14 May 1999 Vol 40 No 10 AFRICA CONFIDENTIAL NIGERIA 3 HORN OF AFRICA Golden parachutes It's now clear that President Regional collisions Obasanjo's incoming civilian The Eritrea-Ethiopia war is helping the Islamist regime in Khartoum government will face a major and further destabilising Djibouti and Somalia financial crisis when it takes office on 29 May. The massive drawdown The main beneficiary of the Eritrean-Ethiopian war (AC Vol 40 No 4) is Sudan’s National Islamic in foreign reserves continues, state Front government. A year ago, both Addis Ababa and Asmara were committed to backing the borrowing is rising sharply and the northern and southern Sudanese opposition, grouped in the National Democratic Alliance, which programme with the IMF has been all but derailed. was making increasingly effective attacks on NIF forces. Ethiopia has since reduced its support for the NDA after meetings with the NIF; more surprisingly, Asmara is also cosying up to Khartoum, signing a ‘reconciliation’ agreement in Qatar on 2 May. The terms include an Eritrean promise to 4 give the Sudan Embassy, handed to the NDA after Asmara broke diplomatic relations in December 1994, back to the government. The NIF regime, which persists in its regional destabilisation strategy Compulsory through the sponsorship of armed Islamist fighters, is now in the improbable position of being coalition courted by two of its once most determined enemies - though who began the courting ritual is in each However the people of KwaZulu- case a moot point. Relations have become an exercise in mutual manipulation. Natal vote, their party leaders have Since 1994, Eritrea has backed the NDA with training, arms and (denials notwithstanding) with decided that the province will be troops; Eritrean forces have crossed the border several times. Hassan Abdullah el Turabi’s NIF ruled by an ANC-Inkatha coalition appeared to have earned the enduring hostility of Eritrean President Issayas Afeworki because of for the next five years. The deal its support for Eritrean Islamic Jihad and the Eritrean Liberation Front of Abdullah Idris. between and means the Abdullah’s ELF (ELF-AI) has recruited both inside Eritrea and among Eritrean refugees in Sudan, voters' choice is really about which prompting Issayas to announce publicly that Hassan el Turabi and the NIF ‘had got to go’. Issayas party dominates the coalition. told Africa Confidential two years ago that he was confident the NDA would be able to topple El Turabi and the titular President, Lieutenant General Omer Hassan Ahmed el Beshir, even if that meant a protracted struggle. ANGOLA 6 Oil-fired warfare Changing calculations Now the calculation has changed and Issayas is concerned about possible Sudanese sponsored As the government's economic and military position worsens, its rearguard action through organisations such as the ELF-AI while Eritrean forces are concentrating apparatchiks are finding ever more on the border war with Ethiopia. Two years ago the ELF-AI formed a united front with other anti- innovative ways of financing the Issayas elements called the ELF-National Congress war effort. The latest strategy uses Ethiopia has been trying to persuade other small Eritrean opposition movements to join this anti- the marketing of equity stakes in Issayas alliance. In Khartoum in March, Eritrean opposition groups finally created the Alliance of new oil fields to guarantee funds to companies linked to defence and Eritrean National Forces, headed by Abdullah Idris (who was military commander of the original security services. ELF). The new Alliance brings together ELF factions (ELF-National Congress, including ELF-AI, with ELF-Revolutionary Council) and three small Marxist organisations (the Popular Democratic Front for the Liberation of Eritrea, Eritrean Revolutionary Democratic Front and Eritrean Kunama TANZANIA 7 Democratic Movement). Also included are another Kunama group called the Eritrean Democratic Resistance Movement, the Khartoum-based Eritrean Initiative Group, and the two wings of Islamic Island initiative Eritrean Jihad, now called the Eritrean People’s Congress and the Eritrean Islamic Salvation After four years of stalemate and Movement. three years of hard work by the The Alliance includes opponents of Eritrea’s ruling People’s Front for Democracy and Justice Commonwealth, a new agreement promises an end to the Zanzibar (PFDJ, formerly Eritrean People’s Liberation Front) from most ethnic groups. Yet the Afar Red Sea crisis. President Mkapa may have Front, recently created by Ethiopia and based there, apparently refused to join. The Alliance largely to remind Zanzibari leader Salmin represents Muslim opposition to the PFDJ, though the ELF-RC has significant Christian support. At Amour that when it comes to least three of its elements have some military experience and it can probably put some 3,000 or so political and economic solutions, fighters into the field; it will get significant support from Sudan and may strengthen Ethiopia’s proxy outsiders' opinions matter. operations in Eritrea, all the more effectively since it will presumably be able to use both Sudanese POINTERS 8 and Ethiopian territory. Zimbabwe/Congo- Facing this spectre, Issayas has been sounding out the possibilities of the Sudanese-Eritrean rapprochement mediated by Libya's Colonel Moammar el Gadaffi. The agreement includes a Kinshasa, Sudan commitment to stop supporting each other’s opposition groups. Then the NDA launched an attack and West Africa in the Eastern Region region on 5 May (see Pointer), partly aimed at destabilising the Asmara- Khartoum agreement. It may have succeeded in showing at least that whatever Gadaffi mediated, 14 May 1999 Africa Confidential Vol 40 No 10

0 Kilometres 600 Red over into domestic politics. Eritrea wants to threaten Ethiopia’s le A t Ni b a Sea r 0Miles 300 a main road and rail link abroad, via Djibouti port, so it backs the

