By Tim Cocks and David Lewis

ABIDJAN/DAKAR, Aug 2 (Reuters) - Ivory Coast's badly needed
elections seem as far off as ever, meaning the instability and
political limbo that have followed the war of 2002-03 in the
world's top cocoa grower are likely to continue.

Originally scheduled for 2005, elections have been
repeatedly postponed by rows between President Laurent Gbagbo
and the opposition over voter lists and rebel disarmament.

Here are some of the factors investors are watching.


The last date set was Nov. 29, 2009, but voter lists have
still not been agreed. In February, Gbagbo accused election boss
Robert Mambe of rigging lists and his removal led to rioting.

The electoral commission restarted work with a new head in
May but western diplomats admit they have scant leverage.

Many suspect Gbagbo is being disruptive because he fears
losing an election. But diplomats say Mambe, an opposition
member of candidate Henri Konan Bedie's party, did mismanage the
electoral process.

What to watch:

- Gbagbo faces two serious challengers -- Bedie, a former
president, and Alassane Ouattara, a former prime minister.

Ouattara, a former IMF deputy director from the mainly
Muslim north, was excluded from a 2000 poll for his alleged
Burkina Faso origins.

There are few policy differences between the candidates,
with politics focussing on regional and historical issues.

- Prime Minister Guillaume Soro. At 38, Soro is too young to
stand. He stepped down as party chief of the New Forces rebels
in July, prompting speculation he will run for the presidency
when he reaches the minimum age of 40.

- Xenophobia. A key factor during the war, rows over who can
vote have rekindled the explosive issue of Ivorian nationality.

- Gbagbo loses. If Gbagbo loses, he can mobilise thousands
of 'Young Patriots' onto the streets to cause chaos.


Despite widespread frustration at the lack of political
progress, the World Bank and IMF have lauded Ivory Coast's steps
towards balancing its budget and clearing defaulted debt.

Ivory Coast is nearing completion point to get billions of
dollars of debt relief and has swapped 2.2 billion euros ($2.73
billion) of defaulted Brady bonds for dollar issues.

Despite the turmoil, the nation hosts West Africa's
franc-zone BRVM bourse and remains a hub for finance, industry
and shipping.

Growth was virtually zero for many years following the war,
but has since picked up as cocoa prices hit 30-year highs.

What to watch

- Debt relief. The World Bank has tied relief of some of
Ivory Coast's $14.3 billion in external debt to the holding of

But even if polls remain on hold, there is a possibility
debt relief could be granted, so long as Ivory Coast meets the
fiscal and macro-economic requirements.

- Global Bond. Ivory Coast in April swapped six defaulted
Brady bonds into one $2.3 billion global bond due in 2032. The
instrument is listed on the Emerging Markets Bond Index (EMBI).

Ivory Coast has a six year grace period on the bond, so the
first test for its six-monthly coupon payments will be on June
10, 2016. The state of public finances, cocoa outlooks and
political instability could all affect the price of the bond.

After the grace period, there is the possibility of default
in a nation that has a history of it. Bond traders fear coupon
payments could be a low priority compared with, say, paying the
security forces. If cash is tight, risk of default is real.

- Growth forecasts. Ivory Coast has cut growth forecasts for
2010 and 2011 by a percentage point each to 3 and 4 percent,
respectively. Analysts have also similarly cut their forecasts.
Poor cocoa harvest and the lack of polls are to blame.

- Rackets. Armed men in uniforms rule the streets. The
Chamber of Commerce says racketeering by army, police, customs
officials and rebels costs business up to $600 million a year.


Apart from a handful of short-lived outbreaks of violence,
there has been no fighting since the end of the war.

However, with rebels still running the north, centre and the
west, despite pledges to restore central authority, the nation
is bogged down in a "neither peace nor war" mentality.

Pro-government militia also operate in the far west. U.N.
peacekeepers and a small French force remain but are likely to
keep a low profile, unless called upon to extract foreigners.

The U.N. Group of Experts has said that political leaders
from the north and the south are profiting from the status quo.

What to watch

- Street protests. Demonstrations shook Ivorian towns after
Gbagbo dissolved the electoral commission and government.

- Threats of armed conflict. As political tensions mount,
the U.N. fears, so will the threat of fighting.

- Rebel divisions. A concern is clashes between factions
whose fiefdoms enabled them to get rich off illegal taxes.


Despite fears that the crisis would dent supplies, the flow
of cocoa from the world's top grower has mostly held up.

However, the lack of investment in supporting farmers and
renewing ageing plantations over the last seven years is
starting to take its toll and volumes are falling.

Degrading land due to deforestation, as well as steadier
incomes and lower taxes in rubber production are, for now,
offsetting the benefit of relatively high farmgate prices.

Volumes to July 18 were around 1.08 million tonnes, down 1.4
percent on last season, itself the worst crop in half a decade.

The sector's administrators were sacked in 2008, leaving an
interim body in charge until needed reforms are in place.

What to watch

- How far volumes fall. The 2009/10 crop was forecast equal
to or slightly lower than last year. A steep fall would support
fears that crops could touch below 700,000 tonnes in the future.

- Delays in elections, reforms. The reform committee is
behind schedule and any proposals will take time. With the
election process deadlocked, there is little scope reform.

Proposals include returning to state price stabilisation.
One solution could be Gbagbo enacting the reforms by decree.

- Advances like disease-resistant cocoa or fertiliser
subsidies could help stem the decline in production.

- Historically high world cocoa prices are supported by poor
regional production, as well as translating into higher farmgate
prices for farmers, despite high levels of tax. If donor demands
for lower taxes are met, farmers are likely to earn more,
boosting interest in the sector. Critics accuse Gbagbo of using
high world prices to evade pressure to reform as they guarantee
higher incomes for both farmers and government.


While other countries in West Africa endured years of
post-independence turmoil, Ivory Coast, under the watchful eye
France, became the region's biggest economic success story.

However, the "Ivorian Miracle" was built on cocoa, which is
now in decline, and the crisis has scared off investors, though
some, led by hardy Lebanese and well-entrenched French, remain.

What to watch

- Gold. The government wants to diversify away from cocoa. A
government forecast seen by Reuters in May put gold output at
11.7 tonnes in 2010, up two thirds on last year.

Gold miner Randgold Resources said in April its Tongon mine
would start production in October. Canada's Etruscan Resources
and Australia's Equigold have permits. Some 100 requests are
being considered.

- Agriculture. Despite falling cocoa volumes, there remain
opportunities in farming, not just cocoa but rubber and other
crops. Coffee and cotton declined after the war, as they grow in
rebel zones. If polls unify the nation, they could take off.

- Oil. Ivory Coast produces 50,000 barrels per day from
three fields operated by Canadian Natural Resources. Offshore
may hold fields similar to Ghana's massive Jubilee reserve, but
investment is on hold due to the crisis.

- The BRVM. The all share index had risen around 5 percent
on the year by late July, logging 50 billion CFA ($98 million)
worth of trades in the first half of the year. The index is
worth about $6 billion but volumes are small.

Although the BRVM was hit hard during the global crisis as
international investors withdrew, the market is generally too
small and isolated to be sensitive to world markets.

- Until investors from Africa start putting their money back
into Ivory Coast, others will remain hesitant.