D. R. Congo: Magic dust – Who benefits?

Pambazuka News

Commercial and political interests in mineral and natural resources have shaped the history of the Democratic Republic of Congo with devastating consequences for its people, wildlife, and environment. Will a new concession with China be diferent?

Khadija Sharife
If the gorillas inhabiting the Kahuzi Biega National Park located in the Democratic Republic of Congo (DRC), a World Heritage site and ecological sanctuary, could read, the bible may have come handy. Not the bible of God, mind you, but that of the free marketers religion.
– The Wall Street Journal.

Then, sitting among the rare and inimitable forested landscape, they might have come across an article detailing the efforts of multinational Bechtel, a company as infamous for its engineering and construction services as the intelligence they have supplied to the CIA and US government.[1] As reported by Robert Block (Wall Street Journal, October 1997), Bechtel has helped map – free of charge – ‘the most complete mineralogical and geographical data of the former Zaire ever assembled, information worth a fortune to any prospective mining or oil firm.’

This inventory not only ‘commissioned and paid for US National Aeronautics and Space Administration (NASA) satellite studies of the country for infrared maps of its mineral potential,’ but also peeled back the skin of the forest and highlands to reveal its finite riches, chiefly coltan – the same magic dust used to develop the technologies underpinning the modernity of high-tech civilisat ion. Given that 80 per cent of the world’s coltan was located in Africa, and 82 per cent in the DRC, putting friends in high places remained a crucial tentacle of foreign policy.

In a report entitled, ‘The Business of War in the DRC‘, research analyst for the World Policy Institute, Dena Montague, has shown how Bechtel executive Robert Stewart quickly became an important advisor and travelling companion of Laurent-Désiré Kabila (president of DRC 1997-2001), a friend of the US as opposed to the ousted notorious dictator, Mobutu Sese Mobutu, who had been a friend of France despite the US$400 million peddled by the US government during the Cold War.

According to hearings instituted by US Congresswoman, Cynthia McKinney, in 2001 on ending the conflict in the Congo, the company also provided intelligence, reconnaissance and satellite data to track Mobutu’s troops. Montague’s report has also shown t hat under Kabila, American Mineral Fields, a small mining operation headed by Mike McMurrough, a close friend to Bill Clinton, secured a US$1 billion deal in May 1997, negotiated soon after Kabila’s army occupied Goma. US Special Forces, for instance, were spotted alongside Rwandan troops.

The gorillas would have seen this, but few remain. These days, almost 90 per cent of the Kahuzi Biega National Park is exploited by loggers, miners and settlers. Everything that lives is designated in ‘red zones,’ awash with weapons and subject to some sort of extractive violence or commercial trade – whether the bush meat trade, at times using pygmies as guides for professions hunters, or the illicit trade in minerals. Yet in the DRC, the resource-rich fragmented underbelly of Central Africa and home to an estimated US$24 trillion in known mineral resources, the only gorilla that stands a chance of winning is the 800 pound gorilla – so named in Africa for the Internationa l Monetary Fund (IMF).

The thrust of the IMF’s external intervention in the DRC’s political economy was evident as late as 2007, when, according to Congolese finance minister Athanase Matenda Kyelu, the state’s draft budget of US$2.4 billion (a similar value in gold is looted annually) was more or less formulated in line with the IMF’s agendas. This ensured that much as 50 per cent of state budget was earmarked for debt repayment – US$13.5 billion contracted by former French- backed dictator Mobutu, in the name of development.

Among these lenders were two primary institutions: The IMF and World Bank. When the National Assembly acted against the IMF’s order by pushing up portions of the budget allocated for services on 14 June 2007, the IMF maximised pressure on select persons within the government to intervene. On 23 June – four days prior to the successful amendment – Congolese newspaper Le Potentiel reported that Kyelu ‘expected the Senate to amend the 2007 draft budget, in order to meet, in particular, the requirements of external partners, one of which being the IMF.’

What did the IMF – who, in conjunction with World Bank were, according to the Jubilee Debt Campaign, on the receiving end of some US$560 billion (in debt servicing of an outstanding US$2.9 trillion, 2006) – eviscerate from the state budget? Part of the ‘reform’ process imagining away unnecessary and excessive costs included education, infrastructure, police services and healthcare. For every one dollar expended on healthcare, four dollars were sent North via the ‘debt sustainability’ programme of the World Bank and IMF.

In 2006, Professor Stanis Wembonyama, director of the main hospital in Lubumbashi, revealed to the BBC, ‘The hospital did not have a single thermometer, armed robbers had set up their base in some of the buildings and there was human excrement everywhere. Doctors and nurses had not been paid for five years.’ This, he stated, was an improvement from ‘how things were.’ For the DRC, possessing a landmass equivalent to that of Western Europe, the issue of medical care and food is critical: Of the near six million people considered collateral damage during the war, more than 90 per cent died from disease and lack of food, often deliberately deprived.

