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Monday, 12 May 2008

A Marshall plan for DRC?

The Democratic Republic of Congo has unveiled details of a controversial $9.25bn agreement that pledges millions of tonnes of copper and cobalt to China in exchange for roads, railways and other infrastructure. Excerpt:

Congo's Infrastructure Minister Pierre Lumbi, in a speech to MP's publicly unveiling the details the agreement for the first time, called it a "vast Marshall Plan for the reconstruction of our country's basic infrastructure."

Under the terms of the deal, some aspects of which had previously been announced by various Congolese government officials, China promised $3.25 billion to revitalise the country's potentially lucrative mining sector. Another $6 billion will go towards building more than 6,500 km (4,000 miles) of paved roads and railways, two hydro-electric dams, and the rehabilitation of two airports.

The opposition criticised large tax breaks for Chinese companies as well as risks the massive loan could further indebt the cash-strapped former Belgian colony. Congo is seeking to qualify for debt relief as a Highly Indebted Poor Country (HIPC) under World Bank and International Monetary Fund initiatives (IMF). The IMF last year warned Congo of the possible macroeconomic effects of the loan.

MP's also denounced the decision to cede to Chinese companies mining rights to over 10 million tonnes of copper reserves and around 600,000 tonnes of cobalt, which they say makes the deal heavily lopsided in favour of China. "The result of simple arithmetic makes the Congolese contribution at least $87 billion," Mbusa said.

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