NAIROBI Dec 14 (Reuters) - Kenya is fighting a potentially protracted war
against al Qaeda-linked militants in Somalia and risks further attacks on
its soil, while it is mired in political and economic challenges at home
ahead of next year's general election.
Here are some of the risk factors ahead:
SOMALIA
Kenya sent troops into Somalia last month to crush al Shabaab, accusing the
militant network of attacks on its security forces and tourists inside
Kenya.
Al Shabaab, fighting to impose a harsh interpretation of sharia law, has
denied being behind the kidnappings and said it will take revenge against
Kenya, the latest foreign power to try to stabilise Somalia.
Analysts say Kenya could be sucked into a wider regional conflict now that
Ethiopia has also sent military trucks and armoured vehicles into central
Somalia.
What to watch:
-- Kenya says the mission is open-ended and it will stay until al Shabaab's
network is dismantled. But this could take time and may require additional
budget support.
-- Major Somali civilian casualties could rally support for the rebels.
-- Military incursions by the U.S. and Ethiopia failed to pacify Somalia.
Significant Kenyan casualties could weaken current widespread support for
the mission.
-- Two grenade attacks in the capital Nairobi have scared residents and led
to beefed up security in public places. More attacks may erode backing for
the incursion and deter tourists.
-- There is a large Somali and Kenyan-Somali population in the country that
could be antagonised.
ICC DECISION
Kenya is awaiting a decision due in January by the International Criminal
Court over the confirmation of charges against six political figures
suspected of being behind deadly violence that followed a disputed election
in December 2007.
The two cases, each involving three Kenyans, are split mainly between an
ethnic Kikuyu and Kalenjin camp. They were the groups behind much of the
violence that killed about 1,300 people following the election.
The ICC said it will announce the rulings on the two cases on the same day,
which may avoid potentially angry reactions if the rulings are delivered
separately.
The judges could drop the charges, request the prosecutor to submit more
evidence, or order some or all of the suspects to stand trial.
Two of the suspects, former cabinet minister William Ruto and Finance
Minister Uhuru Kenyatta, son of Kenya's founding father Jomo Kenyatta, plan
to run for the presidency in next year's election. Analysts say their
chances would be seriously damaged by a trial.
What to watch:
-- If the cases are thrown out, the potential presidential candidates could
get a boost. If both Ruto and Kenyatta are indicted, would they be allowed
to run under Kenya's new constitution that bars tainted officials to run for
office?
-- Would the ICC require that Kenya hand them over to The Hague, and if so,
would the country comply? Failure to cooperate with the ICC would concern
foreign investors and Western governments who want Kenya to combat impunity.
-- If one case continues and the other is rejected, is there a likelihood of
reprisals between the rival ethnic groups?
ELECTION DATE
Kenya's political class has scrambled to meet a one-year deadline for the
passing of dozens of crucial bills central to the new constitution. But a
key outstanding constitutional issue is when the next election will be held.
The constitution stipulates that the election should be held on Aug. 14
2012, but Kenya's cabinet is pushing for a December 2012 date, citing
logistical hurdles.
The vote would be to elect the president and parliament, as well as senators
and county governors.
A bill with amendments to enshrine the December date is with parliament, and
is due to be voted on early next year.
The proposal has been divisive among legislators, and has been dismissed by
the commission for implementation of the constitution. Polls show more
Kenyans want an August election.
The constitution aims to trim presidential powers and curb the corruption,
political patronage, land-grabbing and tribalism that have plagued Kenya
since independence.
The Supreme Court has mandated a lower court to hear a case on the
controversy and make a ruling on the election date.
What to watch:
-- If the election is allowed to go ahead in August, will that leave enough
time to prepare the new constituencies and implement other changes to ensure
a fair electoral process?
-- One of the cases in court challenges parliament's authority to change the
election date and calls for a referendum to do so. If the court rules for a
referendum, it would increase political uncertainty. (editing by Rosalind
Russell)
KAMPALA Dec 14 (Reuters) - Protests over the cost of living in Uganda have
lost momentum again after a government crackdown but economic conditions
remain ripe for harnessing by an opposition keen to get people on the
streets.
Though inflation fell slightly to 29 percent in November after aggressive
tightening by the central bank, frustration is still high among a population
particularly hard hit by the high costs of food and fuel.
That frustration has boiled over several times this year with opposition
leader Kizza Besigye leading a series of demonstrations during which he and
his supporters attempted to walk to work to highlight the high cost of fuel.
A series of 24-hour power cuts has angered the population further and in
November inspired brief protests from owners of small businesses who say
their profits have been hit.
