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UPDATE 2-Gbagbo hints at possible talks in Ivorian poll row

Fri, 10 Dec 2010 18:43 GMT

Source: reuters // Reuters

* Gbagbo hints at possible talks over election row -paper

* Talk of war dismissed by isolated leader

* Soro says will be "in office" next week

(Adds Soro comment, U.N. presence around Ouattara hotel)

By David Lewis and Loucoumane Coulibaly

ABIDJAN, Dec 10 (Reuters) - Ivory Coast President Laurent Gbagbo has dismissed talk of a possible resumption of war and called for negotiations to end the crisis triggered by a dispute over a Nov. 28 presidential election.

The comments, published in the state-run Fraternite Matin newspaper on Friday, are the first signs from Gbagbo that he is ready for talks to end a deadlock after a top legal body named him as president, reversing election commission results that said his rival Alassane Ouattara had clearly won the vote.

Both men say they are serving as president, having named prime ministers and their respective governments.

There has been no sign of an end to the impasse although the official designated by Ouattara as his prime minister hinted on Friday things would "return to normal in coming days".

"We hear people say there will be war, that there will be an explosion. There will not be a war here. Things will end up with us sitting down (together)," Gbagbo was quoted as saying in the newspaper. "Let's sit down and talk. If there is a problem, we will sit down and talk."

Ouattara has been recognised by world leaders, who have threatened sanctions against Gbagbo and his family, as well as the African Union and regional body ECOWAS, which have since suspended Ivory Coast until Ouattara takes up his post.

There was no response from Ouattara's camp to the offer. Guillaume Soro, who quit as Gbagbo's premier to take up the offer of the same job under Ouattara, suggested the deadlock would soon ease.

"Things will return to normal in coming days. As far as I am concerned, from next week I will be at my offices to tackle the tough problems and urgent concerns of the Ivorian people," he told reporters, without elaborating.

At present, government buildings are in the hands of pro-Gbagbo officials. Ouattara and Soro are based in Abidjan's lagoon-side Golf Hotel, ringed with barbed wire and guarded by dozens of U.N. peacekeepers with armoured vehicles.

The polls were due to help reunite the top cocoa grower, divided since a 2002-3 war. But rebels still running the north, where hundreds of thousands of votes were cancelled by the pro-Gbagbo Constitutional Council to deliver his victory, have also backed Ouattara, raising fears that war may resume.

DEBT WORRIES

Cocoa prices have spiked to four-month highs in recent days. But the benchmark March cocoa contract <CCc2> slumped $144 to $2,866 per tonne in New York on Friday as traders said there were signs things were moving towards solution.

The yield on Ivory Coast's Eurobond <CI049648839=RRPS>, meanwhile, stood around 13 percent, up from 10 percent just after the run-off, on fears the standoff could hurt its ability to meet payments. The next coupon is due in December.

"It is a fairly small payment, due to the structure of the bond. It's only 1.25 percent interest ... or just below $30 million. The question is: who will actually pay it?" said Andreas Kolbe, emerging market credit strategist at Barclay's Capital, adding the following payment would be due in June.

"As long as Cote d'Ivoire (Ivory Coast) keeps up the payments, the bond won't drop out of the EM benchmark indices."

The IMF, World Bank and African Development Bank say they can only work with a U.N.-recognised government, raising the risk that Gbagbo's staying on would threaten $3 billion in debt relief, with budget support also being cut.

At the lagoon-side hotel, Ouattara has set up generators amid fears of power being cut, and called on civil servants not to go to work.

The usually busy government tower blocks surrounded by palm trees in the once gleaming but increasingly shabby commercial district were largely quiet on Friday.

"Lots of our colleagues have not come to work today," civil servant Roger Zan told Reuters. "As you can see, there is virtually no activity in the corridors. The civil servants are still afraid."

Arrivals of cocoa beans at the country's two main ports have slowed while business leaders have threatened to stop paying taxes until the row over who is in charge is resolved. (Additional reporting by Tim Cocks; Writing by David Lewis and Tim Cocks; Editing by Maria Golovnina)