The DRC’s killing fields, the veiny patterns criss-crossing the East bordering Uganda and Rwanda, directly correspond to the billions in looted mineral resources, namely coltan, cobalt, gold and diamonds in addition to illegally logged timber, wildlife and human trafficking. More recently, the IMF’s intervention – to promote debt sustainability – has been the renegotiation of the September 2007 ‘development- for-resources’ Sino-Congolese deal, previously worth US$9 billion (with an estimated US$50 billion in minerals, chiefly cobalt ripe for the taking).

Known as the ‘deal of the century,’ the two parties would exchange no actual funds, operatin g instead via China’s preferred ‘Africa policy,’ i.e.: The barter system where 32 per cent of shares would be held by the DRC’s state-owned mine, Gecamines, and 66 per cent by the Chinese, through three state-owned industries, including China’s policy bank China Exim (loans of which are not backed by the Chinese state, but are still subject to approval by the Ministry of Commerce).

A report in the Inter Press Service (28 October 2009) details how exploitation, primarily from new concessions, save for portions of Katanga Mining Ltd (reimbursed), would see US$3 billion in revenues from the tax exempt Sino-Congolese joint venture, Socomins, used to repay investment, and Gecamines providing US$100 million to finance operating and employment concerns. The following phase of the contract stipulated that 66 per cent of the profit would finance China’s infrastructural works – realised through China Railway En gineering Company (CREC) and Sinohydro, a company specialising in hydroelectric and hydraulic engineering projects.

The cost of the projects will be determined in-house, potentially leaving the door open to corporate mispricing. The remaining 34 per cent of profits will be divided among shareholders. In the event that the mines are not as profitable as imagined, China has secured the rights to further mineral concessions. According to the September agreement, China retains the right to extract 626,619 tons of cobalt and 10.6 million tons of copper from the Katanga region, which is part of the copperbelt extending from Angola through to the DRC and Zambia.

China Exim’s loans will pass exclusively through Chinese hands, circumventing the possibility of illicit flight on the part of the Congolese state. Congolese President Joseph Kabila, son of former DRC President Laurent Kabila, described the deal as crucial to the development of the DRC, stating: ‘The Chinese banks are prepared to finance our Five Works (water, electricity, education, health, and transport). For the first time in our history, the Congolese will really feel what all that copper, cobalt and nickel is good for.’ These works include 145 health centres, 20,000 council flats, 31 hospitals, 49 water distribution centres as well as expanded water supplies, four universities and a parliament building.

China has also pledged to build 4,000 kilometres of tarred road (prior to Chinese activities, just 200 kilometres existed) in addition to 3,200 kilometres of railway systems). Approximately 50 per cent of loans from China Exim were directed toward the continent, incentivising South- South trade and investment. For this reason, in addition to the necessity of a counterweight, China’s potential as a developing-country investor levels the playing field, shifting investment goals from ‘returns’ to that of ‘access.’ (Africa’s biggest investors however – at 20 per cent – are other African nations.) How well did the DRC and ‘system d’ regions – resource-rich regions located on the peripheries – fare under the conventional system?

The nature of the consequences differs from region to region. For instance, the East’s extractive violence rooted in the exploitation of coltan – a crucial component in the multi-trillion dollar world of high-tech goodies, from mobile phones to rocket shields – vastly differs from that of the industrial logging belt adjacent to the Congo River, where the bulk of timber is allegedly headed for Europe and China, as in the Congo, Gabon, Cameroon and other heavily-forested regions. But coltan exploitation and the violence that sparked following the 1994 spillover of Hutu refugees driven from Rwanda by the Rwandan Patriotic Front is almost strictly linked to the commercial and geopolitical sphere commonly known as the ‘West.’

‘They aren’t here in the Congo to chase us, like they pretend. I have seen the gold and coltan mining they do here, we see how they rob the population. These are the reasons for their being here,’ stated an Interhamwe soldier to the ‘Report of UN Panel of Experts on the Illegal Exploitation of Natural Resources and Other Forms of Wealth of the DRC‘ in 2002. According to this UN report, ’60-70 per cent of the coltan exported from eastern DRC was mined ‘under the direct surveillance’ of the Rwandan army,’ while more than 85 multinationals were involved.

‘Many international corporations, such as Banro-Resources Corporation, Geologistics Hannover, Rwasibo-Butera, Eagleswings, Veen, Soger, Afrimex, Cogecom, Ventro Star, Raremet, Finiming Ltd, Union Transport, Specialty Metal, and Finconcorde, among others, have imported coltan from the DRC via Rwanda for use in Europe, Asia and the US,’ stated Dena Montague, a researcher with the World Policy Institute.

