Smuggling rackets rule in rebel-held Ivory Coast

KORHOGO, Ivory Coast (Reuters)

Powered by a runaway trade in everything from clandestine cotton to shady sugar and bootlegged boxes of malaria pills, rebel-held Ivory Coast has turned into a smuggler's paradise.

Three years of civil war have led to a collapse in law and order that has proved a boon for a shadow economy run by rebel warlords, gangsters and fly-by-night businessmen, but left legitimate enterprises struggling to survive.

"For the past two years we've been saying 'We are going to the wall, we are going to the wall,'" said Marcel Meurot, the French director of Ivory Coast's biggest sugar producer, Sucaf, based in the rebel-held northern town of Ferkessedougou.

Sucaf, owned by the French group Castel, is in danger of becoming another casualty of the civil war that has engulfed the former French colony since a failed attempt to overthrow President Laurent Gbagbo in September 2002.

The economic crisis caused by the conflict in the West African nation is also helping to prolong it.

Regional analysts say powerful figures in both the rebel-held north and government-controlled south have forged alliances with opaque business interests that have made war profitable for leaders on both sides.

Like many other firms, Sucaf has been brought to its knees by a flourishing cross-border smuggling trade that goes unchecked by the rebels who take their cut.

While Sucaf's 30,000 workers have kept up production since the start of the rebellion, sales have plunged by 40 percent as cheaper, untaxed imports enter the market.

Meurot estimates that 50,000 tonnes of sugar enters Ivory Coast illegally from neighbouring Ghana each year, pricing his product out of the market.

Smugglers even sell sugar in stolen Sucaf packaging.

Clandestine cotton

From small businesses to much bigger enterprises, many firms in the impoverished north are making their money through illegal trade with neighbouring countries instead of official, tariff-intensive business with the government-held south.

Unpaid by official marketing agents since the start of the war, desperate cotton farmers are forced to trade thousands of tonnes a year on the black market for sale in neighbouring Burkina Faso and Mali, at a loss of 40 percent.

On the streets of northern Korhogo, the second biggest rebel-held city, women sell anti-malarial drugs imported from Guinea at a fraction of pharmacy prices, while restaurants stock soft drinks from Burkina Faso.

Even in government-controlled areas of the world's largest cocoa producer, cocoa is illegally sold for higher prices through neighbouring Guinea, Togo, Ghana and Liberia.

Rebel-held territory has been cut off from government funding since the start of the crisis, fuelling a culture where taking bribes is one of the few sources of income.

From the lowliest soldier asking for a cigarette or "tea money" at a roadblock, to the local warlord driving a gleaming four-wheel drive, rebels find questionable sources of cash.

The rebel movement, know as New Forces, funds its war effort mainly through payments made by cargo hauliers.

In the small town of Diawala , an 11-lorry convoy of petrol tankers from neighbouring Mali thunders through, with a "permission to pass" notice pasted on each windscreen.

Granted by rebel authorities for a considerable fee, such signs eliminate hold-ups at a gauntlet of checkpoints manned by armed, sometimes drugged, young soldiers keen to solicit money.

"Everything needs a permit," says Alphonse Soro, 29, chief of the New Forces' civilian administration in Korhogo. "Say you wanted to move goods from Korhogo to Odienne: you pay us."

Sucaf's Marcel Meurot negotiated a 75 percent reduction on the fees at the start of the conflict, agreeing to pay 100,000 CFA franc ($188) for every truck headed south. The rebels took 200 million CFA in such payments from Meurot alone last year.

But Meurot says rebels find safeguarding the passage of illicit conveys much more lucrative, charging 1.2 million CFA for a pass for clandestine cargo. A ban on sugar importation to combat fraud, introduced last August, has not been enforced.

Living the high life

The smuggling bonanza has done little to improve life for most people in the rebel-held north, a ruined land where doctors and teachers are few, water is a luxury, food is scarce and roads are crumbling.

In Korhogo, business has been hit so hard that few residents can afford taxi rides in cars. Since the rebellion, a thriving business of moped taxis has grown up, offering cheaper lifts.

While locals struggle to pay 200 CFA for a ride around town, visiting rebels cruise around in cars with no number plates.

Senior rebels appear to be reaping the benefits of the new economic order. Civilian New Forces leaders live in the smartest villa in town and at least one stays at the Mont Korhogo hotel, once the toast of tourists.

Many military chiefs are rumoured to have made their money in a series of bank raids carried out at the start of the war.

New Forces administrators say they receive no official salary, having volunteered for the cause. Those paying their ad hoc taxes are less convinced about where the money goes.