Kassala Massawa SAN’A opposition Front pour la Restauration de l’Unité et la Démocratie ASMARA Wad ERITREA YEMEN (FRUD); on 13 April, Djibouti’s Foreign Minister, Muhammed Medani Musa Chechem, warned that President Issayas’ ‘intransigence’ B l TIGRAY n u e e Assab e d il N Gondar Aden A and ‘irrational and insane’ behaviour could drag Djibouti into a i N l f e Mt Moussa Ali o e e t DJIBOUTI f i Lake Tadjoura u l h G ‘swamp of border conflict’. Tana W sh DJIBOUTI Dese a w A L. Hafun After FRUD attacked an Ethiopian road convoy near the border Abbe Berbera last October, Ethiopia started helping the Djibouti government; ADDIS d SOMALILAND ABABA n Harar Ethiopian troops and helicopters have been in action at least twice

SUDAN a l t this year against suspected FRUD forces. Most FRUD units ETHIOPIA REGION n Ogaden u operate in northern Djibouti, close to the Eritrean-controlled Mount P o FIVE Om Moussa Ali, where the borders of the three countries meet. However, Yirga ’Alem Sha be lle on 14 and 15 April, two landmines exploded in Tadjourah district, SIDAMA SOMALIA one of them killing or wounding twelve policemen, and Boran Belet Dolo Weyne BAKOOL demonstrating FRUD’s disruptive power. Lake Luuq Turkana Bulo Hawo Eritrea has also supplied arms to opposition movements in GEDO UGANDA BAY eastern and southern Ethiopia, including the Oromo Liberation J MOGADISHU

u ba Marka Front (OLF) and Ogaden National Liberation Front (ONLF). The KENYA KAMPALA Indian Equator intermediary is Hussein Mohamed Farah ‘Aydeed’ in Mogadishu, Kismayo who has close links with both groups as well as with the Somalian Lake Ocean Victoria NAIROBI Raas Kamboni Islamist front, Al Itahad al Islami. OLF fighters have fought in Aydeed’s militia against the Rahenweyne Resistance Army (RRA) it was not an effective non-aggression pact: the NDA continues to in Bay and Bakool regions, and some were recently seen in be based in Eritrea, with the clear aim of overthrowing the NIF Mogadishu. Aydeed has sent the OLF weapons and in April 1998, regime while the Eritrean opposition alliance stays on in Khartoum, allowed it to hold a congress in Mogadishu, where it elected new having been assured by Sudan that ‘its status was unchanged’. leaders drawn largely from its military and Muslim elements. Djibouti is also having a mixed war (AC Vol 40 No 7). Its port When Hussein Aydeed visited Addis Ababa last August, Ethiopia is benefiting from the Ethiopian business rerouted from Eritrea offered him nothing, so Eritrea won him over when he visited over the past year but the Asmara-Addis Ababa conflict is spilling Asmara in February. He was accompanied by Abdurahman

Eritrea and its cousins The odds are stacked against Eritrea. Ethiopia has a bigger and better increased the threat from his harder-line compatriots. There are no equipped army and airforce, and a bigger population and economy to open signs of discontent in Asmara and Issayas’ simple lifestyle still sustain a long war. But President Issayas Afeworki tells visitors not endears him to his people. Yet Eritrea’s diaspora, mainly in the United to forget history: little Eritrea took on and beat Colonel Mengistu States and Britain, which is expected to give some US$400 million to Haile Mariam’s regime in Ethiopia, which had boasted the biggest the war effort, has started asking some awkward questions. Instinctively, army in Africa plus massive backing from the Soviet Union. This exiles back their country against what they see as Ethiopian aggression time, Issayas says, Ethiopia is weaker and more divided because most but may start to show their frustration if Issayas doesn’t produce some Ethiopians won’t support what they see as a war prosecuted in the results on the diplomatic front. Youngsters in Eritrea, whom Issayas interests of Premier Meles Zenawi’s Tigrayan-dominated government. calls the ‘Coca-Cola generation’, are being drafted to the front but The Tigrayans, who constitute ‘a minority within a minority’, are without the fighting morale that their elder brothers and sisters had in the aggressors and suffer from an inferiority complex about Eritreans, the 1970s and 1980s. Such new recruits could cause problems. Issayas says. He says that he stood almost alone in the Eritrean Eritrean fighters and financiers will want to see more diplomatic People’s Liberation Front in wanting cooperation with the Tigrayan progress if the military stalemate (which benefits Ethiopia) continues. People’s Liberation Front during the war against the Derg. Although Issayas’ call for international backing for a solution acknowledges he won the argument, he says he has now been proved wrong: ‘I was this. But would-be peacemakers are unlikely to rush to Asmara. too tolerant’. Issayas’ ambivalent foreign policy has chipped away at the country’s Issayas’ contention that most Ethiopians wouldn’t support Meles’ international support. war effort has so far proved wrong, although both Asmara and Addis Washington had wanted to use Eritrea as a bulwark against Sudan Ababa are actively supporting oppositionists in each other’s territory. (as had the Sudanese opposition). But after a series of clashes between If the war drags on, Eritrea’s resources will be stretched far more Asmara and US non-governmental organisations and businesses, early thinly than Ethiopia’s. Already businesses are closing in Asmara US enthusiasm for Eritrea’s discipline, incorruptibility and sense of because their workers are being sent to the front and the shortage of purpose seems to have waned. Washington listens more to Ambassador foreign exchange is slowing down trade. The Eritrean talent for David Shinn in Addis Ababa than to William Clarke in Asmara. Not improvisation, which was critical in resistance to Mengistu’s regime, many other Western countries have heavyweight representatives in is more difficult to harness in a modernising economy engaged in First Asmara; Britain, despite being a former colonial power, has no one World War trench-style warfare against a much bigger and more there. Asmara’s best friends these days are Libya, which helps with powerful enemy. money for arms, and Egypt, which is suspicious of Ethiopia’s intentions Yet none of this has weakened Issayas’ personal position nor concerning the Nile waters.

