Free Agents:

Ashley, Gusak, Haberman, Wang

Cocoa Wars: Cote d’Ivoire’s conflict over power and cocoa

Background

Cote d’Ivoire, a war-torn West African nation, is facing yet another conflict -- this time as a result of a long-awaited election. Alassane Ouattara, the ex-Prime Minister supported by the Rally of the Republicans party from the mostly-Muslim North, declared victory in the election held in early December of 2010. So did the incumbent President Laurent Gbagbo, from the Ivorian Popular Front party, which ruled the Ivory Coast since 2000 with strong support from the more Christian South. The disputed presidency has led to a power struggle, epitomized in several reactions between the main players of this game: the incumbent president, the rival president, and the mediating international community. Due to its importance to the country’s economic sustainability, cocoa has become the central economic weapon in this power struggle.

The current quarrel is not new to Gbagbo and Ouattara. The two opposing leaders and their parties have been at each other’s necks for over a decade, often in the form of bloody massacres of each other’s supporters. This has been going on since the election of 2000, which put Gbagbo in power after the coup d’etat of 1999 took down Henri Konan Bédié. Bédié was an ineffective leader who began concentrating on the ethnic differences in the composition of the country’s population, favoring the southern ethnic group. Before then, the country was ruled by President Félix Houphouët-Boigny since the country claimed its independence from the French in 1960. Houphouët-Boigny ruled with an iron fist, but steered clear of ethnic delineations, as the country could not sustain its massive production of coffee and cocoa without migrant labor from its less prosperous neighboring countries: Burkina Faso and Mali.

The production of cocoa is substantial in Cote d’Ivoire. Nearly 40% of the world’s cocoa, or 1.3mm tonnes, come from this nation alone. Between 3 and 4mm lives (or about 20% of the country’s 21mm people) are affected by the industry, as farmers subsist on crop yields and lack substitute industrial pursuits. Cocoa is the main ingredient in chocolate, and the western world’s taste for the treat, as well as the associated health benefits (e.g., reduction in cardiovascular problems), maintain cocoa’s high price in the market. However, in the last decade, the price of Ivoirian cocoa rose by a factor of 3.5x, from $1,000 per tonne, to a 32-year high of $3,550 per tonne (with the last 7th of the increase occurring since September 2010). The price hike was a direct result of the country’s political instability and complications in the market due to child labor disputes.

The Key Players

Incumbent (current president, Laurent Gbagbo)

Laurent Gbago is an Ivorian politician who has served as President of Cote d’Ivoire since 2000. On September 19, 2002, a coup against Gbagbo’s government failed. The situation developed into a civil war between the government held south and the rebel held north, but after several months of fighting a peace agreement was reached and French peacekeepers arrived to patrol a cease-fire line. According to the cease-fire, Gbagbo remained president, but a new neutral Prime Minister was to be appointed. This was opposed by Gbagbo, who believed the French were giving too much support to the rebel north.

Early in 2004, the peace agreement officially collapsed. Following “accidental” air-strikes on the French by Gbagbo, the French responded by destroying most Ivorian aircraft. While Gbagbo’s original mandate as President expired on October 30, 2005, political unrest made it impossible to hold an election, and thus the African Union agreed to extend Gbagbo’s presidency for one year (though due to military conflicts he remained president beyond this date). On July 30, 2007, Gbagbo declared the civil war over and said the country should move quickly to elections, which were then planned for 2008. On August 30, 2008, Gbagbo was designated the FPI’s candidate for the November 2008 presidential election at a party congress.

In 2010, Cote d’Ivoire finally held an election which saw Gbagbo face off with Alassane Quattara, who was declared the winner by 54.1% of the vote. Gbagbo then ordered the army to close the borders, and foreign news organizations were banned from broadcasting from within the country. Both men have since taken separate oaths of office. Though the international community recognizes Alassane Quattara as the new President, Gbagbo has responded by launching ethnic attacks on Northerners, with unconfirmed reports of mass graves. Gbagbo has also demanded that peacekeepers leave the country. The international community has responded by freezing Gbagbo’s assets (which are largely located in Europe) and imposing cocoa sanctions.

