By Joe Bavier

ABIDJAN (Reuters) - From his lagoon-side allotment in Ivory Coast's economic capital Abidjan, Moussa Yanda has a ringside seat to watch the foundations of a $290-million toll bridge slowly rise up from the shore.

"I love watching it," enthused the softly-spoken 45-year-old as he packed up his garden tools for the day. "When things are developing, we realize we're going to make it through this."

Little over a year ago such optimism was scarce. Mortar bombs were pouring down around Yanda's city garden as the West African country slipped into a civil war that claimed over 3,000 lives and forced thousands more to flee their homes.

Now, helped by billions of dollars of donor cash, President Alassane Ouattara wants to shore up the peace with a dash for economic growth like the "Ivorian miracle" which turned the country into a regional powerhouse after independence in the 1960s.

Internationally recognized as winner of a presidential election in December 2010, Ouattara had to wait over four months to enter office as incumbent Laurent Gbagbo refused to step down, pushing the country towards self-destruction.

Old ethnic wounds were opened in the violence that brought the economy of the world's top cocoa-grower to a halt. Ouattara spent much of the conflict in an Abidjan hotel besieged by pro-Gbagbo forces before his northern allies, backed by French troops, ejected Gbagbo from his palace.

Ouattara, a 70-year-old former top International Monetary Fund official, appears determined to make up for lost time. Each day a new strip of pot-holed road is patched up and the mirror-windowed skyscrapers of Abidjan's Plateau financial district now show few signs of the battles waged there.

The toll bridge across the lagoon, long a symbol of Ivory Coast's arrested development in the decade of political crisis that preceded the conflict, is now being built - 15 years after the contract with France's Bouygues was penned.

As early as his inauguration speech made a year ago on Monday, Ouattara had signalled his goal of emulating Ivory Coast's three-decade rise that ushered in a golden age of prosperity and stability unrivalled before or since in West Africa.

"It became clear to President Felix Houphouet-Boigny very early on that peace is not an accident, but an actual development strategy," Ouattara said then of the country's independence president, still widely revered by Ivorians.

THE ROAD TO A RENAISSANCE

For Houphouet-Boigny, the recipe for peace was simple: heavy economic investment and close ties with international partners. Ivory Coast's rich agricultural sector became a magnet for migrant labor from around West Africa and expatriate workers from Europe and Lebanon flocked to take a share of the riches.

But the golden era failed to survive much beyond Houphouet-Boigny's death in 1993. Would-be heirs played the dangerous game of ethnic politics that led to a 1999 coup, a northern rebellion splitting the country in two, and a slow-burn political crisis that exploded after the December 2010 polls.

Undeterred, Ouattara is treading in Houphouet-Boigny's steps anew with a first year in office spent blazing through projects which could be lifted straight from a donor wish-list.

A reform of the cocoa sector - while yet to fully convince the food multinationals involved - aims to boost farmers' incomes and reverse a trend that saw the rural poverty rate jump from 15 to 62 percent between 1985-2008 despite a doubling of production during the same period.

The Ministry of Mines and Energy has promised to invest $500 million by 2015 to boost power output and meet rising domestic and regional demands for electricity. Planned reviews of the mining and petroleum codes seek to unlock the potential in these long neglected but potentially lucrative sectors.

Infrastructure left to decay for more than a decade is also being revamped with an emphasis on large public works projects.

"He's ticking all the right boxes," said Andris Piebalgs, European Union Development Commissioner, one of the many donors who last year gave Ouattara a vote of confidence with aid worth five percent of Gross Domestic Product.

An IMF-backed deal on debt relief, in the works for years but never finalized as Gbagbo dragged his heels on reforms, is expected in June. This could bring foreign debt down from around 50 percent of GDP to a more manageable 40 percent.

It is hard to argue with the results. The IMF sees growth of around eight percent this year, easily wiping out last year's contraction of 4.7 percent. Analysts expect the rate to steady to a still healthy six percent next year and pursue that trend for the foreseeable future.

"Everyone in the business community is optimistic," said Standard Bank Sub-Saharan Africa analyst and longtime Ivory Coast-watcher Samir Gadio.

"The biggest thing being achieved by improving governance is that it is creating a shift in domestic sentiment. So far there is not a major shift on either foreign direct investment and far less portfolio investment but people are starting to consider investing in Ivory Coast."

NO RECONCILIATION, NO OPPOSITION

But if the country is on the road to a renaissance, the path remains littered with potential pitfalls - chief of which are the old rivalries deep within Ivorian society on which the first era of affluence foundered.

While Ouattara is in his element tinkering under the bonnet of the economy, his efforts to foster a wider reconciliation in a country of 20 million riven in two for over a decade remain constrained by former foes and supposed allies alike.

Even though Gbagbo lost to Ouattara, the U.N.-certified results showed he won nearly 46 percent of the vote - evidence of strong support for him and his Ivorian Popular Front (FPI) in the wealthier south of the country.

All agree that if Ivory Coast is to emerge as an inclusive democracy, it will need an opposition worthy of the name. But that is a role the FPI is not willing or able to play now.

Gbagbo is awaiting trial at the International Criminal Court in The Hague on war crimes charges. His influential and much-feared wife Simone is under house arrest and most of the party leadership is in jail or exiled in countries such as Ghana.

