Canada blocks debt relief as Congo marks jubilee

Wed Jun 30, 2010 6:27pm EDT
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By Katrina Manson

KINSHASA (Reuters) - Canada delayed an $8 billion debt relief deal for Democratic Republic of Congo in a dispute over mining rights, depriving the Central African country of a chance to mark the 50th anniversary of its independence on Wednesday with the accord.

Congolese President Joseph Kabila had pushed for the relief to be finalized in time for the celebration to show the world his country was putting its painful past behind it, following the 1998-2003 war in which some five million people died.

But a World Bank decision on the debt was postponed at Canada's request due to a legal dispute that exploded last year between Vancouver-based First Quantum Minerals and the Kinshasa government over mining rights, officials said.

"Canada did it due to ongoing concerns related to governance, rule of law, and preoccupations about what these realities mean for sustainability of the debt relief program," said a Canadian official who requested anonymity.

The accord, which could have slashed Congo's annual debt service burden to $194 million from $920 million, was meant to be a high point of events to be attended by United Nations Secretary-General Ban Ki-moon and King Albert II of ex-colonial power Belgium.

A spokesman for Canadian Finance Minister Jim Flaherty cited concerns about the cancellation of mining contracts after a review of the sector by Kinshasa and noted that Canada had slowed the debt relief process last year in an effort to raise concerns.

"We will continue to work with our international partners to ensure Canadian investment in the DRC is protected, while empowering those within the country as they work toward peace and sustainable economic development," the spokesman said.

The International Monetary Fund, the World Bank's sister organization, approved debt relief for Congo on Wednesday, saying the authorities had met all of the conditions under global programs to ease the debt burdens of poor countries.   Continued...