Rival (newly elected president, Alassane Ouattara)

Alassane Quattara is an Ivorian politician and President of the Rally of the Republicans (RDR), a political party that is mainly supported by the Muslim north. In the 2010 election, Quattara ran against incumbent Gbagbo. Gbagbo, whose presidential mandate had expired in 2005, had delayed the election several times.

Just when the results of the 2010 election were about to be announced, the Electoral Commission of Cote d’Ivoire missed the deadline for declaration of results, as papers were snatched from an official who was about to read the results on live TV. The head of the Constitutional Council then invalidated 500,000 votes from the pro-Quattara regions (which constituted almost 10% of the vote), and declared Gbagbo the winner. The United Nations, which according to a 2007 peace deal is required to certify election results, rejected the Constitutional Council’s figures.

World (International Community - UN, USA etc.)

After the 2010 December election, Gbagbo ordered the Cote d’Ivoire army to close its borders and foreign news organizations were banned from broadcasting. The African Union, the European Union, ECOWAS, the United Nations (UN), the United States, and France were among the nations and international organizations that rejected Gbagbo's presidency. The IMF stated they would only work with a government recognized by the UN.

Gbagbo, who controls the army, has refused to step down. In addition to opening fire on civilians, he has turned off water in parts of the country’s northern territory. To pressure Gbagbo to step down, major chocolate trading houses have stopped cocoa purchases from Cote d’Ivoire, and are instead relying on more politically stable Ghana for supply. Further, Gbagbo’s access to state accounts in Europe have been frozen, a move that was intended to force Gbagbo to default on civil servant and army salaries.

The Farmers

Due to the high prices in the commodities market for cocoa and the favorable growing conditions of the region, most of the local community’s money is invested in the crop, and it is the nation’s largest export. However, few new cocoa crops have been planted in the last few seasons due to unstable political conditions and rebel fighting, a fact that is exacerbated by the need of three years to fulfill one fruit production cycle for a cocoa plant. This suggests possible longer term ramifications for both the farmers as individual participants in the economy, and the national economy as a whole.

Moreover, under the newly-imposed state control over cocoa by Gbagbo’s administration, farmers are reluctant to manage their existing crops. As a result, prices have risen to a 30-year high of $3,550 per ton. The prices are likely to rise even higher, since the international freeze on purchasing imposed by Outtara’s administration has one sixth of all of world’s cocoa (500,000 tons or $1.7B) sitting in the Ivoirian port of Abidjan. Gbagbo in turn is threatening a tax levied on all the cocoa that is sitting around, with a further threat of confiscating the beans if the tax isn’t paid.

Games and Decisions

Incumbent (current president, Laurent Gbagbo)

Although Gbagbo lost the election to Outtara, he refused to give up his presidency. As part of his plan to fight against Outtara, he has chosen to nationalize banks and the cocoa industry. He wanted to ask for support from the international community, however, the broader international community has sided with his opponent. Further, the international community accuses him of interfering with the election outcome results. In response, Gbagbo has decided against options such as forming a coalition with other regional powers, like a neighboring country, or fleeing so that he can reserve his resources to fight back either politically or militarily in the future. Instead, Gbagbo has nationalized banks and the cocoa industry to fund military expenses. Without support from the military, he is not able to maintain any legitimate control over the country. Therefore, his priority has been to retain military support.

Looking forward, we can anticipate several moves from Gbagbo, and deduce the associated payoffs. Some variable options for Gbagbo are to give up or engage in a civil war, depending on the responses of the World. If the World initiates international embargo, the entire country will suffer economically because it will not be able to export cocoa. The payoff for Gbagbo is therefore –1, indicating that he will no longer be able to fund his military. Without his military support, he will be forced to give up power. Consequently the payoff for Outtara in this situation is +1. The World may choose this option because it does not involve the World in direct conflict.

