View attachment Tanzania-Political settlement-as forwarded-31-12-10.docx First, at the centre of the ruling coalition is the ruling party, CCM, the bureaucracy and the army. However the structure of the ruling coalition is being modified as lower level factions are gradually gaining power, while factions hitherto included in or controlled by the ruling coalition are causing internal rifts or are gaining strength outside it. Second, the primary concern of the ruling coalition with nation building rather than economic growth (a questionable claim made by Khan) that endured for decades following independence is now supplemented with new concerns about winning elections and gaining popular support so as to stay in power. Thus the provision of certain services demanded by voters - and often funded by donors - is central to this new concern. Third, authoritarian efforts by the ruling coalition to control political power which is based on religion, ethnicity, region or economic strength are still substantial. Consequently, there is still little sustained efforts by the ruling coalition to promote an indigenous class of capitalists and strengthen their organisations. Relations to them are growing closer but remain ambiguous. The move is accompanied by increased economic differentiation and a larger but still reluctant tolerance for capitalism. Foreign Direct Investments and the re-emergence of non-indigenous entrepreneurs (read Indian-Tanzanians) is viewed with some animosity inside and outside the ruling coalition. Concern about economic nationalism (aka Africanization) remains important in shaping or implementing productive sector initiatives. Fourth, for decades donors have remained important participants in elite bargaining about policies, their implementation and the intended results. Their push for economic and political liberalisation has influenced elite formation. Moreover, donor funding but not natural resource rents as Khan claims - are important sources of rent, but the management of it and other types of rent is rather fragmented and decentralised. Rent management is driven more by inter-organisational conflicts in the public sector than by conflicts between patron-client based factions within the ruling coalition. Funding of election campaigns is an important driver of political rent-seeking Fifth, as a consequence, the political basis for a sustained and longer-term prioritization of productive sector policies and implementation arrangements is weak. This is an extract from a draft paper by France Bourgouin and Ole Therkildsen with Torsten Geelan for the EPP workshop in Dar es Salaam, January 2011.