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The political stalemate in Zanzibar

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zanzibar elections

As talks fail to produce a peaceful solution, the standoff between rival parties has disrupted trade and brought international concern about potential violence.

The government of Zanzibar has announced plans for new elections in February but the opposition, which claims it won a previous vote that the government annulled, is calling for a boycott.

The announcement is the latest development in a nearly three-month political standoff that has disrupted trade in the east African archipelago and prompted international concerns about potential violence.

At the center of the controversy are long-running tensions over the balance of power between Tanzania on the mainland and tiny Zanzibar, which is a semi-autonomous state within the larger nation.

The leading players are Zanzibar President Mohammed Shein of the Chama Cha Mapinduzi political party, which holds power in both Tanzania and Zanzibar, and Maalim Seif Sharif Hamad, secretary general of the Civic United Front, the main opposition party in Zanzibar.

Opposition declared election victory

Hamad, who is also first vice president of Zanzibar, ran against the incumbent Shein in an October 25 election. The day after the vote, the opposition leader claimed victory before the results were officially announced.

Despite strong objections from the opposition and international observers who said the election was valid, the government annulled the election after the Zanzibar Electoral Commission determined there were electoral law violations.

While incumbent Shein and the Chama Cha Mapinduzi party support a new election, Hamad and the opposition party favor completing talks that began after the opposition questioned the legality of Shein staying in office after his term expired in early November.

Despite eight closed-door meetings since the election, negotiators have not come up with an agreement. Those taking part in the former Tanzania mainland president Jakaya Kikwete, former Zanzibar president Abeid Karume, and former Tanzanian president Ali Hassan Mwinyi in addition to Shein and Hamad.

Zanzibar economy suffers

The announcement of a new election comes in the face of international and domestic pressure to end the political impasse, which is hurting Zanzibar’s economy.

Beans, potatoes and tomatoes, which are from mainland Tanzania, have become scarce and increasingly expensive in Zanzibar. Tanzania’s government said mismanagement by traders, poor infrastructure and red tape are to blame, but Zanzibaris fear traders are responding to the political uncertainty.

According to the Bank of Tanzania (pdf), Zanzibar’s imports dropped by nearly half between October and November 2015, from nearly $40 million to $21 million.

At the same time, fears that the stalemate would affect tourism to the islands may have been unfounded. The bank reported that tourist arrivals increased in 2015, with earnings of $73.6 million, up from $55.2 million in 2014, a gain of more than 30 percent.

Maalim Seif Sharif Hamad

Maalim Seif Sharif Hamad, secretary general of the Civic United Front

Stalemate raises fears of radicalization

International observers declared the October election valid and called on the government to announce the results. They cited fears that the political stalemate could contribute to the radicalization of youths in Zanzibar, which is predominantly Muslim.

International observers also questioned the decision to annul the election, saying it appeared the election commission did not have a quorum when it made the findings of election violations. Nicodemus Minde, an election observer and adviser for Norwegian-based policy group International Law and Policy Institute, called the decision to annul “unilateral.”

The Chama Cha Mapinduzi party has long maintained power in Tanzania, while Zanzibar has chafed at what it considers mainland meddling. The opposition Civic United Front has called for full autonomy for Zanzibar.

After gaining independence from the British in 1961, Tanzania was formed in 1964, uniting the mainland Tanganyika state with the Zanzibar (also called Unguja) and Pemba islands.

Long history of political violence

Elections have been marked by clashes between the two parties since the 1990s, and hundreds have died in past elections. A unity government with the Civic United Front as the junior partner was formed in 2010, when Shein was first elected president, to diffuse tensions.

However, there were reports of police intimidation prior to the October election and two homemade bombs exploded in Zanzibar after the election was annulled. A third device was found and safely detonated in Stone Town, a popular tourist area.

In spite of the annulment, the ballots of 500,000 Zanzibar voters were counted in the election for Tanzania’s president. John Magufuli, the candidate of the Chama Cha Mapinduzi, received 58 percent of the total vote of 15 million and has been sworn into office along with Samia Suluhu Hassan, a Zanzibari who became Tanzania’s first female vice president.

