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Key Political Risks to Watch in Guinea

August 2, 2010

 

FACTBOX-Key political risks to watch in Guinea

Mon Aug 2, 2010 12:08pm GMT

By Saliou Samb

CONAKRY Aug 2 (Reuters) – Guinea, one of the world’s biggest sources of the aluminium ore bauxite, will hold the second and decisive round of a presidential election in coming weeks, a vote aimed at ending a political crisis that has persisted since a 2008 military coup.

On July 20, Guinea’s Supreme Court rejected candidates’ challenges and confirmed that Cellou Dalein Diallo, who polled highest in June 27’s first round, and second-placed Alpha Conde will face each other in a run-off for the presidency. The court did, however, throw out votes from five districts on grounds of “severe irregularities”. Diallo is the favourite, having secured the backing of a leading rival.

A truly free and fair vote could mark a turning point for the country and set a powerful example to neighbours in West Africa, where civil war, armed power grabs and accusations of rigged elections have become common.

Guineans and foreign observers see a legitimate poll as a first step towards Guinea winning back foreign aid and ensuring its mineral wealth benefits its 10 million people.

POLITICS AND THE ELECTION

The army stepped into the power vacuum left when President Lansana Conte died in December 2008 after more than two decades of rule, selecting Captain Moussa Dadis Camara as head of the junta, and de facto head of state.

Camara won early popularity but then reneged on promises to hand power back to civilians. He became an international pariah when security forces killed 150 unarmed pro-democracy marchers on Sept. 28 2009, a massacre in which the United Nations said Camara was implicated.

In December a former aide-de-camp wounded Camara in an assassination bid, since when he has undergone medical treatment in Morocco and has been convalescing outside Guinea. His second in command Sekouba Konate took over and — to the relief of the region and with the firm backing of U.S. and French diplomacy — named a transitional government tasked to prepare elections. What to watch:

– Conduct of vote. Several candidates in the first round alleged fraud, and international observers, while saying they were generally satisfied with the process, noted logsitical problems. To minimise the risk of a challenge after the second round, which could be more inflammatory than those so far, the electoral commission (CENI) will want to make sure there are as few problems as possible.

– Loser disputes result. While the electoral process may be able to withstand challenges of the count in a handful districts, if the loser claims the entire second round is fraudulent or flawed, and his supporters take that grievance onto the streets, Guinea may have a major problem. The foreign governments which have spent $41 million between them on the vote have stressed to candidates the importance of respecting the result, but an loser denouncing the result rather than offering to work with the winner could provoke serious unrest.

– Ethnic conflict. Diallo and Conde draw support essentially on ethnic lines. Conde belongs to the Malinke ethnic group, as does around 35 percent of the population, while Diallo is a Peuhl, a group which makes up around 40 percent.

Ethnic divisions have historically been a factor in Guinean politics. Malinke are seen as having held sway under President Sekou Toure, the country’s first post-independence leader, while successor Lansana Conte belonged to the minority Soussou group. Camara came from one of the minorities in the southeast of the country. Many Peuhl believe it is their turn to govern. Eyewitnesses said much of the Sept. 28 violence was ethnically motivated. The nightmare scenario is that an ethnic flare-up triggers tensions among the same ethnic groups in neighbours such as Sierra Leone and Liberia.

– Army tries to retain power. Konate has not had to deal with any major rebellion within the ranks. But some analysts believe parts of the army will not readily step down from power lightly. Konate has already rewarded soldiers for their good behaviour during the first round with across the board promotions, but still, whoever wins the election may have to buy off officers with some form of financial sweetener — which would mean fewer revenues to reform public services and infrastructure.

– Camara’s supporters rally. Interim premier Jean-Marie Dore warned before the first round that supporters of Camara were plotting his return to Guinea to disrupt the election. Though trouble did not materialise as some had feared, interference from the Camara camp cannot be wholly ruled out.

– Security. Even if the army does not attempt to hold onto power or destabilise the incoming government, its past role in maintaining law and order has been counter-productive. Military discipline has improved greatly under Konate but last year soliders were blamed for robberies and attacks on civilians. Though it seems unlikely foreign firms will be targeted, some executives quit the country last year on security concerns.

MINING

Guinea relies on minerals for over 70 percent of exports. Its best established export industry is bauxite, the feedstock ore for aluminium, of which it is the world’s biggest shipper. With its Friguia complex, RUSAL has capacity for 640,000 tonnes of alumina a year which the Russian firm ships around the world for further refining into aluminium.

As well as bauxite, Guinea is a producer of gold, but iron ore is the country’s major growth industry.

Joint ventures of Rio Tinto and Chinalco, and Vale and BSG Resources, are between them spending more than $5 billion on the Simandou and Zogota iron ore projects, deals agreed this year. UK-listed iron ore firm Bellzone Mining Plc clinched in May a potentially crucial deal with China International Fund (CIF) under which CIF will pay $2.7 billion for Bellzone’s Kalia iron project, including a 286-km (180-mile) railway, in return for the right to buy all the Kalia output and other advantages.

What to watch:

– Contract review and security of title. Several candidates have promised to review contracts signed by the junta. But as long as the parameters of such a review are clear, most firms will be content to work with the authorities on it. Analysts point out that Guinea has an interest in maintaining relations with incumbents so as to maintain state revenues from the mines.

– Metals prices falling. Mining projects are only viable when sales prices for their product are above a certain level. Once operational, mines the size of those planned or operational in Guinea very rarely shut down altogether, but production can be cut back. Iron ore prices rose close to $200 per tonne in key market Asia this year but have since fallen to $150 per tonne.

– Strikes and protests. Output at Friguia was almost completed halted by a 16-day strike over pay earlier this year, while wildcat strikes and blockades by residents are common. Mining firms are often targeted by Guineans angry at lack of basic infrastructure and utilities provision.

– New projects. Were large-scale new projects to get the go-ahead this year, it would be a boost for the new government. Potential developments in the pipeline include a BHP Billiton -ArcelorMittal joint venture to combine iron ore assets in Guinea and Liberia, about which preliminary talks began at a company level in January.

BHP is also, with Global Alumina, Dubai Aluminium Co and Mubadala Developments, a shareholder in Guinea Alumina Corporation, a joint venture which plans to build a 3.3-million tonne-per-year alumina refinery. A report in Australia in April suggested BHP may be ready to approve the project this year.

SOCIETY AND WIDER ECONOMY

Annual mining revenues worth around $100 million to the government have not been enough to pull Guinea out of poverty, with the country ranked 170 out of 182 in the most recent United Nations Human Development Index of living standards. A smooth election is vital to any change in its fortunes.

What to watch:

– Donors coming back. The European Union last year suspended development aid and withdrew a plan for a fishing partnership with Guinea. But foreign donors will want to reward democratic progress by swiftly unblocking aid and Guinea’s new leaders can expect help, notably from Brussels and ex-colonial power France.

– Infrastructure improvements. Many Guineans are without access to electricity and running water, and less than a third of the population is literate. Any new government will be under pressure from the street to make improvements fast.

(Additional reporting and writing by Daniel Magnowski; editing by Mark John and Philippa Fletcher)

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