2 14 May 1999 Africa Confidential Vol 40 No 10

‘Tour’, the predecessor and opponent of Somaliland’s President administration in Luq. Mohammed Ibrahim Egal. Eritrea might try to revive the On 11 April, Omar’s allies in Mogadishu, Aydeed and Ali opposition in Somaliland in order to try to stop Ethiopia using the Mahdi Mohamed, had already made a formal complaint to the port of Berbera. United Nations, with copies to the Organisation of African Unity, Aydeed returned to Mogadishu's Balidogle airport with two Arab League and the regional Inter-Governmental Authority for plane-loads of weapons provided by Eritrea, financed by Libya and Development (IGAD). Seeking to neutralise Itahad, Ethiopia flown via Yemen. One Eritrean-chartered Russian freighter visited made the first of several cross-border incursions into Gedo in 1996, Merca in March, delivering hundreds of Kalashnikovs and much seizing and holding Dolo, Luq and several other small towns for ammunition. Another shipload of arms, including anti-aircraft and most of 1997. It has also provided arms and finance to movements heavy machine guns, arrived in early May. The price of opposed to Itahad and its allies, including Aydeed’s. Kalashnikovs has now fallen by 20 per cent to US$150 each in It has armed the Somali National Front (Marehan) in Gedo; RRA Mogadishu’s Bakara market. Fighting broke out in Merca in early in Bay and Bakool (and the newer Digil Salvation Front in the same May as local militias pressed for their share of the weapons. areas); United Somali Congress-Peace Movement (Hawadle/ Eritrea denies sending weapons to Aydeed but Somali sources Hawiye) in Belet Weyne in central Somalia; Ali Mahdi’s United insist the latest consignment includes several Oromo fighters, Somali Congress (Abgal/Hawiye) in Mogadishu (but when Ali coming from Eritrea. We hear that Oromos have been trained in a Mahdi lined up with Aydeed, it switched support to one of his main camp near Adi Caieh in Akele Guzai, southern Eritrea. Following rivals in the USC, Hussein Haji Bod, who received several lorry- Ethiopian bombing raids, they are being moved to Somalia, where loads of equipment at the beginning of May); Somali Salvation a camp has been set up in Qoryoley, south of Mogadishu. Democratic Front (Majerteen) of Col. Abdullai Yusuf, which now Accompanying the Oromos were 11 Eritrean officers, engineers rules Puntland in north-east Somalia; and the Somali Popular and specialists in mine-laying, reports say. Movement (Majerteen/Harti) of Gen. Mohamed Siad Hirsi ‘Morgan’ in Kismayo. Morgan used his latest consignment to Gutema in Puntland attack Itahad training camps around Ras Kamboni, south-west Most of the new weapons have gone to the OLF, and to the ONLF, Somalia, on 14 April, forcing some mujahideen to take refuge in which recently organised two kidnappings in Ethiopia’s Region Kenya. Five and which claims to have killed and wounded 340 Ethiopian soldiers in the first four months of this year. An Ethiopian military NIGERIA delegation, led by General Lemma Gutema, visited Puntland at the beginning of May to talk about military assistance and border security. OLF units of 200-300 men have, since late last year, been Golden parachutes operating along Ethiopia’s southern border and Ethiopian troops Military 'pensions' and mismanagement have several times raided across the border to repel OLF attacks. threaten the incoming civilian government After attacking a military post at Garbit near Mega, the OLF claimed that several hundred suspected OLF members were rounded It’s now clear that President Olusegun Obasanjo’s incoming up. Boran Oromo live in Kenya, too; Addis Ababa doubts whether civilian government will face a major financial crisis when it takes Nairobi has seriously tried to control OLF activity. (Kenyan troops office on 29 May. The massive drawdown in foreign reserves (AC have recently been on a military training exercise with United Vol 40 No 8) continues, government borrowing is rising sharply States’ troops in the traditionally lawless North-East Province). and the staff-monitored programme with the International Monetary Eritrea is now orchestrating efforts to organise a ‘Coalition of Fund has missed nearly all the major benchmarks agreed in January Ethiopian Oppressed Peoples’, an idea underlined at an OLF (AC Vol 40 No 2). meeting in Stockholm, Sweden, on 3 April which included both Not only have foreign reserves plummetted, from US$6.7 billion moderate and hard-line OLF groups, plus the Sidama Liberation to $4 bn. in the first quarter of this year, but the outflow goes on. Movement. The OLF formed a military alliance with the ONLF According to senior officials in Obasanjo’s People’s Democratic two years ago and has recently signed agreements with the smaller Party, the incoming civilians will be fortunate if they find more Oromo People’s Liberation Front and United Oromo People’s than $1.5 bn. left in foreign reserves by the end of May. Liberation Front. Eritrea wants to include anti-Ethiopian Somali A substantial part of the drawdown has been used to fund what groups, including the factions of Aydeed and his allies, and Al the World Bank and IMF euphemistically term ‘extra-budgetary Itahad. expenditure’. Also in the first quarter, the budget deficit swelled Ethiopia has reacted sharply to these efforts to widen the war. to N60.1 bn. ($668 million), nearly double the projection for the On 8 April, its troops once more crossed into Somalia’s Gedo entire year. Trying to shore up its financial position, the government Region, seizing temporary control of Bulo Hawo, an Itahad has been borrowing heavily from local banks. By 21 April, total stronghold, and of Dolo. This operation (officially denied) also domestic borrowing had reached the equivalent of $7 bn., with supported a faction of the Somali National Front, the Marehan interest payments of nearly $1 bn. due in 1999 alone. political organisation in Gedo. When its Chairman, Gen. Omar The government has forced banks to make compulsory purchases Haji Masaleh, lined up with Aydeed in 1998, the SNF split, and of N40 bn. ($444 mn.) of treasury bills in an effort to soak up one of Omar Haji’s leading opponents was killed on 7 April. liquidity. This further strains Nigeria’s rickety banking sector, Ethiopia’s intervention in Bulo Hawo encouraged Omar’s opponents with a sharp rise in interest rates (now at 35 per cent) adding to the to launch an unsuccessful attack on Bur Dhibo on 21 April. In early atmosphere of looming crisis. The naira has been devalued twice May, opposition groups were claiming that Ethiopian forces since January, from $1 = N86 down to $1 = N95 by the first week continued to hold areas of Gedo and had set up their own of May. But with the parallel rate already below $1 = N100, the 3 14 May 1999 Africa Confidential Vol 40 No 10

Central Bank of Nigeria may have to make further adjustments. contracts was not made clear. What puzzles many Nigerians and outsiders is the IMF’s and The FCT lost out, too. It had asked for a massive N36.4 bn. ($404 World Bank’s deafening silence on these developments. Was it mn.), including N5 bn. ($55.6 mn.) for housing newly elected wishful thinking or diplomatic understatement that led the IMF’s National Assembly members and N8.4 bn. ($93 mn.) for completing senior Africa advisor, Hiroyuki Hino, to describe Nigeria’s recent a new international terminal for Abuja airport. Ibrahim Aliyu, economic performance as ‘uneven’ to a conference organised by Chairman of the once influential but now increasingly marginalised the daily Financial Times in London on 4-5 May? Some Nigerian Programme Implementation Committee, which Abubakar had delegates at the conference suggested the Fund and Bank fear that established to direct his agenda, pointed out that another proposal, if they speak out too loudly, they’ll be held responsible for any for infrastructure at Gwarinpa, ‘might be unnecessary, in view of resulting political instability provoked by members of the outgoing the release of funds by the federal government to the federal military goverment. Yet others insist that failure by the Bank, Fund housing authority for the same purpose.’ The meeting cut the and foreign governments to speak out would weaken President- FCT’s funding to N5.9 bn. ($65.6 mn.). elect Obasanjo’s government as it would be blamed for the economic The Ministry of Power and Steel was unintentionally transparent crisis caused by the military’s profligacy. about its request for ‘walking capital’ of $40 mn. for the notorious Kaduna-based veteran oppositionist Balarabe Musa has gone white-elephant Alscon aluminium smelting plant. The document further, suggesting that the coming financial collapse is just one of was amended by hand to request the more technically appropriate, a series of booby-traps set by military officers to undermine the if less accurate, ‘working capital'. Its massive subvention for N104 incoming civilians. Other anti-military groups have already started bn. ($1.2 bn.) alone was reduced to N14.3 bn. ($158 mn.). referring to a ‘coup by bankruptcy’. At the FT conference, Vice-President-elect Atiku Abubakar At a donors’ meeting in Paris on 9 March, Finance Minister said the incoming administration was not in a position to prevent Ismaila Usman made pledges to restore some order to government such activities but pledged a review once the new government was spending. Within days, though, the military government was again in place. We hear Obasanjo has met Head of State Abubakar on the dipping in to the till, approving projects of dubious merit and of no matter. On 5 May, Abubakar told a meeting of the full cabinet that particular urgency for some of the lesser government ministries, to he had reduced the emergency spending programme to N48 bn. a value of an astonishing N280.3 bn. ($3.1 bn.). With Defence and ($533 mn.) and ordered the Finance Minister to ensure that only other ministries also putting in sizable bids, alarm bells began to projects directly related to the transition be implemented. But the ring even in government at the prospect of imminent, total financial damage may already be done. meltdown. There are signs that some of Obasanjo's advisors are trying to address the accountability isues. A team is already gathering Walking capital information for a review of oil sector policy, including marketing. A special government committee to prioritise approved government They want to sell crude more directly to end-users and cut out the projects awaiting funding was established to try to prune back the system of middle-men and sponsors for lifting contracts. Past military’s potentially catastrophic generosity. Those represented efforts to limit sales to end-users have failed because traders have at the 22 April meeting included Planning Minister Rasheed been ready to pay more commission to influential backers in Gbadamosi, Health Minister Debo Adeyemi, Solid Minerals Nigeria's political and military establishment than the end-users. Development Minister Patrick Yakowa, National Economic Nigeria's equity crude market remains the preserve of seven traders Intelligence Committee (NEIC) Chairman Sam Aluko and senior - Addax, Arcadia, Attock, Glencore, Marc Rich, Trafugura and officials from the ministries of Power and Steel, Works and Housing, Vitol. Any attempts to change this system would cut into the Finance, the Federal Capital Territory (FCT) and Central Bank. commercial interests of many senior officers. Gbadamosi, along with Finance Minister Usman, has been one of few ministers trying to keep spending within the limits of the IMF SOUTH AFRICA agreement. However, with so many bogus and inflated proposals on the table, the meeting amounted to little more than a kind of lottery. Total spending was cut, but only to N63.3 bn. ($703 mn.), a huge Compulsory coalition sum - even if Nigeria was not already in desperate economic straits KwaZulu-Natal's political leaders insist that and a new government about to take over - for which only token power-sharing will stop the violence efforts at justification were made. The Aviation Ministry wanted N34.6 bn. ($384 mn.) for a new The people of KwaZulu-Natal (KZN) will cast their votes on 2 radar system, a project which, according to the official minutes, June, in national and provincial elections. However they vote, had ‘been on the drawing board for some years now.’ Nobody their party leaders have decided that their province will be ruled by explained why this huge contract - some specialists reckon that a coalition for the next five years. The deal, between Thabo Nigeria could buy adequate radar services for a third of the price Mbeki, President of the African National Congress, and Chief - had suddenly become an emergency. The committee approved Mangosuthu Buthelezi of the , means that spending of N25.6 bn. ($284 mn.). the electorate can choose only which party dominates the coalition The federal Ministry of Works and Housing, which had in the most populous, and the most violence-prone, of South projects worth N9.8 bn. approved by Head of State Abdulsalami Africa’s nine provinces. Abubakar, received N3.9 bn. ($24.8 mn.) and a stern warning to Both Mbeki and Buthelezi have appealed for tolerance, but the ‘change its orientation with respect to award of contracts’, and to fearful history has not been buried. The province is still divided consider only those ‘contractors with the requisite competence and into party fiefdoms where rivals dare not enter. In the month before integrity.’ On what basis the Ministry had previously awarded the 1994 elections, an average of ten people died each day in 4 14 May 1999 Africa Confidential Vol 40 No 10 Uneasy peace The Zulu people are proud of their reputation as fighters, which is sadly fighters, in order to damage the ANC. President , on confirmed by the history of their region. Historic Zululand, incorporated his release from prison in 1990, tried to try to bury the hatchet, and wholesale into the white-ruled province of Natal, regained a nominal failed. Yet when open elections were at last held, and a Government identity in 1970 when the Zululand Territorial Authority began to of National Unity was formed, Buthelezi accepted cabinet representation function. The apartheid government, under its Bantu Authorities Act, for Inkatha, and served as acting president on more than a dozen intended to create a puppet Zulu ‘homeland’, with 48 major pieces of occasions when both Mandela and Deputy President Thabo Mbeki territory and more than 100 smaller so-called ‘black spots’ scattered were out of the country. amid white-owned towns, farms and sugar estates. Mbeki, following Mandela’s lead, has sought to accommodate But the wily Chief Mangosuthu Buthelezi, elected as the territory’s Buthelezi. Gradually, the endless behind-the-scenes talks paid off, chief executive officer, had other ideas. He was determined not to see and violence began to recede in KZN. The emerging plan was that the his people shuffled out of the South African mainstream and into a ANC and IFP would jointly govern KZN, with the IFP getting a share bantustan. Encouraged by the exiled African National Congress, of the ANC’s power on the national scene. But by drawing closer to Buthelezi (who is related to the Zulu royal family) in 1975 transformed the ANC, the IFP risked losing its identity. Pact or no pact, the two Inkatha, a Zulu ‘cultural organisation’, into the Inkatha Freedom Party parties are now fighting for control of KZN. Old animosities simmer (IFP) - a legal body, pursuing the aims of the banned liberation just under the surface, threatening to spill over once more into violence. movement. Buthelezi and Inkatha successfully resisted the pressure Meanwhile a potentially dangerous newcomer has come on to the from Pretoria to accept ‘independence’. scene, the United Democratic Movement. The UDM’s leaders are But Inkatha was as much Zulu as South African. There was an Bantu Holomisa, formerly military dictator of the (Xhosa) Transkei awesome falling out with the ANC, many of whose leaders were from homeland, and , a former National Party cabinet minister. the rival Xhosa people. From the early 1980s onwards, KwaZulu- ANC and UDM supporters have clashed already, not only in KZN, but Natal became a killing field in which thousands died. Elements in the also in the Western Cape. Political violence has not yet gone away but apartheid regime’s brutal security services armed and backed Inkatha’s the province is in better shape than five years ago.