New election “inevitable”

Meanwhile, the Zanzibar government said it had budgeted $3.4 million for a new election. Seif Ali Idd, Zanzibar’s second vice president, called a new election “inevitable.”

Idd said the ongoing talks with the opposition were aimed at keeping the peace but did not preclude an election.

Opposition spokesperson Ismail Jussa told supporters to ignore the government announcement, saying the talks should be completed before an election was scheduled.

It was not immediately clear when mediation talks would continue. Before the election announcement, former Nigerian president Goodluck Jonathan had been tapped to lead new talks and he was expected to visit the country early this year.

Renewed violence feared

The talks began after the opposition party raised questions about whether Shein could stay in office as president after his term expired in November. However, the government maintains that the Constitution allows him to remain in office until a successor is sworn in.

Hubertus von Welck, an election observer from the German Friedrich Naumann Foundation, said negotiations must continue to maintain the peace.

“If they cannot come to a diplomatic solution, we might once again see violence and deaths,” von Welck said.

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Anglo American to sell Australian Callide coal mine

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callide coal mine

JOHANNESBURG (Reuters) – Global mining firm Anglo American will sell its Callide coal mine in Australia to Batchfire Resources, it said on Wednesday.

“The transaction will be effected via a sale of shares in the subsidiary companies holding Anglo American’s interest in Callide,” the company said in a statement.

Anglo said the terms of the deal were confidential.

The company announced a major restructuring in December, saying it would offload three-fifths of its assets as it attempts to tackle sliding commodities prices.

Callide, an open pit thermal coal mine that produced 5.6 million tonnes in the first nine months of 2015, is one of four Australian coal mines the company plans to sell.

Anglo announced last month it would sell its majority interest in Dartbrook coal mine to Australian Pacific Coal Ltd in a deal worth up to A$50 million ($34 million).

The company is scheduled to give more details on its future global portfolio in February.

The overhaul at Anglo American highlights the scale of the fallout from the commodities slide, which is forcing mining companies across the board to cut jobs, investment and costs.

($1 = 1.4571 Australian dollars)

 

(Reporting by Olivia Kumwenda-Mtambo; editing by Susan Thomas)

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Zambia’s kwacha weakens on low dollar supply

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LUSAKA (Reuters) – Zambia’s kwacha weakened more than 1 percent on Tuesday on tight dollar supply, sending the currency of Africa’s second-largest copper producer down 1.25 percent to 11.25 per dollar by 1302 GMT.

“Scant dollar inflows continue being snapped up by interbank and corporate players and is likely to sustain pressure on the kwacha in the near term,” Zambia’s National Commercial Bank said in a note.

 

 

(Reporting by Chris Mfula; Writing by Nqobile Dludla; Editing by James Macharia)

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Strong India, Africa demand lifts South Africa 2015 coal exports

Comments (0) Africa, Business, Latest Updates from Reuters

RICHARDS BAY, South Africa (Reuters) – Coal exports from South Africa’s Richards Bay Coal Terminal (RBTC) rose by 5.7 percent to 75.4 million tonnes in 2015 helped by demand in Africa and India.

Africa’s largest coal export facility, a major supplier to Europe and Asia, RBCT had set a target of 75 million tonnes and aims for similar results in 2016.

“Its going to be hard to beat 75 million tonnes, because of where prices are sitting this year,” Chief Executive Nosipho Siwisa-Damasane told a news conference.

Shipments to Africa and India rose sharply, offsetting a fall in demand from Europe and from China, where RBTC said it did not send a single vessel in 2015.

Coal prices have tumbled in recent years due to a glut of supply and weaker demand growth, pushing some producers to curtail activity, sell or shut coal mines.

RBCT, which moves the commodity on behalf of producers and shareholders such as Exxaro and Anglo American, said it had shelved expansions plans due to weak prices.

RBTC had planned to increase its capacity to 110 million tonnes from 91 million tonnes.

