is also in a liquidity squeeze after Gbagbo sent soldiers to seize the Abidjan office of West Africa's central bank in retaliation after it cut off his access to state funds.

Banks have had problems clearing cheques, and many have had to place limits on daily withdrawals. Two international banks closed operations in Abidjan on february 14.

"Funding is very hard to come by. We will have to close soon because we cannot meet our obligations," said a San Pedro-based exporter. "We also need to export to get money for purchases, but we don't have any more."

Cocoa arrivals at Ivory Coast ports fell further in the week to February 13 to around 12,000 tonnes versus 20,434 tonnes a year ago, suggesting Ouattara's ban has had an impact

"How will this all end? That's what we're all asking ourselves," said the director of an export company in Abidjan.

"Local banks have stopped financing cocoa purchases; there's a lack of cash; the cocoa is all stuck at the ports. We're on course for an economic disaster."


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