Insurgency threat may dim Mozambique's shine for investors By Marina Lopes and Pascal Fletcher MAPUTO/JOHANNESBURG (Reuters) - An economic take-off in Mozambique driven by bumper coal and gas discoveries two decades after the end of a civil war is facing disruption from disgruntled former guerrillas who feel they have not benefited from the post-conflict dividend. A public threat by the ex-rebel Renamo opposition party to paralyze central rail and road links has put the Frelimo government on alert and alarmed diplomats and investors. A slide back into the kind of all-out war that crippled the former Portuguese southern African colony between 1975 and 1992 looks unlikely. Nevertheless, Mozambique's rebirth as an attractive tourism and investment destination could lose some of its momentum after armed attacks in the last two months blamed on Renamo. The raids in central Sofala province killed at least 11 soldiers and police and three civilians and came after Renamo leader Afonso Dhlakama returned with his civil war comrades to the Gorongosa jungle base where they operated in the 1980s. "It does bring back all those fears of the war," said Joseph Hanlon, a senior lecturer at Britain's Open University and an expert on Mozambique. Renamo, which signed a peace pact in 1992 with its former Marxist foe Frelimo, denied that it carried out a raid on an arms depot on Monday that killed seven soldiers. But on Wednesday it threatened to paralyze the main road through Sofala and the railway carrying coal exports to port. There was no evidence by late Thursday that it had carried out the threat. Witness reports from Chimoio and Dondo on the Beira corridor railroad link indicated no immediate disruption. Everything here is absolutely tranquil. It is a normal day," Arnaldo Neves, Director of Production for Portuguese construction company Mota-Engil which is rehabilitating the railroad, told Reuters from Dondo railway terminal in Sofala. Mozambican state railways spokesman Alves Cumbe said operations were continuing as normal on Thursday. The Sena line to Beira port is used mainly by Brazil's Vale and London-listed Rio Tinto, which are among companies that have been developing Mozambique's coal deposits and offshore gas fields. Vale, which is investing $4 billion in its Moatize coal mines near Tete and is the main user of the Sena line, declined to comment. President Armando Guebuza's government said it was taking the Renamo threat seriously but insisted it would keep the country's strategic transport corridors open. Officials declined to detail specific measures taken to counter Renamo actions. Renamo had claimed an earlier attack that killed four policemen in Sofala in April. Renamo, originally founded with the help of white-ruled Rhodesia's intelligence services and then backed by apartheid South Africa, accuses Frelimo of maintaining a stranglehold over politics and the economy and stacking the election commission to ensure victory in a presidential vote next year. "Renamo and its followers think that the political system is not inclusive enough," said Ozias Tungwarara, head of the Africa Governance, Monitoring and Advocacy Project at the Open Society pro-democracy network founded by financier George Soros. Resentment at Frelimo's dominance of politics and elections since the end of the war has also been accompanied by opposition allegations that the party's leaders are hogging the spoils of the coal and gas bonanza. "There is a feeling that an elite is getting rich and becoming wealthy, and that others are not," Hanlon said. He saw Renamo's old military chiefs leading a campaign for Frelimo to cede to its former war foes a greater share of the national wealth, whether in state jobs or business patronage. Hanlon said Dhlakama and his fighters - which some estimates put at around 1,000-strong - could certainly create a security problem for the government army from their Gorongosa jungle base by raiding and sabotaging nearby road and rail corridors. That central area is quite heavily forested. It's good guerrilla country. It's easy to attack traffic," he said. But he believed neither Renamo nor Frelimo had the military capacity to go back to fighting an all-out conflict of the kind that left Mozambique in ruins two decades ago. Hanlon saw "zero popular support" for war from a Mozambican population of 23 million which had come to appreciate an existence of peace but still remained among the poorest in the world, scraping by on an average wage of only $400 a year. But there are fears that even sporadic attacks could badly undermine recent economic gains. "It might start as a small fire now ... but a small group of determined, disgruntled people with some military training could still cause havoc and suffering," Tungwarara said, pointing to other debilitating insurgencies in Somalia and Mali. Held up as a post-conflict success story, Mozambique has emerged as one of the brightest stars in the "Africa Rising" narrative, enjoying growth rates of more than 7 percent. Attacks and disruption to key coal exports and transport corridors could badly choke the enthusiasm of investors, Tungwarara added. Hanlon said that if Renamo's "generals without soldiers" failed to make good on their threats to paralyze the country's logistics then the group's credibility was likely to suffer. But both believed Guebuza's government should try to defuse tensions by opening up economic and political opportunities for Renamo, for example by addressing its demands for a more independent and representative electoral authority. "The danger is that we will see increased polarization as we move towards the 2014 elections," said Tungwarara. There is time to step back, but it requires genuine give and take. Writing by Pascal Fletcher; editing by Tom Pfeiffer