The FPI boycotted legislative elections last year and those mid-ranking party officials still in the country snubbed an offer of jobs in the government - partly for fear of displeasing exiled or jailed superiors, but also partly out of distrust of Ouattara and his ruling Rally of the Republicans (RDR).

"We are the ones who suffered the worst difficulties," FPI representative Sebastien Dano Djedje said, highlighting the party's mood of resentment and alienation.

Their absence has left many Ivorians feeling excluded from politics. The risk of further marginalization is all the greater with legislation on the nationality and land ownership issues at the root of Ivory Coast's problems now set to be decided by a parliament packed with Ouattara allies.

NO JUSTICE, NO PEACE

While some FPI conditions for re-entering politics - such as a demand that Gbagbo be freed - are unrealistic, their charge that post-war justice has been partial is seen by many as valid.

Nowhere is that truer than in Duekoue, a mainly pro-Gbagbo town in the cocoa-producing west where around 800 civilians were killed as pro-Ouattara northern rebel soldiers swept south in late March 2011 on their way to a final assault on Abidjan.

During a visit to the town last month, Ouattara repeated his promises that all crimes would be punished. But there still has not been a single arrest of a pro-Ouattara soldier.

"As of now, the promises of impartial justice have been pretty hollow, with almost no action to support the rhetoric," said Matt Wells, who investigated the Duekoue massacres for New York-based Human Rights Watch.

While the violence of pro-Gbagbo fighters may overall have exceeded that committed by pro-Ouattara forces, critics argue the lack of full justice suggests Ouattara is beholden to the fellow northerners whose armed support he needed to win power.

"We want a light to be shone on what happened here and for justice to be done. That will make forgiveness easier," said community leader Constant Bohe, standing beside a mass grave now covered in tall grass in Duekoue's Carrefour neighbourhood.

TWO ARMIES

U.N. investigators believe much of the killing in the west was the settling of old land feuds between the area's original inhabitants and migrants, from the north as well as neighboring countries, who possess most of the region's cocoa plantations.

While security in most of the country has vastly improved, the west is still plagued by violence and awash with arms. Yet the army and police force, far from acting as guarantors of stability, constitute a serious danger in their own right.

Deep distrust exists between rank-and-file police agents, many of whom fought for Gbagbo, and their new, often northern, bosses. Security commanders are often loath to issue arms to their subordinates, creating a crippling dysfunction.

A similar split afflicts the military. The northern rebellion was spawned from a failed army mutiny in 2002. The return of ex-rebels, many with big promotions, is viewed dimly by those army officers who, regardless of their view of Gbagbo, chose not to desert during the war. The two sides rarely mix.

"If you look at the history of this country since 1999, all the problems have come from within the army ... It's very dangerous to have these different streams in the army," said Rinaldo Depagne of the International Crisis Group think-tank.

Ouattara must also somehow succeed in breaking up rebel fiefdoms that allowed some northern commanders to get rich through the control of diamond mines, regional goods smuggling routes and illegal taxation rackets.

It will be a delicate task, not least because many former rebels feel a sense of entitlement having risked their lives backing the president. Ouattara himself has taken the defense portfolio - a clue that he will personally oversee reform of the army - but so far, little progress has been made.

"He's acting very cautiously and taking his time. It's very difficult for him to do it quickly and in one shot. The goal is not another war. It can appear to some observers as weakness, but I don't think that it is," Depagne said.

BUYING TIME

There are reasons for optimism. Regional neighbors such as Liberia and Sierra Leone have in the past two decades suffered more devastating conflicts and - so far - held the peace and made economic progress. Post-genocide Rwanda has also achieved a degree of stability through development.

While reconciliation and justice remain fundamental issues, Ouattara can bank on support from about 60 percent of voters as long as his coalition holds with the PDCI party once led by Houphouet-Boigny.

Assuming it finally wins IMF-backed debt relief, the next leap forward for Ivory Coast's finances will be a return to international markets burned by the default on its $2.3-billion bond during last year's conflict.

Finance Minister Charles Koffi Diby says Ivory Coast will resume interest payments this year but investors are still waiting for word on the arrears and the country will have to get a new credit rating - which could take at least two years.

Standard's Gadio predicts that even a booming Ivory Coast will struggle to set investors' pulses racing as Nigeria, the giant further along the West African coast, does with its oil industry and population of 160 million.

Yet he argues its use of the euro-pegged West African CFA franc offers a degree of economic stability and inflation-proofing that neither Nigeria nor neighboring Ghana enjoy, while its relatively solid energy and transport infrastructure could provide the base for a viable light manufacturing sector.

"As a country you have to decide what is your comparative advantage and exploit it," he said, arguing that it was not too far-fetched to suggest Ivory Coast could emulate the export-led growth achieved in the past by countries such as Morocco and Tunisia.

How long it will take before Ivory Coast can start to realize such potential is unknown. By laying the foundations for a stronger economy, Ouattara is buying himself time for the longer-term task of healing the wounds of the past and knitting Ivorian society back into a peaceful whole.

"He's heading in the right direction. He's done many of the right things," said one Western diplomat. "But even now it is becoming quite clear how far there still is to go on this road." ($1 = 0.7860 euros)

(Additional reporting by Mark John in Dakar; Editing by Mark John and David Stamp)