Getting Congo's Wealth To Its People

Joseph Kabila was recently sworn in as president of the Democratic Republic of Congo. The ceremony marked the end of a tumultuous peace process that led the country out of seven years of war. The remarkably peaceful polls were a tribute to the determination of the Congolese people to find peace and stability after a conflict that killed close to 4 million.

But the country's problems are not solved. The mortality rate is still deeply disturbing. On any average day, 1,200 Congolese die of the two side-effects of war and logistical collapse: disease and malnutrition. Given this grim situation, the Congolese stake their hopes on their legendary mineral wealth. Responsibly exploited, it is vast enough to fund the entire reconstruction of this dysfunctional country.

But dubious mining deals between the Congolese government and international corporations may be threatening the nation's chances of rising from the ashes.

Just 10 years ago, before war and malnutrition engulfed the country, Congo ranked high among the world's producers of cobalt, copper, coltan and industrial diamonds. Yet more than three-quarters of the population live on less than a dollar a day, and one quarter - that's 15 million people - must survive on a single meal.

The peace deal and the elections were supposed to put an end to this sort of crippling economic injustice. Yet, while the international community has done wonders organizing the polls, it has been far less successful in creating an accountable state that works for the good of Congolese people.

The World Bank sees the mining sector as the driving force behind Congo's economy. It has helped publish a new mining code, has commissioned several audits of the largest state mining company, and has given $45 million to retire 10,000 state mining workers. The theory is that Congo needs to privatize its stagnant state mining companies in order to revive the industry. Once the mines are up to speed again, the state should be able to make ample revenue through taxing exports and profits.

That was the theory. In reality, the Congolese government has signed up for a number of questionable deals that compromise this economic revitalization. A reputable Canadian law firm, Fasken, Martineau andDuMoulin, which has expertise in mining contracts, has examined two of these deals on behalf of nonprofit organizations. It has concluded that: the terms were so unfavorable that the Congolese state partner share in the profits would "be minimal, if any"; that contrary to best international practice, no competitive bidding process was followed; and that the Congolese government made no assessment of the value of the property it was selling, but left the price to guesswork.

The law firm was not alone. A leaked World Bank memo also lamented "the complete lack of transparency with respect to the negotiation and approval of these contracts."

The World Bank estimates that 75 percent of Congo's remaining copper and cobalt reserves were signed away in similar deals in 2005. As the deals presently stand, the main profit Congo state will make is from taxing the operations and exports of the mining companies. For a minimal return, it has signed away millions - if not billions - of dollars' worth of copper and cobalt for 35 years.

Blame Congolese government, and perhaps ask who might have profited personally by putting his or her name to such a patently uncommercial deal. But blame also the international officials who were fully aware of the deals when they were struck. The World Bank may not control Congo's mining sector, but it has invested millions in resurrecting the industry, and it regularly meets with government officials and advises them on how best to run it. The leaked memo hits the nail on its head: "to allow the contracts to proceed without comment would put us in the difficult position of perceived complicity and/or tacit approval of them."

Who are the document's authors talking to, if not themselves? And are they listening? Those contracts must be renegotiated in a way that benefits the Congolese state and people. To its credit, the World Bank has commissioned an audit of Gecamines' contracts, and some World Bank officials seem to accept the need for changes to the contracts. It remains to be seen how far its officials are willing to match actions to words and persuade Congo's first democratically elected president and his government to stand up for the rights of the people who elected them.