Canada Holds Up Congo’s Debt Cancellation
July 1st, 2010
The World Bank announced yesterday that it was postponing the Democratic Republic of Congo’s long-awaited debt cancellation, even though the country has qualified. The postponement has come about at the request of Canada, because Canadian mineral firm First Quantum is in dispute with the government of DRC over mineral rights.
The DRC has been waiting for debt relief for 7 years, while the IMF and World Bank have satisfied themselves that the country has met numerous economic conditions. Politics has come into play before – last year the IMF held up DRC’s progress through the debt relief scheme because the country was proposing to take loans from China. Congo and China agreed to reduce the amount and terms of the loans late last year.
DRC has over $12 billion of foreign debt, much of it based on loans taken out by President Mobutu in the 1970s and 80s. Mobutu’s reign in Congo (then Zaire) was shrouded in corruption, to the point that an IMF representative in Zaire – Edwin Blumenthal – told the fund in 1978 that there was “no (repeat, no) prospect for Zaire’s creditors to get their money back in the foreseeable future”. Nonetheless, loans continued to accumulate, and international campaigners have long called for DRC’s loans to be canceled on the basis of their illegitimate nature.
The debt cancellation is expected to amount to around $8 billion in total. First Quantum is seeking international arbitration after the cancellation of a mining contract. The government of DRC has reviewed numerous mining contracts in recent years, claiming that mining played a key role in the bloody civil war which killed 3 million people in the late 1990s.
Nick Dearden from the UK Jubilee Debt Campaign said:
“It is utterly outrageous that Canada is holding up poverty relief to one of the poorest countries in the world in order to protect its own corporate interests.
“The history of DRC is a woeful tale of exploitation; that a country of such immense natural wealth has become the seventh poorest country in the world is a terrible indictment of our economic system. It’s time we owned up to that history and – on the 50th anniversary of Congo’s independence, finally allowed DRC to control its own resources and destiny.
“The experience of DRC also goes to show that debt relief schemes are still operating in the interests of the ‘creditors’. DRC has spent years shelling out tens of millions of dollars in debt ‘repayments’ while also implementing economic conditions which make its economy more attractive and ‘safe’ for foreign investors. This is not most people’s idea of ‘debt cancellation’.”