FACTBOX-Key political risks to watch in Guinea: November 2011
By Saliou Samb
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CONAKRY Nov 8 (Reuters) - Tensions are mounting ahead of Guinea's parliamentary elections, seen as key to reviving foreign aid programs and ensuring the country's 10 million people benefit from minerals investment.President Alpha Conde, who survived an assassination attempt in July, less than seven months after taking office, has renewed an offer of talks with the opposition to smooth over differences on how the election is being organized.
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Guinea's transition to civilian rule in late 2010 was seen as a powerful example for the region after years of military leadership, but the assassination attempt, which the government has blamed on some former senior military officers, has highlighted the difficulties Conde faces in carrying out a key campaign promise to reform the military.
Since Conde won the Nov. 7, 2010, election, tensions continue to simmer in the country. Conde's security forces have cracked down on supporters of his chief political rival Cellou Dalein Diallo, who conceded defeat in the election.
What to watch:
- Protests. Three people were killed in protests in late September when rock-throwing demonstrators clashes with security forces using tear gas grenades and truncheons. Opposition figure Diallo has vowed to call his supporters onto the streets over what he says is Conde's effort to rig the parliamentary polls due this year. The date for the election, which is tied to aid from the European Union and other donors, has yet to be set.
- Heightened tensions following the assassination attempt. The government said 26 military officers and 13 civilians had been arrested. It added that those arrested had spoken of links to political and business circles.
- Ethnic tension. Conde and Diallo drew support essentially on ethnic lines and the election rekindled ethnic tensions. Conde belongs to the Malinke ethnic group, as does around 35 percent of the population, while Diallo is a Peul, a group which makes up around 40 percent.
- How Conde's government deals with the opposition will be closely watched by investors and human rights observers. The organisation of legislative elections planned for the latter part of the year will also be scrutinized for signs Conde's leadership will break with Guinea's authoritarian past.
- The role of the army. Conde appointed himself defence minister, giving him direct involvement in a military reform effort started by junta leader Sekouba Konate. The country's military has earned a reputation for brutality and indiscipline.
Guinea relies on minerals for more than 70 percent of exports. It is the world's biggest shipper of bauxite, the feedstock ore for aluminium. 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, and 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.
What to watch:
- Investments under new mining code. Guinea adopted a new mining code in September that more than doubles the state share in mining projects from 15 percent to 35 percent. The new allowable state share includes a 15 percent free carry, a clause the mining companies say will eat directly into their profits and make new investment less likely.
- Contract reviews. Guinea's Mines Minister told Reuters in September the country was planning to launch a nationwide mining contract review to root out 'unconscionable provisions' granted by previous rulers. The review could affect the country's main investors, though Russian mining giant RUSAL said existing contracts could not be altered unilaterally.
- China has shown growing interest in the minerals-rich country. Apart from the Rio-Chinalco JV to develop the Simandou iron ore project, Guinea is in advanced talks with state-owned China Power Investment to develop a bauxite mine and build an alumina refinery, deep water port and a power plant in deals worth nearly $6 billion.
- Labour relations. Ex-workers blocked a key export railway from RUSAL's Friguia alumina refinery for several days in September over back pay. They left the tracks when they were informed that RUSAL had wired payment to the government for disbursement. Meanwhile, villagers seeking jobs at Canadian miner Semafo's gold operation attacked company buildings in September, forcing the company to shut the operation and evacuate its expatriate workers to Mali.
- Ongoing disputes. Guinea has a long history of disputes with major companies, like its decision to remove Rio Tinto's rights to part of the Simandou iron ore development , and ongoing disagreements with RUSAL over pollution and back taxes.
Other examples include when Conde in March cancelled a deal with France's Getma International to manage Conakry's container port, handing the multi-million-dollar deal to port group Bollore
A month later he cancelled an agreement with Vale to upgrade a 640 km railway.
Guinea reached an agreement with South African mobile operator MTN to settle a dispute after the government seized MTN's facilities over a payment row. MTN agreed to pay Guinea 15 million euros to end the dispute.
- New projects. Large-scale new projects would be a boost for the new government. BHP Billiton is, with Global Alumina (GLAu.TO: Quote), Dubai Aluminium Co and Mubadala Developments, a shareholder in Guinea Alumina Corporation, a joint venture that plans to build a 3.3-million tonne-per-year alumina refinery.
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 United Nations Human Development Index of living standards.
The smooth election outcome may change its fortune. Output of minerals rose in 2010.
What to watch:
- Donors coming back. The European Union in 2009 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 from Brussels and ex-colonial power France.
EU development chief Andris Piebalgs visited the country in May and said Guinea had made progress towards democracy. He added that full cooperation with the country could resume once legislative elections are held. The election commission has proposed Dec. 29 for the elections, but the government has not yet approved it and the opposition has rejected it.
- Infrastructure improvements. Many Guineans have no electricity or running water, and less than a third of the population is literate. The new government is already under pressure from the street to make improvements fast. (Writing by Richard Valdmanis)