July 1, 2010 / 12:24 AM / in 7 years

Canada blocks debt relief as Congo marks jubilee

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.

<p>Congolese military police march during a civil and military parade to mark the 50th anniversary of independence from Belgium, in Kinshasa, June 30, 2010. REUTERS/Katrina Manson</p>

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 debt accord was meant to be a high point of celebrations 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 due to its 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.

John Lipsky, the IMF’s first deputy managing director, said the Congolese government was “strongly committed” to tackling corruption in the mining and oil sector, important for securing foreign investment and further donor support.

Both bodies must approve the deal and a World Bank official said the board had rescheduled the meeting for Thursday to approve debt relief for Congo. A U.S. official said Washington was supportive of the debt deal.

A source familiar with discussions said the World Bank board was expected to approve the debt deal despite Canada’s misgivings. The Bank is also expected to approve a $50 million grant to improve governance in Congo’s mining sector. “Debt relief is expected to go through and (the impact) is almost instantaneous,” the source said.

“SLEEPING GIANT”

Before the celebrations, Kabila did manage to secure the start of the withdrawal of U.N. peacekeepers from his country.

He wants the entire force out by the end of next year. But the U.N.’s Ban told Reuters that he stressed to Kabila that the drawdown must be based on a “common assessment of the situation,” and Congolese army reforms.

Hundreds of thousands of Congolese turned out for a parade in Kinshasa, the bedraggled national capital which has been given a hurried facelift by Chinese laborers for the occasion.

“Slowly but surely Congo is recovering, as a giant who is waking up after a long sleep,” Kabila said in a speech in front of parliament which drew only muted applause.

The speech was at times barely audible and it was not clear if Kabila made any reference to debt relief. Earlier, religious leaders led prayers at the venue for a speedy debt write-off.

Investors in Congo’s lucrative minerals sector were unnerved by its move last September to close First Quantum’s Kingamyambo Musonoi Tailings (KMT) copper and cobalt project. The company is seeking international arbitration.

Last month, Congo’s Supreme Court also annulled the Vancouver-based company’s rights on two other mining titles.

The party mood in Kinshasa has been further dampened by the still-unexplained death this month of Floribert Chebeya, the country’s main human rights campaigner, who spoke out against arbitrary killings and torture of political dissidents.

Yet despite high levels of public dissatisfaction at the state of the country before next year’s general election, and continued violent rebellions across the country, there is also a streak of pride that it can hold such a celebration at all.

“Despite all the problems facing our country we are proud today,” said polio victim Baudouin Mangula, named after a Belgian king and celebrating his own 50th birthday on Wednesday. “It’s thanks to peace in our country that we can parade here -- that is a big achievement.”

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