NAIROBI Oct 5 (Reuters) - Kenya is facing a storm of economic challenges as
politicians start jostling ahead of next year's general elections against
the backdrop of confirmation-of-charges hearings for six high-profile
suspects accused of fomenting political violence.
Here are some of the risk factors ahead:
KENYA ON TENTERHOOKS
The country is on tenterhooks as hearings to confirm charges against the six
suspects named by the International Criminal Court (ICC) in The Hague for
being behind 2007-08 post-election violence draw to a close this month.
The fallout from the ICC hearings could trigger angry reactions along tribal
lines and ignite more fighting should key suspects be indicted to stand
trial on charges of crimes against humanity.
Steep food and fuel prices have fanned discontent in east Africa's biggest
economy, raising the spectre of some form of protest from labour and
consumer groups, even though attempts so far have gained little traction.
Food shortages have been worsened by inflation running at 17.3 percent in
September, and a local currency that has tumbled about 25 percent against
the dollar this year.
In the background, security agencies worry of attacks by Somalia's al
Qaeda-linked al Shabaab rebels, who, according to a new U.N. report, have
extensive funding, recruiting and training networks within Kenya.
Two westerners were kidnapped by gunmen near Lamu in the past three weeks in
two separate raids, dealing a blow to the resort island town 100 km (60
miles) from the Somali border.
The raids have fanned fears tourists may cancel bookings, ruining the peak
end of year season and hurting the economy.
At stake is an economy projected to grow by 5.7 percent this year. High
inflation, the weak shilling and drought in parts of the agriculture-based
economy could undermine real growth.
ICC AND POLITICAL FALLOUT
ICC prosecutor Luis Moreno-Ocampo in December named three government
ministers, the cabinet secretary and a former police chief as key suspects
behind the violence that shook Kenya after elections in December 2007.
The ongoing confirmation of charges hearing is to decide on whether the
suspects will stand trial later next year. There are two separate cases with
three suspects each.
The stakes are high. Two of the suspects, former cabinet minister William
Ruto and Uhuru Kenyatta, son of Kenya's founding father Jomo Kenyatta, plan
to run in next year's election. Analysts say their chances would be
seriously damaged by a trial.
The ICC is expected to rule on the cases towards the end of the year. If the
cases are thrown out, the potential presidential candidates could get a
boost. If both Ruto and Kenyatta are indicted, the next step would be to see
if they still run, and whether Kenya will hand them over to The Hague.
If one case continues and the other is rejected, there could be reprisals on
the ground between the rival ethnic groups.
The cases has split the cabinet. Analysts say President Mwai Kibaki and his
allies want to shield top suspects by trying to block the ICC from trying
them, so they can run for president in 2012 elections and block Prime
Minister Raila Odinga from succeeding him.
Analysts say Odinga's camp is keen to have ICC trials proceed so that his
key rivals are locked out of the running.
Opinion polls show Odinga -- who accused Kibaki of robbing him of victory in
the December 2007 polls -- as the frontrunner to replace Kibaki, who is
barred by law from seeking a third term, but also show his rivals' combined
support could unsettle him.
What to watch:
-- Will any of the suspects be indicted?
-- The government's stance is that it will cooperate fully with the ICC.
Will this continue to be the case if the top suspects have to face trial?
-- Failure to cooperate with the ICC would concern foreign investors and
Western governments who want Kenya to combat impunity and rein in
politicians who fan tribal animosities.
CONSTITUTION ON THE ROPES
Kenya's political class scrambled to beat a one-year deadline for the
passing of dozens of crucial bills central to the new constitution.
Analysts say a huge amount of work remains to make the new charter a reality
on the ground, such as defining the boundaries for new electoral
constituencies.
But probably the most crucial outstanding constitutional issue is when the
next election will be held. Despite the new constitution, which states the
poll should be in August 2012, the cabinet has proposed a four months delay
to December.
The proposal has been divisive, getting the backing of many lawmakers while
it has been dismissed by the commission for implementation of the
constitution as well as pro-constitution groups.
The constitution aims to trim presidential powers and curb the corruption,
political patronage, land-grabbing and tribalism that have plagued Kenya
since independence.
Some progress has been made. Analysts have hailed the process used in
appointing a new chief justice -- interviews were conducted live on
television. The squabbling between Kibaki and Odinga over the running of the
coalition cabinet appears to have subsided.
Odinga axed rebel party members from his cabinet, including William Ruto,
one of the six ICC Kenyan suspects.
The fight against corruption in Kenya suffered a setback when parliament
passed legislation establishing what on paper should be a more powerful
anti-graft watchdog.
That law required the exit of the watchdog's director, Patrick Lumumba. His
stinging rhetoric against corrupt politicians raised hopes among many
Kenyans the battle against graft was about to get serious, but upset
political leaders.
On the management of public finances, there is disagreement over whether the
country should adopt a law fronted by the Treasury which seeks to curb the
counties' ability to take on debt, or go for a law prepared by the local
government ministry, which seeks to give county governments power to borrow.
What to watch:
-- Will political leaders set aside partisan and ethnic interests and hasten
the implementation of the new law?
-- Who will be the country's next corruption tsar and will the graft
watchdog's bite be allowed to match its bark?
-- Which law on the management of public finances will be adopted? Can the
Treasury and the local government ministry reach a compromise?
MILITANT STRIKES
Although seen as a counter-terrorism triumph of global importance, the
killing in Somalia of top al Qaeda plotter Fazul Mohammed could still ignite
retaliatory strikes in the country and the wider region.
Al Shabaab's warnings of attacks against neighbour Kenya have grown in
significance, especially because they blame Nairobi for training Somali army
troops. Fighting between Somali militias also risks spilling over into
Kenya.
Twice hit by al Qaeda attacks, Kenya has long cast a wary eye at its lawless
neighbour Somalia and is among countries in the region supporting the fight
against al Shabaab.
Suspected Somali gunmen have kidnapped a British woman and French woman in
two separate incidents, in early September and on Oct. 1, raising concerns
about safety of holidaymakers.
What to watch:
-- Does al Shabaab, weakened by internal rifts, have the appetite to attack
outside of Somalia? How will Kenya and neighbours respond to al Shabaab's
latest threats?
-- Will the two hostages be freed soon? Will the government be able to stem
the emerging threat of kidnapping of tourists? (Additional reporting by
James Macharia; Editing by David Clarke)
C Thomson Reuters 2011 All rights reserved
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Received on Wed Oct 05 2011 - 09:22:15 EDT