 

 

(By Zandi Shabalala. Reporting by Zandi Shabalala; editing by James Macharia and Jason Neely)

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Kenya’s new car sales jump 12.86% in 2015:

Comments (0) Africa, Business, Latest Updates from Reuters

NAIROBI (Reuters) – Kenya’s new car sales increased by 12.86 percent last year to 19,524 units, the Kenya Motor Industry Association said on Monday.

Rita Kavashe, who chairs the association, told Reuters in November that growth was driven by demand for light trucks used to distribute goods and carry construction materials.

 

(Reporting by Duncan Miriri; Editing by Hugh Lawson)

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Africa’s air transport industry eyes expansion, upgrades

Comments (1) Africa, Business, Featured

africa airlines

With a growing population that now surpasses one billion and an expanding middle class, Africa can expect to see air travel increase significantly in the next two decades.

The International Air Transport Association projects that the African air passenger rate will more than double from 119 million passengers in 2014 to 280 million in 2034. (source)

However, the African airline industry lags behind the rest of the global air industry and it faces significant obstacles to future growth, including lack of capital for expansion, high taxes and tariffs and a fragmented system that lowers efficiency and raises costs.

“Africa is a growing market with enormous opportunities for air transport. With an almost 1.1 billion population, it is a huge market for air transport,” said Elijah Chingosho, secretary general of the African Airlines Association (AFRAA). “However, the existing players are confronted with many challenges that are impeding their ability to take advantage of the opportunities.”

Aviation accounts for $80 billion in GDP

Aviation is already playing a role in the African economy, supporting nearly 7 million jobs and accounting for $80 billion in GDP. The sector, in which many airlines are government owned, grew by 5 percent in 2014, outpacing growth in Europe and America.

Currently, non-African carriers dominate intercontinental traffic to and from Africa, accounting for 80 percent of that traffic. Meanwhile, African airlines carry only 2.85 percent of all global traffic.

Intra-continental system is ripe for expansion

Chingosho said African airlines should focus on expanding intra-African and domestic travel. Currently, about 41 percent of traffic is inter-continental, 32 percent intra-Africa, and the rest domestic.

“The best opportunities for growth and expansion lie in the under-served African regional and domestic markets,” Chingosho said. He and others point to Africa’s fast-growing middle class, now about a third of the population, according to the African Development Bank, as an emerging group of potential customers.

Connections between African countries are difficult

Developing an efficient routing system within the continent is a priority.

Ethiopian airlinesIn many cases it is easier for a traveler from an African country to first fly to Paris or Dubai and then to another African country, according to Fatima Beyina-Moussa, director general of Equatorial Congo Airlines and president of the African Airlines Association.

The African Airline Association has 33 airline members that account for 85 percent of traffic by African carriers, including the largest African airlines – Ethiopia Airlines and South African Airways.

Liberalization could open regional markets

Chingosho and other experts say the primary obstacle to expansion is lack of liberalization, or deregulation, that would open regional markets on the continent to trans-national competition.

Forty-four African nations signed the 1999 Yamoussoukro Decision designed to liberalize air travel on the continent, but implementation has been slow, according to the International Air Traffic Association. However, Chingosho offered some optimism: He said African heads of state had agreed to liberalization by January 2017.

Report documents economic benefits

The international association cited one 2014 study that examined the potential financial benefits of implementing the agreement and demonstrated “beyond doubt the tremendous potential for African aviation if the shackles are taken off,” said Tony Tyler, the association’s director general and CEO.

The report said liberalization in just 12 key markets studied would potentially serve 5 million more travelers and provide an additional 155,000 jobs and $1.3 billion in annual GDP.

Financing needed to expand fleets, improve airports

Another obstacle to growth is lack of capital.

Only 19 African countries have ratified the Cape Town Convention, a 2006 treaty designed to make asset-based financing and leasing of aviation equipment more available by reducing creditor risk, Chingosho said.

African air carriers are small compared to international counterparts. Among the largest are: Ethiopian Airlines with 76 aircraft, South African Airways with 65, Royal Air Morocco with 53 and Kenya Airways with 45.

By contrast, Emirates has a fleet of 245 aircraft and Qatar Airways has 167. The world’s largest airline, American, has nearly 950 aircraft.

