Sunday, June 27, 2010

Nobody Likes African Resource Nationalism

I laughed out loud when I read this:

Add another item to the agenda at this weekend’s G20 summit: African resource nationalism and the twin issue of security of mining contracts. That’s thanks to a burgeoning dispute between Canadian miners and the authorities in the Democratic Republic of Congo.

If Africans are so nationalistic with their resources, surely we wouldn't have the Niger-Delta wahala raging on, or the western companies profiting from Liberian lumber more than Liberians do, or those DRC miners making less from their resources than men in suits who oftentimes are not even Congolese do. But I digress.

Later in the post:

Canadian prime minister Stephen Harper, who is hosting the meeting, plans to raise concerns about the case, which Canada views as particularly egregious. Canadian authorities think they should play a part in a decision by the IMF and World Bank due next week on whether to conclude the write-off of $9bn of Congo’s historic foreign debt.

The Kinshasa government last year revoked Canadian miner First Quantum’s license to exploit the Kolwezi copper and cobalt tailings project in which the company says it has already invested $750m. The case went to international arbitration in Paris in February.

What’s made the Canadians particularly hot under the collar, and alarmed investors across the board in Congo, is the emergence of a secret contract that appears to hand the asset over to a British Virgin Islands-registered consortium, led by the mysterious Highwinds International, before the arbitration has even started.

Sources familiar with the dispute in Kinshasa say IMF officials have asked the Kinshasa government to refrain from signing off on the deal - or any other related to the asset - before the case has been heard in Paris, to commit publicly to good governance and to submit all future mining contracts to open and transparent tender.

In four simple paragraphs, Beyond Brics encapsulates everything wrong with Africa in global trade: Canada doesn't like a deal, so they're trying to blackmail DRC by holding their IMF deal hostage; IF DRC makes a calculated decision to hand over the exploration of their mineral resources to a high bidder (I would suppose that's the case, though what I've read doesn't make that explicit) it'll make Canada "hot under the collar" and "alarm" potential investors. And if the case hasn't even gone into arbitration, then clearly nothing is set in stone and Congo can do as it likes? And why again is the Canada in any position to influence the IMF's decision to write off their $9 Billion debt? In whose interest is the IMF working?

The International Finance Corporation, the World Bank’s private-sector arm, is an equity partner in the venture with First Quantum, and, unusually, has joined in the international arbitration after carrying out a judicial audit.

This presents an awkward conundrum for the World Bank, which has played a part in painstaking negotiations the terms for a debt write-off to a country which is simultaneously threatening its own investments.


Are you serious???? Should this even be allowed to happen? The World Bank has private sector interests in the exploration of mining exploration company that deals in the Congo, and has carried out an audit on its own dealings. I defy anyone to find a better definition of "Conflict of Interest".

Of course, Kabila's government is not exactly clean in the mess that is Congo's quagmire. Still, stories like this get me wondering if it's even possible for a developing country to enrich itself and do what is best for its own people, even if the president had the best of intentions.

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