By Barry Moody
NAIROBI, Jan 20 (Reuters) - Hopes that a bloody election crisis would shock Kenya into a new political era have been dashed by a wave of corruption scandals and squabbling among members of the unwieldy coalition government.
Ordinary Kenyans swallowed the idea of a huge and expensive "Grand Coalition" to end violence over a disputed election a year ago in the hope it would enable east Africa's biggest economy to chart a new course freed from decades of abuse by venal politicians.
Early signs seemed good, with former enemies President Mwai Kibaki and Prime Minister Raila Odinga appearing to cooperate on policies that broke the mould of pandering to regional and tribal interests.
But much of that momentum has vanished while almost daily squabbling between the two major wings of the government and a string of graft scandals have caused disillusion, anger and a widespread feeling that little has changed.
"In one year only, Kenyans have been treated to a magnitude of corruption they have never seen," said Okong'o O'Mogeni of the Law Society of Kenya.
Local businessman and analyst Robert Shaw agreed. "The average Kenyan has seen scams coming out of every orifice of the government," he told Reuters.
Shaw believes the combination of corruption and a famine affecting 10 million Kenyans is a "lethal combination" that could cause unrest on the streets.
But other analysts are more sanguine, believing that members of the coalition have too much to lose to precipitate an election ahead of the scheduled 2012.
They say the horrors of last January and February, when at least 1,300 people died in post-election ethnic bloodshed, are in fact a strong deterrent to street protests.
"You have a population that is scared about what happened last year. It is not easy to get people out on the streets," Kenyan analyst Amboka Andere told Reuters.
PROSPECTS BETTER THAN OTHERS
Foreign analysts believe the prospects for Kenya, despite these serious problems, are better in the medium term than several other frontier markets initially seen as more able to weather the global crisis.
Ratings agency Fitch increased Kenya's sovereign outlook to stable from negative last week, saying the coalition government's survival had returned the country to stability and put it on the road to recovery.
Richard Segal, of UBA Capital, said Kenya's outlook was not great in 2009 but "2010 could be quite good...there are not too many countries around the world where you can have a reasonably okay view for 2010," he told Reuters.
Like some other analysts, Segal said the coalition had survived longer than expected when it was installed last April to end the election violence.
"A lot of people feared a lot worse...they felt the coalition wouldn't last out the year. The fact that it has, has to be seen as positive...they don't see any alternative to muddling through," Segal told Reuters.
Andere agreed the coalition was likely to hold despite squabbling he saw as mainly for public consumption and said both sides were involved in corruption so neither would exploit the scandals to destroy the government.
"They are quite comfortable where they are," he said.
Nevertheless, disputes between Kibaki's PNU party and the former opposition ODM of Odinga are so persistent that the president last week appointed a 12-member committee to mediate within the administration and streamline its workings.
ODM believes Kibaki and his followers have tried to bypass them by using the powerful head of the civil service, Francis Muthaura, to implement policy outside the elected government.
The elections at the end of 2007 swept away about 60 percent of the old parliament and analysts at the time suggested this was a reason for optimism with new MPs taking their seats in response to a clear vote for change.
But the parliamentarians voted themselves tax-free allowances despite a wave of criticism and passed a media bill widely seen as an infringement of the rights of a free press.
"The public was saying 'We demand change', so everybody is feeling very angry now," Shaw said.
But it is the revelation of high level scandals ranging from tourism to oil supplies that have most damaged the government's image both among Kenyans and donors. This, despite pledges by Kibaki to crush endemic corruption when first elected in 2002.
Most shocking were accusations of a scam selling maize reserves to bogus millers at a time when Kenyans are suffering severe drought and failure of food crops.
Kibaki last week launched a $470 million aid appeal to feed 10 million people facing famine.
Analysts say donors will be reluctant to hand over new funds unless they are tightly controlled, because of the scandals and the global crisis that has hit their pockets.
But Andere believes the government will be able to buy enough food to survive the shortages unless rains fail in March.
"If those rains don't come, then they will have a real problem," he said. (firstname.lastname@example.org; tel: +25420 222 4717) (For full Reuters Africa coverage and to have your say on the top issues, visit: af.reuters.com/)