Chingosho estimated the African fleet would need 800 new aircraft to accommodate growth projected through 2030. Sixty percent of those would expand the fleet and the remaining 40 percent would replace aging aircraft. He said the bulk would be single-aisle, mid-range aircraft.

In addition, airports must be expanded and upgraded, he said.

Airlines report high costs for fuel, tariffs

High operating costs and inefficiencies are other factors holding the African aircraft industry back.

Jet fuel continues to be relatively expensive in Africa, about 30 percent higher than the global average. It cost nearly $120 per barrel in 2014, down from a peak of about $130 a barrel in 2012. Unpaved runways result in higher fuel consumption and maintenance costs.

Elijah Chingosho

Elijah Chingosho, frica Airlines Association (AFRAA) Secretary General

Adding to their costs, Chingosho said, many African airlines are using high capacity aircraft in small or mid-sized markets, which has pushed average load factors below 70 percent. This compares with an average of 80 percent globally.

At the same time, high tariffs and cumbersome customs regulations limit development of airfreight. For example, The National Association of Government Freight Forwarders recently complained that high tariffs have forced Nigerian importers out of that country and many others will leave.

Airport charges are high, with some airports adding as much as $150 per passenger to the cost of a ticket.

African airline fares are high in cost

The result is high fares and low profit margins.

One study found that fares on typical intra-African routes are as much as two times higher than comparable routes in Europe and as much as three times higher than similar routes in India.

Meanwhile, the African airlines operate on a profit margin of less than 1 percent, compared to 4 percent globally.

Safety record improving

Lack of safety and concerns about terrorism and civil strife further depress demand for air travel.

Chingosho said many airlines are still below global standards but he noted that 41 African airlines have adopted international safety standards.

He said the airlines need better training personnel in all areas, including safety. He has encouraged aircraft manufacturers to provide that training.

Air transport will help unify Africa

Chingosho and others assign some of the blame for high costs to high taxes assessed by governments that see air travel as a service for the rich, who can afford to pay, rather than a means of mass transportation that is particularly suitable for Africa with its challenging topography.

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Report finds high business risk in 27 African and Mid-Eastern nations

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syrian war

Amidst unrest and war across Africa and the Middle East, a new report on risks to business in different nations paints a sobering picture.

Only 10 African and Middle Eastern countries are considered low risk for businesses, according to the report by Control Risks, a global risk management consultancy. Nearly three times as many countries – 27 – pose an extreme or high risk to companies operating within their borders.

Globally, insurgency is reshaping political and business affairs, according the report. In both business and politics, the established order is being disrupted by forces that appear suddenly, the report said.

Nowhere is that more clear than in Africa and the Middle East, according to Control Risks’ evaluation of political risk in 68 countries in the region. The rating is based on the likelihood that instability or interference or other factors such as corruption or infrastructure could negatively affect business operations.

Extreme risk in Burundi, CAR and Somalia

In sub-Saharan Africa, only three countries were given a rating of “extreme” risk: Burundi, Central African Republic, and Somalia.

Burundi has experienced widespread violence and the report predicts that the political and security environment will worsen in 2016, especially in Bujumbura, the capital. With the government unwilling the make concessions to its opposition, the report asserts that the risk of a coup will increase.

Meanwhile, Somalia and the Central African Republic are attempting to emerge from years of violence but remain unstable, the report said.

Violence in Burundi

Violence in Burundi

Piracy off East Africa coast declines sharply

It said a return to high levels of piracy off the coast of Somalia is unlikely in 2016.

The report said anti-piracy measures off the coast of Somalia have been effective, reducing the amount of activity to just one percent of its peak in 2011. But that might not last.

“Governments and shipping companies face the challenge of responding to the diminished threat without unraveling the work that helped to curtail the problem,” the report said, noting the paradox that the success of anti-piracy efforts could well lead to their being diminished.

However, the report cautioned about continuing offshore kidnappings and high jacking off the coast of Western Africa.

