Get money, get aid.

Risky Business

Though I have much love for Professor Collier, he was deservedly taken down a peg for his suggestion that the international community encourage a coup in Cote d’Ivoire.

Of course, when an alternative is the much less sexy sounding idea that a declaration of non-transferability on contracts can force Gbagbo into a financial bind, maybe we can’t blame him. (Nope…actually we still can.)

This suggestion was recently blogged by Todd Moss at CGD.  Translation?  It’s the idea that Gbagbo needs cash (to pay the military) so no one should loan it to him.  Why?  Because he ain’t gonna pay it and whoever comes to power next will have to pay those leftover debts.  And, if anyone is in fact willing to give him money, this is pretty risky which means the reflected interest rates on that debt will be high.  Basically, this is a way of saying that the next administration shouldn’t be punished for Gbagbo’s irresponsible borrowing today, while Gbagbo will come under pressure when he doesn’t pay up to residents or foreigners.

The key issue here is that maybe this is unnecessary because no one will loan money anyways since the risk is too high and any contracts would be widely recognized as unenforceable.  Or, squeezing Gbagbo’s pocketbooks might have negative effects on the general population depending upon how long this standstill holds out.   EU assets are already frozen but Gbagbo has struck back by getting his cash via other means—seizing the central bank.

On top of this, his rival, Outtara, is urging cocoa importers to boycott Ivorian cocoa in order to cut off Gbagbo’s financial lifelines.  Though this may be damaging to Gbagbo, it will alternatively hurt the livelihoods of farmers and encourage cocoa smuggling to neighboring countries.

Just like everyone else, we’ll be waiting to see what happens next.

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