politically-motivated crimes. The election itself involved obvious deployed, so the ground would be well covered. But the security irregularities, and its confirmed (but not undisputed) result was a forces complain of the lack of good operational intelligence making narrow 50.3 per cent majority for Inkatha, with 32.2 per cent for the it hard to establish targets. ANC. ANC-IFP relations have got worse this year, since Buthelezi The opinion polls suggest that, this time round, the ANC will dismissed the provincial Premier, Ben Ngubane, a thoughtful IFP emerge as the province’s largest single party, with about 38 per politician who had worked with like-minded ANC leaders to cent of the poll, the IFP trailing badly at about 20 per cent. Just reduce tension. His replacement is Lionel Mtshali, an Inkatha possibly the ANC’s share might rise above 50 per cent, once the 25 hard-liner who served briefly and controversially as Minister of per cent of voters who are undecided or undeclared have made their Arts, Culture, Science and Technology in the Government of choice - but fear, and the high proportion of voters in remote rural National Unity (GNU). Buthelezi apparently intended him to firm areas, make opinion polls unreliable in KZN. Past polls have up the IFP’s organisation and support, which had softened since tended to under-estimate support for the IFP. However that may peace broke out between the IFP and ANC at national government be, a coalition is thought indispensable to the maintenance of level, and the ANC gave Buthelezi the prestigious title of acting relative peace. president. That happened in 1996, when the National Party, then So far, inter-party violence remains well below the level of 1994. led by Frederik de Klerk, left the GNU, and the ANC (Mbeki in But a recent worsening of ANC-IFP relations has raised fears that particular) was keen to keep the IFP within the GNU. it could pick up in coming weeks. As if to forestall damage, the Once the election is out of the way, Mtshali seems unlikely to National Director of Public Prosecutions, Bulelani Ngcuka, a remain head of the IFP in the province. The ANC blames him for subtle former ANC politician, recently ordered a raid on the home damaging its careful peacemaking, and he made a mess of his last of Nyanga Ngubane, a senior IFP man who is the province’s ministerial job, but to keep him out of harm’s way he could be Minister of Safety and Security. restored to the national cabinet as one of Buthelezi’s nominees in an ANC-IFP national coalition; or be given an obscure diplomatic Death squads post. Ngcuka also put two other prominent provincial politicians on If the ANC does lead the KZN coalition, Mtshali’s successor as notice (via leaks to the press) that they too could face arrest. One provincial premier will probably be Sibusiso Ndebele, who heads is , the ANC boss in the party’s KZN Midlands the ANC’s provincial list. He has a cool head, and would be stronghold. The other is Philip Powell, a security policeman instructed to avoid triumphalism both by Mbeki and by Jacob during the apartheid era and now an IFP politician. Powell’s ANC Zuma, the ANC’s Deputy President, a Zulu who has done much to detractors suggest he knows more than he admits about several tons pacify the province. Zuma is tipped to take over from Mbeki as of weapons, which were advanced to Inkatha by ex-Colonel South Africa’s First Deputy President, with Buthelezi as Second Eugene de Kock, who ran the apartheid state’s main death squad Deputy President. The ANC’s other key leaders in KZN would be operation. Detractors also implicate Powell in the military training the Midlands boss Zweli Ngubane Ngubane and Bheki Cele, the of IFP militants. provincial Spokesman on Safety and Security. As Africa Confidential went to press, local and national security The ANC seems to believe it can outlast Inkatha. Buthelezi, officials were considering how best to police the province over the aged 71 and suffering from diabetes, is tired, according to senior election period. As many as 60,000 police and troops could be IFP colleagues. When he goes, his party will lose much of its force. 5 14 May 1999 Africa Confidential Vol 40 No 10

United States, Falcon is linked to two businessmen active in ANGOLA Luanda - a Paris-based Brazilian, Pierre Falcone, and ‘Mosquito’, who represents the commercial interests of a senior member of Dos Santos’ government. Falcone has excellent financial and intelligence connections in Paris; he played a major role in helping to arrange Oil-fired warfare an oil-based pre-financing deal involving Swiss-based oil trader Luanda is tying new investments in its oil Glencore and France’s Paribas on behalf of Luanda. The deal, sector to arms procurements mediated by former Paribas executive Jean-Didier Meill, who has since moved to Glencore, helped free up funds for major arms As the government’s economic and military position worsens, its purchases from Russia’s Rosvooruzhenie. leading apparatchiks are finding ever more innovative ways of Worried about the ramifications of such an equity partner, Exxon financing the war effort. The latest strategy, we hear, centres on contacted a senior US government official and was ‘reassured’ that marketing equity stakes in new oil fields to companies specialising Falcon’s background was well known to Washington. Less well or linked to defence and security services. For over a year, foreign known, perhaps, are the activities of Nigerian-born oil trader oil companies have been trying to finalise negotiations to secure Diende Fernandez, who stopped over in Europe in early May to licences for three ultra-deep-water oil blocks, thought to contain tell oil company executives that he had the authority to sell the final the largest untapped reserves being offered for exploration anywhere equity positions in the three major oil blocks, and was also authorised on earth. The government is hoping to reap more than US$800 to trade in Angola’s diamonds (AC Vol 40 No 8). million in signature bonuses from the operating companies and Against this backdrop, the economic position grows increasingly their equity partners in these blocks. Much of this will be funnelled desperate. Foreign suppliers wait to be paid for goods shipped long into the war, specifically to arms procurement. ago (some angry creditors have hired asset-tracing companies to Luanda has already appointed the leading operator in each claim from government bank accounts); teachers and doctors have block: British Petroleum-Amoco (26.6 per cent in Block 31); Elf- not had their salaries; and businesses are unwilling to take on new Aquitaine (30 per cent in Block 32); Exxon (35 per cent in Block government contracts. 