Gbagbo earlier defied international demands for him to yield and he named a new cabinet, two days after Ouattara had announced his parallel government from a lagoon-side hotel guarded by U.N. peacekeepers.
After an emergency summit attended by regional heads of state in Nigeria, the 15-nation ECOWAS further increased pressure on Gbagbo by suspending Ivory Coast’s involvement in the group.
ECOWAS’ acting president, Nigerian leader Goodluck Jonathan, warned against efforts to cut a deal, as in Zimbabwe or Kenya.
“We’ve seen that these governments of national unity … it doesn’t really work…Elections have been declared, somebody has won, so he has to hand over,” he said.
The dispute over the outcome of last month’s poll in the world’s top cocoa-growing country has raised the risk of renewed violence in a nation still divided after a 2002-2003 war, prompting the United Nations to begin pulling out some staff.
Gbagbo was sworn in as president last week and appointed the new government in defiance of calls from the United Nations, the United States, France and others for him to accept provisional results of the Nov. 28 poll that made Ouattara the clear winner.
International backing for Ouattara is based on copies of result sheets collected by the United Nations across the country.
“The heads of state and government recognised Mr Alassane Dramane Ouattara as president-elect of Ivory Coast,” ECOWAS leaders said after the meeting in Nigeria’s capital Abuja.
At the United Nations, diplomats said Russia had blocked a U.N. Security Council statement that would recognise Ouattara as the election winner.
After five-and-a-half hours of closed-door discussions, the council adjourned for the day with Russian envoys saying they needed further instructions from Moscow, the diplomats said.
Gbagbo, who has kept control of the army and state television, has dismissed calls on him to quit as meddling and on Tuesday held a first cabinet meeting.
The line-up was missing former finance minister Charles Koffi Diby, who handled talks with the IMF and World Bank on $3 billion of debt relief and has a strong international reputation.
Speculation grew that he had changed sides after former IMF official Ouattara named him [to] his government. Diby did not turn up for Ouattara’s parallel cabinet meeting on Monday and has not spoken about his intentions.
Clashes with security forces and between rival supporters have left at least 28 dead and 280 wounded since Nov. 26, according to the International Committee of the Red Cross.
Mindful of the risk of bloodshed, Ouattara spokesman Patrick Achi said he would keep supporters off the streets: “We have not chosen the approach of taking the streets or starting violence.”
Cocoa futures jumped to four-month highs on concern about supply bottlenecks, with the second-month contract up over 1.5 percent at $3,140 per tonne during Tuesday trade.
The yield on Ivory Coast’s $2.3 billion Eurobond, a bellwether of investors’ mood, has risen to above 12 percent from below 10 percent before the vote. Emerging markets fund Exotix downgraded it to “sell” from “hold”.
Business leaders warned of a catastrophe for firms unless political leaders quickly found a solution to the row.
“A number of businesses will not be able to pay taxes while others risk going bust,” the CGECI business federation said.
The United Nations, which has about 10,000 peacekeepers in the country, said it was withdrawing around 600 non-military staff to Gambia and Senegal, citing growing tensions.
Despite the risk that the row could re-ignite the conflict between north and south, Ivorians pushed on with life.
Once the showpiece of West Africa, Ivory Coast’s leafy, tropical main city of Abidjan was calm on Tuesday, its wide boulevards humming with traffic and impatient hooting as normal.
“We’ve been in crisis many years, so it’s nothing new,” said lawyer Herman Dirabou, as he queued to pay his phone bill next to a women frying yams on a sandy pavement.
“Maybe with two presidents we’ll get twice as much done.”
The Constitutional Council, headed by a staunch Gbagbo ally, overruled the electoral commission, cancelling hundreds of thousands of votes in Ouattara strongholds, alleging fraud.
But the United Nations has said that even if the allegations were true, Ouattara should still have won