U.S. may increase anti-terror efforts in sub-Saharan Africa

On the terrorism front, the report predicts that U.S. president Barack Obama, in the final year of his term, will be more assertive internationally, including lending more support to counter-terrorism efforts in sub-Saharan Africa.

Boko Haram, the Nigerian militant group, is coming under more pressure from multiple governments and is likely to be forced to relinquish territory and instead rely on hit-and-run attacks, according to the report.

Nigeria was one of 16 countries that received a “high” risk rating. The report said the pending end of a program of amnesty for militants, and falling oil prices could worsen tensions.

Other countries with a high risk rating include: Chad, Comoros, Congo, Democratic Republic of Congo, Cote d’Ivoire, Equatorial Guinea, Eritrea, Gambia, Guinea, Guinea-Bissau, Lesotho, Niger, South Sudan, Sudan, and Zimbabwe.

Twenty-three nations pose medium risk

These 23 countries were given a medium risk rating: Angola, Benin, Burkina Faso, Cameroon, Djibouti, Ethiopia, Gabon, Ghana, Kenya, Liberia, Madagascar, Malawi, Mali, Mozambique, Rwanda, Sao Tome, Sierra Leone, South Africa, Swaziland, Tanzania, Togo, Uganda, and Zambia.

Only six countries – Botswana, Cape Verde, Mauritius, Namibia, Senegal, and Seychelles – received a low risk rating.

Middle East turmoil evident in ratings

The report also reflects political unrest and war in Northern Africa and the Middle East, where only four countries were rated low risk.

Three war-torn countries – Iraq, Syria, and Yemen – were rated extreme risk.

High-risk countries were Algeria, Egypt, Iran, Libya, and the Palestinian Territories.

Medium risk countries were Bahrain, Jordan, Kuwait, Lebanon, Mauritania, Oman, Saudi Arabia, and Tunisia.

Israel, Morocco, Qatar, and the United Arab Emirates were rated low risk.

By comparison, the United States is ranked low risk while China and Russia are ranked medium risk.

Globally, Control Risks said, the risk outlook is the worst it has been in the past decade. It cited, terrorism, instability in the Middle East, cyber-risk and Chinese economic problems as factors creating a “potentially more volatile world in 2016.”

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Nigeria stocks hit 3-1/2-year low as funds sell on naira woes

Comments (0) Africa, Business, Latest Updates from Reuters

LAGOS (Reuters) – Nigeria’s share index tumbled 3.4 percent on Thursday and hit its lowest point in almost 3-1/2 years, spooked by the weak outlook for the currency, traders said.

The share index, which has the second-biggest weighting after Kuwait on the MSCI frontier market index, has fallen for five straight days, sliding below the psychologically important 25,000 point line not seen since September 2012.

At the market close, the index was down 3.4 percent at 24,239 points. The index has dropped 12.4 percent in the first nine days of trading this year.

Currency and stock markets in Africa’s biggest economy have been hit hard by the fall in the price of crude oil, Nigeria’s main export, which has slashed government revenues and triggered an exit of foreign investors.

“From what foreign investors are telling us, when they have confidence in the naira/dollar exchange rate they can then make investment decisions,” Oscar Onyema, CEO of the Nigerian Stock Exchange told Reuters.

The naira has dived 34 percent on the black market compared with its official level of 197 after the central bank stopped dollar sales to retail currency outlets. The move has intensified speculation that Africa’s top oil producer will have to formally devalue its currency soon.

Onyema said the bourse expected 2016 to be challenging for the market after the index shed 17.4 percent last year with losses continuing into this year, as oil prices plunged and the domestic economy faltered.

Foreign buyers, who accounted for 54 percent of trading volumes, were on the sidelines owing to the lack of clarity on Nigeria’s forex policy, highlighting naira weakness as a deterrent to a market rally in 2016, he said.

The index of Nigeria’s top 10 banks fell 4.69 percent to lead the bourse lower. Top decliners included Seplat, Oando, Guaranty Trust Bank and FBN Holdings all down more than 9 percent.

“With crude oil prices down, accretion to FX reserves is out of the question … putting investors on red alert. The central bank may not be able to meet all the demand for FX even if it were to devalue,” said Ayodeji Ebo, head of research at Afrinvest.