Though 80 per cent of the world’s coltan is located in Africa, with 82 per cent of this found in the DRC (specifically in the ‘red zone’ controlled by the Rwandan army or, alternately, Rwandan-backed militias), the fluidity informing the legal and illegal nature of coltan largely depends on whether or not the ‘magic mud’ – named so for its close proximity to the surface – is purchased via legal entities abroad, and often, through ‘legally licensed’ comptoirs based in the Kivus and Goma.

In the case of coltan, the tentacles interlocking multinationals which geostrategically control the resources extends to stages one (exploration), two (detection) and five (treatment and commercialisation). Rwandan brokers are largely responsible for overseeing stages three (extraction, overseeing the extraction of coltan) and four (transportation). Some mines, such as the Nairobi mine, clearly refer to destination, while the bulk of coltan is processed through Kigali , the capital of Rwanda, en route to the ports of Mombassa, Kenya, or Dar-es-Salaam, Tanzania. Previously services such as SDV-Transitra, then, or Russian Antonovs, much later were used to ferry the goods to Kampala, Nairobi or Kigali.

According to the UN report, ‘In November 2000 in Kigali, the Panel was told that the illegal exploitation of resources and the financial gains of [the Rwandan Patriotic Army] RPA were justified as the repayment for the security that Rwanda provides…’ Halliburton subsidiary, Brown & Root, aided the process by building bases along the Congolese/Rwandan border where the Rwandan army trained.
The Rwandan Patriotic Front’s (RPF) training, since the late 1970s, was provided by the US via Fort Kansas while Paul Kagame (the current President of Rwanda) and other elites constituted crucial elements of Uganda’s army (with Kagame becoming Director of the National Resistance Army (NRA) in the same year that Uganda’s Yoweri Museveni became president of the country).

The International Court of Justice (ICJ) would later claim that Uganda’s damage to the Eastern DRC was the equivalent of US$6-10 billion. According to the UN report, ‘The illegal exploitation of natural resources is facilitated by the administrative structures established by Uganda and Rwanda. Those countries’ leaders directly and indirectly appointed regional governors or local authorities or, more commonly, appointed or confirmed Congolese in these positions. With minor exceptions, the objective of [its] military activity is to secure access to mining sites or ensure a supply of captive labour.’

Circuitous routes included Museveni’s brother who operated three services flying resources out of the DRC and into Rwanda and Belgium airline SABENA operating between Kigali and Amsterdam. SABENA suspended operations, revealed researcher John Katunga, following the release of the UN’s report, only to be replaced by Martinair. A previous UN report documented as many as 64 planes leaving mineral-rich regions in an ordinary day.

Multinationals like Nokia at the time proclaimed to receive no coltan from the region. Yet, according to a revealing statement made by Nokia’s Communications Manager in 2001, ‘All you can do is ask, and if they say no, we believe it.’ Not much has changed. However, the process of certifying and fingerprinting resources is only difficult because of the lack of genuine political will and the commercial interests involved.

The truth appears to be that entities like Cabot, the second largest processor of its type (guided by Sam Bodman, former Secretary of Energy under Bush), and HC Starck, producing 50 per cent of the world’s tantalum stocks in 2001, cannot be monitored due to regulatory vacuums undermining any plausible pretences of accountability and tra nsparency. A Starck press release merely asserts: ‘These trading companies have confirmed that HC Starck is not being supplied with material from the crisis areas of central Africa.’

For the DRC, ‘controlled’ by a fragmented and incoherent state, politically and physically distant from exploited territories, the situation – described by the 2002 UN Report as ‘the systematic and systemic exploitation of the DRC done in the name of resources’ – implies that humans born ‘rich’ in the DRC, are fast becoming as much an endangered species as the gorillas, elephants and other magnificent creatures gunned. Outside and alongside the DRC, in the contiguous world inhabited by ‘everyone else,’ accessorising life with mobile phones and computers and Sony PlayStations, we have become unwitting players in the system; spectators to a nation devoured by the terribly respectable white collar criminals, and their minions, rendering the DRC a large prison without walls, and the ‘unregulated’ free market, a religion of economic mercenaries. After half a century of prayer, the DRC has made into the desired image – a resource-rich bargain bin, open for business.

*This article first appeared in The Thinker (Volume 12, 2010).

*Khadija Sharife is a journalist and a visiting scholar at the Centre for Civil Society based in South Africa.

NOTES

[1] There are myriad other examples related to Saudi Arabia, Indonesia, Iran, Syria and others. The revolving door has included people like Steven Bechtel (CIA liaison to the Business Council), George Schultz (former Bechtel President and Reagan’s Secretary of State), Richard H elm (former CIA Director under Nixon and later consultant to the company), and William Simon (Treasury Secretary under Nixon and consultant to Bechtel).