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Date: Wed, 18 Aug 1999 22:45:44 -0500 (CDT)
From: "Rev. Khandi Konte-Paasewe" <khandi@netset.com>
Subject: ACL: In Africa, Wealth Often Buys Only Trouble
Organization: ?
Article: 73122
To: undisclosed-recipients:;
Message-ID: <bulk.25345.19990819151552@chumbly.math.missouri.edu>

The Black List - http://www.theblacklist.net

In Africa, wealth often buys only trouble

By Howard W. French, 19 August 1999

BIDJAN, Ivory Coast -- Sensing a killing to be made, Jean-Raymond Boulle, the founder of an aggressive mining upstart called American Mineral Fields, picked sides early in the civil war that swept Zaire last year.

Visiting the rebel headquarters at Goma, Boulle loaned his company's airplane to the movement led by Laurent Kabila and reportedly also made a gift of badly-needed cash. And before Kabila could even capture the capital, Kinshasa, as he did in May, Boulle's company won a $1 billion contract to exploit what is perhaps the world's richest deposit of copper and cobalt, at Kolwezi in the south of the country.

Or so Boulle thought.

Since taking power, and renaming his country the Democratic Republic of Congo, Kabila's government has rescinded the American Mineral Fields deal, and now appears poised to award the same deposits to the South African mining giant Anglo-American.

Local and foreign news reports say that Anglo-American has on its payroll a nephew of Congo's powerful Minister of the Economy who is, at the same time, an employee of that ministry.

With American Mineral Fields having filed a $3 billion lawsuit against Anglo-American, courts will soon decide whether corruption influenced the Kolwezi deal.

Whatever the courts find, one thing seems clear already to many mining analysts: At the very least, the murky dealings around a huge contract like this will dim the prospects for a major injection of private investment capital that the Congo sorely needs -- and that should be easy enough to attract, given that Congo boasts the world's largest reserves of diamonds and cobalt, and among the richest supplies of copper.

And so Africa has yet another reason to wonder just how lucky it is to have the vast riches that lie under its soil, just waiting to be exploited.

'Geological Scandals'

or decades, countries like Congo and a score of other African nations have been humorously described as "geological scandals." The term was intended to convey a sense of their embarrassment of mineral riches. But over the years, it has also become an apt description of the state of affairs that seems to prevail wherever plentiful natural resources are found.

African countries aren't the only geological scandals, of course. Oil producers from Mexico and Venezuela to the Shah's Iran or the Sultanate of Brunei have seen huge oil windfalls either feed the pockets of corrupt political elites, pay for monuments to leaders' egos or set off ruinous spending sprees.

But in much of Africa, where the structures of modern government are relatively young and still weak, where illiteracy is high and checks and balances few, the temptations for leaders to do as they wish with their nations' wealth is particularly high.

Some minerals, diamonds in particular, especially lend themselves to fraudulent practices. And the states that produce them in large quantities -- Angola, Sierra Leone, Congo and the Central African Republic -- would make any hit parade of squandered wealth and stunted economic development.

Gems are so problematic because they are easily smuggled, their production goes under-declared and their value gets deliberately underestimated.

Thus, for Kabila the challenge ahead will not be to find resources with which to generate income. Rather, the challenge is arguably even more daunting: to make sure that the mineral wealth is not simply siphoned off corruptly, leaving a few local millionaires and, in all likelihood, quite a few more contented shareholders of the companies that win contracts to exploit the riches.

Easy Targets

udging by the experience of many countries, international business interests are acutely aware of the weaknesses in the political and economic systems of the new African countries, and rush to exploit them to their advantage whenever they can.

Liberia, for example, is emerging from a devastating civil war that was both fueled by and fought over control of the country's rich mixture of resources -- from abundant diamonds and gold to vast stands of scarcely exploited tropical hardwoods that fetch high prices on international markets.

After starting his country's civil war, Liberia's recently elected president, Charles G. Taylor, was popularly known throughout West Africa as "Superglue," because, it was said, everything he touched he kept.

So far, Western diplomats credit Taylor with a surprising effort to turn over a new leaf. But even before his government could restore running water or electricity in much of the bombed-out capital, Monrovia, the city's few hotels were jammed with prowling foreign investors offering cash up front for shady mineral deals.

"A lot of people have come here offering quick money to Liberia, and when a government comes to power and finds only $17,000 in the treasury, as we did, the temptation can be powerful," said Elie Saleeby, Taylor's finance minister. "People don't believe you when you tell them you don't want it. But we are determined to start off the right way, and that means reducing our debts and not taking on bad new ones."

The examples of those who successfully resist such temptations are, predictably, few when compared to those for whom profligate use of abundant mineral wealth becomes as compulsive as a heroin addiction.

The story of Kabila's neighbor to the west, the Republic of Congo, is instructive. With only 2 million people, this Congo, a former French colony, should by all rights be one of Africa's most affluent societies, if not one of the world's. It has oil, valuable hardwood forests and many other untapped natural riches.

And yet the Congo Republic, in 38 years of independence, has scarcely paved any roads, built any factories or created any new housing for its people.

The reason, many Congolese say, is that the country's small elite has spent almost all its energy fighting -- often along ethnic and regional lines -- over control of the plentiful riches rather than seeking to use them in ways that would generate new wealth for the benefit of the whole society.

The large foreign oil concerns operating in Congo, like the French company Elf, have apparently been all too willing participants in this game, providing large amounts of money up front -- money that can be used for everything from personal enrichment and political payoffs to arms purchases -- in order to tie down oil production into the distant future.

Now, in spite of its immense wealth, the tiny Congo Republic finds itself digging out with difficulty from a devastating four-month civil war, fought last year between partisans of a sitting president and his predecessor, for control of this manna. And when the cleanup of the destroyed capital, Brazzaville, is completed, the country's citizens will find themselves burdened by one of the world's highest levels of national debt per capita.

Asked how he would spend his forced retirement, the defeated Congolese president, Pascal Lissouba, recently told the French weekly, L'Autre Afrique: "I will be distilling the fruits of my experience and sharing it. I have understood, for example, just how tragic it is to live in a country so richly endowed. Our wealth has given us nothing but problems."

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