Today's Headlines - Tues 4/15/2008

FACTBOX: What next for Kenya's power-sharing deal?
Reuters
Tue Apr 15, 2008 10:39am EDT

(Reuters) - A second day of violent protests by Kenya's feared Mungiki criminal gang on Tuesday overshadowed the re-opening of Kenya's parliament, which is facing a heavy reform agenda after a post-election crisis.
The trouble also underscored one of many challenges -- in this case, security -- that Kenya's two-day-old power-sharing government is tasked with tackling. Here are answers to some questions about what may happen next:

HOW FAR HAVE THE TWO SIDES COME?
* The biggest hurdle looming after former U.N. chief Kofi Annan brokered a deal between President Mwai Kibaki and opposition leader Raila Odinga in February was creating a power-sharing cabinet. After six weeks of negotiations and a near-breakdown in the agreement, Kibaki on Sunday named the 41-member cabinet that made Odinga only the second prime minister in Kenyan history. Founding President Jomo Kenyatta was prime minister for barely a year before his title was changed. It also created the costliest and largest cabinet in Kenya's 45 years of independence.
The size and cost -- estimated to be $1 billion a year or about 5 percent of Kenya's GDP -- has been criticized by Kenyans and rights activists as extravagant. Investors say it will be a drag on the economy.

WHAT WILL HAPPEN NEXT?
The two sides must now work together on revamping the constitution. The crisis laid bare issues of land, power and wealth that have divided Kenya's 42 ethnic groups almost since the current charter was drafted on the eve of independence.

Many have tried and failed since the 1990s to revise it to trim the president's vast powers, introduce checks and balances and eliminate loopholes put in place by Kenyatta and his successor, Daniel arap Moi.

In 2005, Odinga and his allies at the time, including new Vice President Kalonzo Musyoka, defeated a Kibaki-backed draft in a contentious referendum. So most Kenyans expect the road ahead to be rocky -- especially with such an unwieldy and divided cabinet.

HOW WILL THE ECONOMY FARE?
The shilling currency has been the strongest barometer of confidence, and has risen after every positive political move.

It has appreciated past pre-election levels now -- last regularly seen about 10 years ago -- and most dealers expect it to strengthen barring any major political setback. Dealers used to the noisy, rambunctious nature of Kenya's politicians say the market will shrug off anything that does not truly threaten the coalition.

The political harm to the economy has been compounded by inflation which hit 21 percent in March. But the stock market may be somewhat insulated because of overwhelming regional and foreign interest in the recent IPO by mobile firm Safaricom, the region's biggest share offering. The tourism industry is marketing heavily to make up lost arrivals, and it hopes to see some success by year's end.

CAN THE COALITION HOLD TOGETHER?
If history is any measure, that is questionable.

Odinga and Kibaki teamed up to win the 2002 election, but rarely agreed after the president took power. Odinga said Kibaki reneged on a promise to make him prime minister after that election. Kibaki fired Odinga from the cabinet in 2005, after the constitutional referendum.

The deal brokered in February says the coalition can be broken three ways: if parliament is dissolved, if the parties agree to it in writing, or if one party withdraws.

That gives both sides the power to ruin things, but diplomats say pressure from Kenyans and the international community should prevent that.

(Writing by Bryson Hull; Editing by Stephen Weeks)
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