 

(Reporting by Chijioke Ohuocha and Oludare Mayowa; Editing by Hugh Lawson)

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Kenya aims to cut external, fiscal deficits

Comments (0) Africa, Business, Latest Updates from Reuters

NAIROBI (Reuters) – Kenya’s economy is expected to grow 6.1 percent in 2016 and the government wants to trim ballooning budget and current account deficits to steady the economy, its finance minister said on Thursday.

Kenya, East Africa’s biggest economy, set a budget deficit target of 8.7 percent for the 2015/2016 fiscal year starting July, unnerving some investors who were also uneasy about Kenya’s current account deficit, which stood at above 8 percent.

The current account deficit was fuelled by a growth of imports like oil and consumer goods which was not matched by growth in exports. The budget deficit swelled due to increased spending on infrastructure projects and local government units created in 2013.

Officials and investors say the government has to deal with the deficits to boost investor confidence and stave off instability in the currency and borrowing rates. The shilling lost 11 percent against the dollar in 2015, but faired better than most African currencies.

Finance Minister Henry Rotich said the global slump in the price of crude oil had helped the country’s current account deficit to improve due to a lower import bill.

“With the measures we are taking to cut the fiscal deficit, the twin deficits will obviously go down,” he told Reuters by phone.

“We are aiming at around 6.5 percent (current account deficit) and also getting our fiscal deficit, including grants, coming down to about 4.5 percent.”

The Treasury wants to start attaining those targets from the next fiscal year and into the medium-term, Rotich added.

He said Kenya was reviewing all government ministries’ expenditure plans for this fiscal year with a view to cutting unnecessary items and reducing borrowing.

“By the end of this month we will have known what savings we are likely to achieve from the exercise,” he said, adding the measures will be contained in a supplementary budget to be taken to parliament for approval.

Growth was expected to be 6.1 percent this year, slightly up from last year’s projection of about 5.8 percent. Rotich said growth will be driven by public investments in infrastructure, a recovery in tourism and farming.

“We are still seeing infrastructure supporting the growth. Construction remains strong. We see recovery of tourism boosting that. With the favourable weather, we see agriculture will also be strong,” he said.

The government is investing in a Chinese-built 327 billion shilling ($3.2 billion) modern railway, tarmac roads and power plants. Tourists have started to return to the country’s beaches and game reserves after key Western markets like Britain lifted travel warnings.

The warnings had been put in place after a string of attacks by al Shabaab militants from neighbouring Somalia.

Rotich said the main risks to Kenya’s growth outlook were global developments including any slowdown in the Chinese economy, the direction of the oil price and U.S. interest rates.

“The risks continue to be external developments. It has become difficult to get a full feel of forecasts for global economic developments,” he said, adding the main risk at home was any adverse weather like poor rainfall.

 

(By Duncan Miriri. Editing by Drazen Jorgic)

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Nigeria approves $200 million World Bank loan for projects in Lagos

Comments (0) Africa, Business, Latest Updates from Reuters

ABUJA (Reuters) – Nigeria’s government has approved a $200 million loan from a World Bank agency to develop infrastructure in Lagos state, its commercial hub, the minister for works, power and housing said on Wednesday.

The loan was the second tranche of a total of $600 million lent by the International Development Association to the Nigeria government for Lagos state since 2010, Babatunde Fashola said.

Lagos, a mega-city of 21 million people in the state of the same name, is the commercial engine of Africa’s biggest economy. Its gross domestic product accounts for about a third of Nigeria’s overall GDP.

Fashola, who did not give details of any projects for which the loan would be used, said the money had been intended for distribution in three tranches each of $200 million to end in 2013 but had been delayed.

“It suffered delays as a result of partisan political differences in the last dispensation. After the first tranche was disbursed there was a freeze on the second tranche,” he told reporters.

Fashola said the loan was to be repaid over 25 years at an interest rate of 2.5 percent.

 

(Reporting by Felix Onuah; Writing by Alexis Akwagyiram; Editing by Chijioke Ohuocha, Larry King)

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