If the World does send troops to the region, the incumbent president Gbagbo will either win or lose. If Outtara wins, with help from the World, the payoff for him is +1. However, if Outtara loses, the payoff for him is -1. Given the many political and economic issues facing the World today, the international community may not interfere in the current situation at all. If this is the case, Outtara will decide whether he wants to give up the Presidency or initiate a civil war. If he gives up the Presidency, he can theoretically reserve his resources and fight Gbagbo more effectively later. Therefore his payoff is 0 (i.e. neutral). From Gbagbo’s perspective, his payoff is +1 because he gets the presidency.

It is possible that Gbagbo could also initiate a civil war. If he wins such a war, he can resume power again, so his payoff is +1. If he loses, he is likely to be captured or killed, so his payoff is very bad, -2 (i.e. more severe than an international embargo). If Gbagbo engages in a civil war, he must consider the possibility of international intervention, and the ramifications for his supporters, military, and personal security. Given Gbagbo’s past history, there is little likelihood that he will give up easily. During a civil war, Gbagbo’s chances for winning are highly dependent upon many variables, though for simplicity we have assumed his chances of winning at 50%. Therefore, based on our analysis and the associated payoffs presumed therein, Gbagbo’s best option is to give up for now and flee.

Rival (newly elected president, Alassane Outtara)

Given Outtara won the election legitimately, he likely still predicted that Gbagbo would not relinquish power given their decade long history of fighting. Indeed, Gbagbo fought not only by declaring that he was not giving up power, but also by taking extreme action, such as nationalizing banks and the cocoa industry in order to make military and civil payrolls.

Because Outtara’s resources are sufficiently less than Gbagbo’s, we assume that Outtara is heavily reliant upon the international community to support his cause. Luckily, Outtara is viewed favorably by the international community because he is seen as the legitimate president (despite the fact that Outtara also has a history spotted with corruption).

Since Outtara enjoys political backing from the international community, but lacks the funds to launch a full-fledged civil war, we believe that Outtara is currently waiting for the international community to make its move. The international community is likely to make one of four moves, further elaborated in the following section. First, the international community could continue to exercise its international embargo (the most likely scenario given the international community’s historical interference record). This will likely cause more pain to Gbagbo (-1 payoff) because it will strip Gbagbo of funds. In this scenario, we expect Gbagbo to ultimately lose, though we imagine that intermittent fighting would take place. Second, the international community could send troops to back Outtara as peacekeepers. Though an unlikely act, this could still likely fuel a civil war, in which Outtara would be the likely winner (+1 payoff for Outtara). If the international community merely funds or supports Outtara through weapons, etc, we envision a scenario similar to international peacekeepers in terms of Outtara’s +1 payout. The last scenario is that the international community could decide to withdrawal all interference. In this case, Outtara would have to decide whether to give up (neutral payoff) or fight (negative payoff). While Outtara enjoys some support from the military and rebel fighters, it is clear that as the incumbent President, Gbagbo definitely enjoys military superiority over Outtara. As such, we think that Outtara is therefore more apt to give up and wait to fight “another day” as opposed to risk losing a bloody flight with Gbagbo.

World (International Community - UN, USA etc.)

The international community has supported Outtara with verification of his victory, freezing Gbagbo’s assets, and putting an embargo on Cote d’Ivoire’s cocoa due to the nation’s internal conflicts. Going forward, the international community has several options. Principally, they can chose to support Outtara who may want to escalate the conflict to a civil war through funds or weapons, which while somewhat costly to them would only be a valued -2 payout. Next, sending troops to the region to end the political turmoil would be more costly and result in likely the same outcome, and so the payout would be -4. The payout is not -3, because we see non-interference with the current situation as resulting in the same conflict that either of the first scenarios would, but with a less predictable outcome and greater bloodshed. Lastly, the international community could initiate further and more severe international embargoes. We see this as having the least negative payout, at -1. The worst case scenario would be to have a war in the region; the payoffs for these options lead to the least overall benefit.