33). Yet the final agreements, and the handing over of signature Oil output of 780,000 barrels per day produces little revenue. bonus cash, are being held up as the government chooses the Angola has borrowed heavily, using future oil production as remaining equity partners in each block. The interest of both oil collateral, so most of today’s production goes to repay loans taken and arms traders focuses on three companies - Pro-Dev, Falcon and out earlier (and often misused). Almost every oil cargo this year, Naphta - which have links to defence and security specialists but with oil prices close to $10 per barrel, went directly into repayments little apparent expertise in upstream oil production. on earlier loans, leaving almost nothing for the pot. Swiss-based Pro-Dev has been awarded a 15 per cent stake in Elf’s Block 33, though only minimal public information is available Murky money about the company. It is owned by a Syrian businessman who has Past oil-backed loans have come in all shapes and sizes. Four mediated in substantial arms deals between British Aerospace previous Union des Banques Suisse (UBS) facilities, and others (BAe) and several Middle Eastern governments. Industry sources arranged by Paribas, Banque Nationale de Paris, Société Générale tell us that Pro-Dev has been offering similar services to the and Bankers’ Trust, have typically involved advances of $300 mn., Angola government and that its equity share in Block 33 would be repayable over three years or less. Interest rates have usually been part of a medium-term payments guarantee structure. BAe high, at two percentage points or so above the benchmark Libor categorically denies it has reached any arms supply agreement rate. Other loans (including some backed by the US Exim Bank) with Angola or that it has approached Britain’s Department of have been taken to finance oil-related matters such as Sonangol’s Trade and Industry about processing the appropriate export licences. equity participation in production projects, and are repayable over However, a company spokesman did confirm that it was in purchase longer terms. negotiations with South Africa’s Denel Corporation, the other Other oil-backed loans, such as one from Japan’s Nissho Iwai company named in Pro-Dev’s procurement arrangement. Elf last year for the purchase of aircraft for the state airline, TAAG, are officials say they know nothing about Pro-Dev’s track record. harder to trace. The figures are murky and complex. Sonangol More is known about Naphta (holding a 5 per cent stake in Block likes it that way, as part of a network of secret funding which has 33), which is 49 per cent owned by Houston-based Isramco, and allowed it to move money around beyond the prying eyes of bodies has long-standing links with Levdan, a private security company such as the treasury and International Monetary Fund. owned by former General Zeev Zahrine. Isramco also has a At the last count, roughly three years’ worth of future oil diamond-buying arm which has been active in Angola. After he production was earmarked for loan repayments. The investment retired from the Israeli army, Zahrine helped, among other things, banking arm of UBS, Warburg Dillon Read (WDR), has been trying to train soldiers in Congo-Brazzaville and is believed to be trusted to put together a new syndicated loan of $500 mn., partly to salvage by both Luanda and the Israeli government. In 1997, Naphta Angola’s credibility by stretching repayments of earlier credits purchased the government’s holding in the Israeli National Oil beyond the three-year horizon. But the UBS/WDR loan is being Company and Naphta Chief Executive Yossie Levy acknowledges restructured and repriced. Bankers were keener to lend in 1997, it paid Zahrine’s Levdan about $300,000 ‘when they bought us the when oil prices were high, huge new discoveries were being made project in Congo’. Luanda sources say that Levdan still provides and the 1994 Lusaka peace accords were still taken seriously. security services for President João Eduardo dos Santos’ Lenders to the government dislike the recent successes of the government. União Nacional para a Independência Total de Angola. Since Even more dispersed are the operations of Falcon Oil and Gas December, two offensives by João de Matos’ Forças Armadas (holding a 10 per cent stake in Block 33). Based in West Virginia, Angolanas (FAA) on Jonas Savimbi’s headquarters at Andulo and 6 14 May 1999 Africa Confidential Vol 40 No 10

Bailundo have resulted in bloody defeats; in former strongholds Zanzibari opposition Civic United Front, led by Seif Shariff such as Malanje and Cuito the FAA have allowed UNITA to move Hamad, refused to accept that result. Ever since, accusations of in and shell the cowering populations. human rights abuses have rained down on President Amour’s Angolan budgets are usually read as pure fiction but the government, which has in turn accused the CUF and its supporters provisional 1999 budget, approved by the council of ministers at of everything including treason. the beginning of April, frankly admitted difficulties. ‘Angola’s The new agreement has been drawn up by Moses Anafu, a access to external financing is almost at its limit,’ said the preamble. special envoy of Commonwealth Secretary General Emeka ‘Lines of credit from Portugal and Spain are blocked because Anyaoku. It provides that: there is no oil to service them for now; commercial lines of credit ● The CCM and CUF will work together to ensure that the will of are over-saturated.’ the electorate is respected at the elections in 2000; The budget admitted that a deficit of nearly 30 per cent would be ● The Zanzibar Electoral Commission will be reformed, and all financed largely by 191 trillion kwanzas of ‘internal financing’, parties will have equitable access to the media; equivalent to almost 7 per cent of government receipts. Angola ● An independent assessor and a committee of retired civil uses no inter-bank instruments such as treasury bills, so ‘internal servants will examine claims for compensation by property owners financing’ means ‘printing money’. In the past week the rate of and civil servants who say they suffered damage or dismissal exchange has slipped from Kwz1.4 mn. per dollar to Kwz1.5 mn.; during the recent controversies; and the fall continues, further confusing the translation of the ● CUF members will resume their seats in the Zanzibar House of budget’s figures into real money. Representatives, and the President will appoint two extra CUF Last year, during the relative peace following Lusaka, the members, bringing their total up to 26, against the CCM’s 47 government forced down the annual inflation rate to 135 per cent; (which includes 21 presidential nominees); it had been in the thousands during the war-stricken years of 1993- ● An inter-party committee of MPs will help to implement the 1994. An extra consequence of the renewed war is that inflation agreement. seems to be blossoming again, despite the clean-up efforts of a new Big obstacles to the agreement’s success remain. The 18 CUF economic team led by Central Bank Governor Aguinaldo Jaime leaders, including four MPs, have been in gaol for 14 months on and Joaquim David, previously head of Sonangol and now in allegations, among other things, that they planned to recruit a ‘Blue charge of the ‘super-ministry’ of Finance. Guard’ revolutionary army of retired soldiers. The full charges Oil may yet again come to the rescue. The budget was built were revealed to defence lawyers only in February, after the around what seemed a realistic oil price forecast of $9 per barrel. accused had spent a year in prison, and the legality of the process If prices had stayed there, Sonangol would have needed to refinance has been widely criticised at home and abroad. The agreement fails its old loans with new ones, or ruin its reputation by defaulting on to mention the proposed trial - Anafu, the Commonwealth mediator, some earlier oil-backed loans. Sonangol’s reputation is all that said it was a ‘completely domestic local issue’. But the agreement enables Angola to borrow sums such as the $602 mn. of new does state that the judiciary is to be reformed. external financing needed to fund the 1999 budget deficit. Graver problems may arise from the reaction of President Amour Just in time, the price of oil rebounded, with help from a recent and his unreformed CCM. The agreement was initialled by Anafu deal by the Organisation of Petroleum Exporting Countries to cut for the Commonwealth, by Abubakar Bakari for the CUF, and by world production. Angolan crude is traded at a small discount on Kingunge Ngombali-Mwiru for the CCM. Bakari is a Zanzibar the world benchmark Brent blend, which this week fetched almost MP, and his party has welcomed the agreement. Ngombali-Mwiru, $15 per barrel. If this lasts, and even if the UBS/WDR deal falls though, is not an islander but the Union Minister of Regional through, Sonangol will probably be able to raise less ambitious Administration. For ten days after its publication, Amour’s island loans from adventurous bankers in Europe and elsewhere. Bankers branch of the CCM said nothing about the agreement; as recently have in the past been unwilling to lend money against prospective as March, Amour declared that Zanzibar’s problems would be increases in oil production capacity - so, as Angolan production solved within the country, not by outsiders. President Ben Mkapa, rises, the receipts from the extra volume are not already committed whose own political position is much strengthened by the agreement, to the repayment of previous loans. The rate of production rose last may have to remind his party colleague that, when it comes to year by around 60,000 b/d, with another 100,000 or so due this year economic recovery, outsiders’ opinions matter. and more to come in 2000. Published fortnightly (25 issues per year) by Africa Confidential, at 73 Farringdon Road, London EC1M 3JQ, England. TANZANIA Tel: +44 171-831 3511. Fax: +44 171-831 6778. Copyright reserved. Edited by Patrick Smith. Deputy: Gillian Lusk. Administration: Clare Tauben.

Annual subscriptions, cheques payable to Africa Confidential in advance: Island initiative UK: £250 Europe: £250 Africa: £233 US:$628 (including Airmail) A new agreement promises to end the Rest of the World: £325 political paralysis in Zanzibar Students (with proof): £75 or US$124 All prices may be paid in equivalent convertible currency. We accept After four years of political stalemate, and three years of hard work American Express, Diner’s Club, Mastercard and Visa credit cards. Subscription enquiries to: Africa Confidential, PO Box 805, Oxford OX4 by the Commonwealth Secretariat, a new agreement - still not 1FH England. Tel: 44 1865 244083 and Fax: 44 1865 381381 formally signed - lays the groundwork for normalisation in Zanzibar. Visit our web site at: http://www.Africa-Confidential.com The disruption began with the 1995 elections, and the declared Printed in England by Duncan Print and Packaging Ltd, Herts,UK. ISSN 0044-6483 victory of the Chama Cha Mapinduzi under Salmin Amour. The 7 14 May 1999 Africa Confidential Vol 40 No 10

opposition victories were followed by Khartoum SUDAN cancelling the last IGAD meeting at the eleventh Pointers hour. Its subsequent proposal of talks on 10-16 May, the week of SPLA anniversary celebrations, confirmed the SPLA in its belief ZIMBABWE/CONGO Lightning strike that the NIF is reluctant to return to the table while the military status quo remains unchanged. A series of opposition victories against the In turn, the SPLA then proposed the last week Big Wheels National Islamic Front government has of June for talks, the anniversary of the NIF The news that creditor banks met to discuss the prompted Khartoum to delay ‘negotiations’ in coup. Khartoum refused. Talks are not expected future of well connected Zimbabwean Nairobi under the auspices of the Inter- to resume before mid-July, at the earliest. entrepreneur Bill Rautenbach’s Hyundai Motor Governmental Authority on Development. In a Distributors in Botswana raises questions about lightning attack (reportedly seven minutes long) his continuing operations in Congo-Kinshasa. the National Democratic Alliance has recaptured WEST AFRICA Johannesburg financial sources tell us several a key base near Kassala. In an operation creditor banks - including First National Bank, codenamed ‘Lions of the East’, Beja Congress, ABN Amro, Absa, WestBank, Banque Democratic Unionist Party, Sudan Alliance Publishing pearl Belgolaise - met Rautenbach at the Sandton Forces and Sudan People’s Liberation Army Hilton on 