Despite an attempt to get the "walk to work" protests off the ground again
last month, they failed to recapture their April-May peak, largely because
security forces put Besigye - said by analysts to be an essential figurehead
- under effective house arrest.
Although a magistrates court ruled that his confinement was illegal, police
have vowed to arrest him every time he attempts to walk to his office.
Even if Besigye was free to protest, however, some analysts doubt Ugandans
have the stomach for large-scale demos, which are often met with violence
from the army and police.
In a move that reflects increasing impatience with the protests, police
slapped treason charges on seven opposition members who were arrested
earlier this month.
Uganda's timetable to becoming a top-50 oil producer has also suffered
several setbacks with legal wrangling and corruption accusations delaying
the start of production.
Britain's Tullow Oil, which is the lead explorer, says production is now
scheduled to start early next year.
PROTESTS, POWER CUTS, INFLATION
Economic conditions continue to deteriorate with crushing price pressures,
but the crisis is unlikely to explode into mass unrest or threaten the
25-year rule of President Yoweri Museveni.
Still, the protests can hurt the economy, dominate the country's political
debate and rattle foreign investors and the Western donors upon which the
coffee-producer relies.
Opposition pressure group Activists 4 Change (A4C) says it will press ahead
with its anti-government campaign although the jailing of its key leaders
and Besigye's restricted movements are testing the group's resolve.
Museveni, elected to a fourth term earlier this year, is keen to avoid a
resumption of the April-May violence as he seeks to reassure foreign
investors that Uganda is a safe bet and ready to join Africa's oil producers
and push to middle-income status.
What to watch:
-- Besigye. To what extent will he continue to challenge security forces?
Can he hold his nerve under the pressure?
-- Public protests. So far the protests barely even begin before police
disperse them, usually with volleys of teargas. Will protesters have the
will to continue - with or without Besigye - and will the government
increase the intensity of its crackdown?
-- Inflation and power cuts. If the government is seen as remaining
indifferent, anger may grow and opposition activists could feel emboldened
to step-up demonstrations.
OIL ROWS, CORRUPTION CASES
Museveni has indicated to parliament he is not likely to delay approval of
Tullow Oil's long proposed partnership with Total and CNOOC further -
despite a parliamentary resolution urging the government to do so - because
it would diminish his government's credibility in future negotiations.
A go-ahead for the deal would jump-start a $10 billion investment and move
the oil sector closer to production phase.
Parliament has also set up a committee to probe allegations of corruption in
the sector after a member of parliament, Gerald Karuhanga, alleged in papers
handed to the house, that three ministers had taken bribes from oil firms.
British oil explorer Heritage Oil said in November it would launch an appeal
against a Ugandan tribunal which has ruled the company is liable to pay $404
million in capital gains tax, prolonging a year-long row over the tax bill.
Heritage had been expected lose the case and said its best chance of success
in the dispute was through an ongoing arbitration in London which it
initiated in May.
Analysts say the corruption allegations and the tax disputes with Heritage
and Tullow are denting Uganda's potential to attract much needed investment
capital.
Uganda's Energy Ministry expects to send three petroleum bills to parliament
by the end of the year as it expedites efforts to institute an effective
legal framework to manage the sector before crude production starts.
What to watch:
-- The tax disputes. If they are not solved, Uganda will gain a reputation
as a risky bet for foreign investors.
-- Corruption allegations. If the probe finds ministers took bribes in some
of the country' oil transactions, Uganda's risk profile as an investment
destination will take a severe blow, making it that much harder to lure
investors.
SECURITY THREAT
Somalia's al Shabaab Islamist rebels have threatened more attacks similar to
the twin suicide-bomb blasts in Kampala in July last year that killed 79
people.
The insurgents have vowed to target Uganda and nearby Burundi until they
withdraw their peacekeeping troops from Somalia's capital Mogadishu. The
troops helped drive the insurgents out of most parts of the capital.
Neighbouring Kenya sent soldiers into Somalia in October to crush the rebels
who it blames for a wave of attacks on tourists and security forces on its
soil.
A force of Ethiopian troops have also crossed the border, according to
officials, residents and elders.
What to watch:
-- Progress in the assault on al Shabaab. Will the Kenyan-led initiative be
successful or will the militants retaliate with strikes on their neighbours?
-- Another attack in Uganda could deter foreign investment inflows, weaken
the shilling, disrupt business and hurt tourism.
(Editing by Barry Malone)
C Thomson Reuters 2011 All rights reserved
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Received on Wed Dec 14 2011 - 08:55:27 EST