Mali: Commercial and financial transactions blocked by ECOWAS sanctions over military coup

Event

President Ibrahim Boubacar Keita (IBK) announced his resignation and the dissolution of the national assembly shortly after his arrest by mutinous soldiers on 18 August. The mutinying officers – calling themselves the National Committee for the Salvation of the People (NCSP) – said they plan to form a civilian transitional government that will organise fresh elections within ‘a reasonable time’. The UN – which has a peacekeeping mission in Mali – called for the ‘immediate restoration of constitutional order and rule of law’ and reiterated a call to refrain from violence. The EU described the mutiny as an attempted coup and warned that it could destabilise not only Mali but the entire region.

Impact

The coup happened in a context of an already very difficult political situation and a jihadist insurgency. In recent months, President IBK faced widespread civil protests over poverty, corruption, and lacking progress in the counteroffensive against militant Islamists in the north and centre of the country. In fact, the largely peaceful coup was generally supported by the population and opposition parties. Nevertheless, for some time, Malian politics are expected to remain turbulent, which could give jihadist militants a chance to enforce themselves. This happened after the 2012 coup, leading to the march on Bamako and eventually the international intervention in Mali.

The Economic Community of West African States (ECOWAS) immediately decided to close its member states’ borders with Mali, and suspend all financial flows between its 15 members and Mali. In addition, it suspended Mali from its decision-making bodies. As a result of the ECOWAS sanctions, the WAEMU (West African Economic and Monetary Union) did its part by closing terrestrial borders and implementing financial sanctions as of 19 August. This implied closing the local branches of the WAEMU’s regional central bank (BCEAO – Banque Centrale des États de l'Afrique de l'Ouest), freezing the BCEAO accounts of the Malian government, closing the compensation chamber for the local banks, and stopping all transfers from Mali.

Against the backdrop of these very severe sanctions, consecutive negotiations between ECOWAS and the NCSP junta leadership have been taking place. Resulting from these talks, the proposal to reinstate President IBK was dropped by the ECOWAS delegation and a few days later, IBK was freed from custody, which showed important progress. As a result, on 24 August the BCEAO reopened its branches in Mali and reopened the compensation chamber for banks that can operate again. However, transfers from Mali seem still blocked and it remains unclear whether banks have access to foreign exchange at all. After the junta demanded a three-year military-led transitional period, ECOWAS stated on 28 August that it is ready to accept a transition period in Mali of up to one year. The two sides appear to be coming closer to an agreement about a transition towards a democratic rule, yet the duration of the transition period seems to be a fundamental discussion point. Therefore, negotiations continue and until an agreement is reached, sanctions will remain in place. This comes at a time of economic malaise where covid-19 left the country in an economic standstill (0.9% GDP growth in 2020).

Analyst: Louise Van Cauwenbergh – l.vancauwenbergh@credendo.com