5 May to discuss HMD’s indebtedness. took Telkuk on 9 May, six months after it had Several heavyweight Nigerian and Ghanaian South Africa's First National Bank deputy fallen to the NIF. business consortia are bidding for control of 82 managing director Alex Park said 'We have The Joint Command’s success came a month year-old, London-based West Africa magazine, been perfecting undisputed claims to our after NIF forces suffered defeat at the hands of which on 24 March went into compulsory security.' HMD is part of Rautenbach's ‘Wheels the SPLA’s 13th Division in southern Blue liquidation, following the non-arrival of funds of Africa’ empire, based in South Africa but Nile. The NIF’s surprise dry-season offensive from the Abuja government, indirectly the ultimately owned by a holding company in the that began in December ended in disaster for a magazine’s owner. One bidder, we hear, British Virgin Islands. We were told that there force besieging the strategic SPLA garrison of represents the interests of Major General Aliyu were serious concerns about the valuation of Ulu. According to SPLA area commander Malik Mohammed Gusau, head of military assets on which Wheels of Africa's credit lines Agar, Khartoum threw in 23 battalions (of circa intelligence under Gen. Ibrahim Babangida were based. Neither Rautenbach nor his partner 600 exclusively regular troops each), only to and a kingpin in Gen. Olusegun Obasanjo’s Nissim Franco were available for comment on see 11 destroyed, 16 senior officers killed and election campaign. Despite the efforts of Wheels’ financial position. two working T-55 tanks captured in the final editorial and managerial staff to reestablish Rautenbach has close personal ties with battle outside Ulu. some credibility, the appointed liquidator, Zimbabwe’s Justice Minister Emmerson Though the government offensive began well, Stewart Paird of Kidsons Impey, has been Mnangagwa, who also manages the business capturing some SPLA positions, it met stiff receiving bids for the title (deadline 15 May). holdings of the ruling Zimbabwe African resistance at Ulu. Malik says SPLA forces there Liquidation sets West Africa free of a National Union and has been the main strategist, held out for over two months by digging crippling debt burden of about £850,000 along with President Robert Mugabe, of themselves in to trenches many metres deep. (US$1.36 million). This doesn’t include a paper Harare’s intervention to shore up Laurent SPLA reinforcements, with government tanks debt of over £500,000 ($0.8 mn.) owed to its Kabila’s government. and guns captured early in the war, then laid parent company, the Daily Times of Nigeria. Astutely using his political ties with Harare, siege to the government’s own siege forces: Information Minister John Nwodo announced Rautenbach started discussions on business approaching not from SPLA territory but circling in November that the Times (and hence West projects with Kabila to reinforce the Zimbabwe- around and attacking NIF forces from the rear, Africa) would be privatised and asked the Head Congo axis. And when Kabila was in Harare in using the government’s own road from Ed of State, Gen. Abdulsalami Abubakar, for November, he appointed Rautenbach chief Damazin as if they were government forces. £800,000 ($1.28 mn., of which half urgently, to executive of Congolese state-owned Gécamines Malik claims he offered the army safe passage prepare the West Africa Publishing Company and sold (for an undisclosed sum) 80 per cent of if it left without tanks, rifles or ammunition but for privatisation. the company’s Groupe Central, to Rautenbach’s it was ordered to fight on and, he says, was But Finance Minister Ismaila Usman Virgin Islands-registered Ridgepointe. ‘annihilated’. More than 400 men died and opposed the grant, as he felt too much We hear Rautenbach’s other operations in afterwards, ‘You couldn’t even find a spare government money had been put into West Africa Congo, such as supplies, logistics and transport, part. Everything was destroyed. Very few men in the past - notably £1.3 mn. ($2.08 mn.) in alongside companies such as Zvinavashe escaped.’ Ethiopian forces have intervened to 1992-93, when Tola Adeniyi was Daily Times Transport (owned by the brother of Army Chief support the Sudanese opposition several times Managing Director, and Reverend Tunde of Staff Lieutenant General Vitalis Zvinavashe) this year but this time were not called on. Roberts was in charge at West Africa. This are faring better than Gécamines. One business In a parallel offensive in the Nuba Mountains period was investigated by the Daily Times in source suggests that Rautenbach might be able (AC Vol 40 No 7), government forces have 1994-95 and was part of an inquiry into the to find help from fellow Zimbabwean failed to capture the handful of airstrips that Daily Times’ debts commissioned by the then entrepreneur John Arnold Bredenkamp, who permit the Nuba to resupply their embattled Information Minister, Walter Ofanagoro, in is back in favour with the ZANU government, region. SPLA Commander Youssef Kuwa told 1996. Neither report was made public. Roberts having been accused of busting United Nations Africa Confidential eight attacks on the airstrips remains an ordained Church of England minister. sanctions against Ian Smith’s regime and have been repulsed. He said government forces Under Gen. Sani Abacha’s rule, the paper subsequently against the SA apartheid regime. appear poised for another push (despite heavy was left slowly twisting in the wind. The Not only is Bredenkamp active across many losses) in the month left before the dry season sporadically and poorly paid journalists staged sectors, including arms supply to Congo-K, he ends. one-day-a-week strikes, supported by Britain’s has very deep pockets. A business associate Commanders believe the NIF offensive in National Union of Journalists. While the claims that an entry in the UK Sunday Times the ‘transitional zone’ and the east began earlier Nigerian government cannot bid for the title, ‘Rich List’ which puts Bredenkamp’s personal than usual in the hope of catching the opposition two of President-elect Olusegun Obasanjo’s wealth at £350 million (US$560 mn.) is a unaware, enabling it to go to the IGAD talks closest aides are former editors, Ad'Obe Obe ‘considerable underestimate’. with only southern Sudan on the agenda. The and Onyema Uguchukwu.

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