DIIS Comment
Is the future of Côte dIvoire being decided in Minneapolis?
How Cargill and other major cocoa traders and processors may help forcing Laurent Gbagbo out of power
27 January 2011
2010 election results invalidated
After a decade of instability and civil strife between North and South, Côte d’Ivoire went to the polls in October and November 2010 for a two-round presidential election that was supposed to take place back in 2005. Such election, delayed several times, was the result of a 1997 Peace agreement between President Laurent Gbagbo’s government and the former rebel group New Forces, which had occupied much of the North of the country during the civil war. President Laurent Gbagbo, whose electoral base is mainly in the South, and Alassane Ouattara, a former prime minister in the 1990s with strong support in the North, were elected to the second round. Despite reports of occasional violence and tension, the election was deemed to be ‘free and fair’ by international observers. The electoral commission, on 2 December 2010, declared Ouattara the winner with 54% of votes. The next day the Constitutional Council invalidated the results and declared Mr. Gbagbo the winner. Both contenders claimed to be the legitimate president and swore themselves into office.
Gbagbo refuses to step down
Despite pressure from the international community and ECOWAS (the Economic Community of West African States), Mr. Gbagbo has refused to stand down. Diplomatic efforts by former South African president Thabo Mbeki have so far failed to solve the situation. Much of the security forces in the commercial capital Abidjan still support Mr. Gbagbo, who remains in control of much of the city. Mr. Ouattara has taken refuge in an Abidjan hotel guarded by UN peacekeepers. The outcome of such standoff depends to a large extent on whether Mr. Gbagbo can access funds to keep paying his security forces and on who has authority over drawing funds from state accounts.
Cocoa companies 'temporarily suspend' purchases
But a new and perhaps surprising set of players has emerged in this conflict – major cocoa trading and processing companies. Due to the tense situation in the country, cocoa trading (a key ingredient of chocolate) has been in disarray in the past month or so. Prices have risen dramatically, as uncertainty over the availability of the crop from Côte d’Ivoire has led to a rush to buy. Côte d’Ivoire supplies 40 percent of world cocoa exports, worth USD 4.5 billion a year at current prices. The cocoa value chain is controlled by a small group of large international trading and processing companies, three of which are particularly important: Cargill (based in Minneapolis), Archer Daniels Midland (based in New York) and Barry Calebaut (based in Switzerland). In an attempt to force his hand over Mr. Gbagbo, the UN-backed government of Mr. Ouattara is now trying to apply a cocoa export ban from the country. According to the Financial Times (25 January 2011), Cargill has now ‘temporarily suspended’ purchases in the country and the other two large traders/processors may follow suit.
Multinationals shaping legitimate governance?
Research on value chains for agro-food products carried out by DIIS researchers has shown that key companies are indeed able to shape governance and operations in international trade, with powers that often go well beyond those of individual states. But generally such power has not extended to ‘solve’ situations of internal conflict – often such companies manage to operate alongside civil unrest fairly well. Are we entering an era where companies such as Cargill in Minneapolis are going to help install legitimately elected presidents?
Compromise in late 2011?
In Côte d’Ivoire, this is unlikely to happen. Given the large proportion of total exports that come from the country, these companies are unlikely to stop buying Ivoiran cocoa in the mid-term. They can afford to do so now because much of the Ivorian cocoa harvest has already been carried out and shipped. When the next main crop will start being available (in October 2011), the situation will be quite different and the pressure will be high on Mr. Ouattara to accept a political compromise of the sort carried out in Kenya and Zimbabwe in recent years.
After a decade of instability and civil strife between North and South, Côte d’Ivoire went to the polls in October and November 2010 for a two-round presidential election that was supposed to take place back in 2005. Such election, delayed several times, was the result of a 1997 Peace agreement between President Laurent Gbagbo’s government and the former rebel group New Forces, which had occupied much of the North of the country during the civil war. President Laurent Gbagbo, whose electoral base is mainly in the South, and Alassane Ouattara, a former prime minister in the 1990s with strong support in the North, were elected to the second round. Despite reports of occasional violence and tension, the election was deemed to be ‘free and fair’ by international observers. The electoral commission, on 2 December 2010, declared Ouattara the winner with 54% of votes. The next day the Constitutional Council invalidated the results and declared Mr. Gbagbo the winner. Both contenders claimed to be the legitimate president and swore themselves into office.
Gbagbo refuses to step down
Despite pressure from the international community and ECOWAS (the Economic Community of West African States), Mr. Gbagbo has refused to stand down. Diplomatic efforts by former South African president Thabo Mbeki have so far failed to solve the situation. Much of the security forces in the commercial capital Abidjan still support Mr. Gbagbo, who remains in control of much of the city. Mr. Ouattara has taken refuge in an Abidjan hotel guarded by UN peacekeepers. The outcome of such standoff depends to a large extent on whether Mr. Gbagbo can access funds to keep paying his security forces and on who has authority over drawing funds from state accounts.
Cocoa companies 'temporarily suspend' purchases
But a new and perhaps surprising set of players has emerged in this conflict – major cocoa trading and processing companies. Due to the tense situation in the country, cocoa trading (a key ingredient of chocolate) has been in disarray in the past month or so. Prices have risen dramatically, as uncertainty over the availability of the crop from Côte d’Ivoire has led to a rush to buy. Côte d’Ivoire supplies 40 percent of world cocoa exports, worth USD 4.5 billion a year at current prices. The cocoa value chain is controlled by a small group of large international trading and processing companies, three of which are particularly important: Cargill (based in Minneapolis), Archer Daniels Midland (based in New York) and Barry Calebaut (based in Switzerland). In an attempt to force his hand over Mr. Gbagbo, the UN-backed government of Mr. Ouattara is now trying to apply a cocoa export ban from the country. According to the Financial Times (25 January 2011), Cargill has now ‘temporarily suspended’ purchases in the country and the other two large traders/processors may follow suit.
Multinationals shaping legitimate governance?
Research on value chains for agro-food products carried out by DIIS researchers has shown that key companies are indeed able to shape governance and operations in international trade, with powers that often go well beyond those of individual states. But generally such power has not extended to ‘solve’ situations of internal conflict – often such companies manage to operate alongside civil unrest fairly well. Are we entering an era where companies such as Cargill in Minneapolis are going to help install legitimately elected presidents?
Compromise in late 2011?
In Côte d’Ivoire, this is unlikely to happen. Given the large proportion of total exports that come from the country, these companies are unlikely to stop buying Ivoiran cocoa in the mid-term. They can afford to do so now because much of the Ivorian cocoa harvest has already been carried out and shipped. When the next main crop will start being available (in October 2011), the situation will be quite different and the pressure will be high on Mr. Ouattara to accept a political compromise of the sort carried out in Kenya and Zimbabwe in recent years.
Regions
Ivory Coast
Is the future of Côte d’Ivoire being decided in Minneapolis?