Chinese in the Congo

Just over a year ago, I had lunch with a representative from the China Africa Development Fund, a Chinese government fund used for state-led investment and development project into African countries. That day the man I was talking to was fairly livid. The government had just gotten preferential mining rights to a series of copper mines in return for a large development loan, and the construction of roads connecting the country's mineral belt with its port in the West, and the China-Africa Development Fund had been given the unhappy responsibility of looking for partners for investment into one particularly mine, which was waterlogged. The person I was meeting with estimated that the water in the mine would double the cost of production, and despite the fact that all potential partners were extensions of the Chinese state, he was being regularly turned down by companies who didn't think they could make any money on the deal.


I was thinking about this meeting while I read Jason Stearns article on the Congo in Foreign Policy. Here he lays out fairly clearly the potential upside and downside of a ban on congolese minerals:


In an ideal world, here is how international pressure would work: The global minerals trade is highly integrated, so a demand shock from the United States -- the largest consumer of electronics -- would have serious repercussions in the Congo. Congolese business associations, unable to shift their product, would start to panic and put pressure on President Kabila to demilitarize mining areas and begin certifying non-conflict minerals. At the same time, the government would get more serious about pushing rebel groups out of mining areas as well.


The real world is a bit messier. The first part of the equation has worked: As of April 1, U.S.-based companies are boycotting minerals from the Congo, saying they cannot distinguish "clean" from "conflict" minerals. Following suit, the Malaysia Smelting Corporation, the largest smelter of Congolese tin, is considering halting new purchases, and exports from the Congolese trade hubs of Goma and Bukavu are grinding to a halt. The problem is that the Congolese government has not yet reacted. It appears that it is more important for Kabila to placate his commanders -- many of whom are former rebels -- than to promote trade.


It is not enough just to legislate from on high and expect the situation to right itself. The Congo supplies less than 5 percent of tin and around 20 percent of tantalum to the world market, and without encouragement companies might shy away from the reputational hazards the Congolese trade brings with it. A sustained boycott of U.S. companies could put tens of thousands of miners out of work and push some of the trade toward India or China, where businesses care much less about social responsibility.


When I asked the man from China Africa Development Fund why his group had gotten a waterlogged mine, instead of one of the many non-waterlogged mines in the area, he accredited it simply to governance problems "(DRC president) Kabila has no clue what his underlings are doing," he said "he just gives them a command and lets them figure out the details."


This, I think, is one of the reasons to be less optimistic about the boycott of Congolese minerals, and more optimistic about Chinese activity in the region. Our interaction with the Congolese government is often predicated on the idea that the Congo has a functional government which can enforce the letter or the spirit of a law, which I think is an optimistic assumption. Without the ability to assert legal control over the mineral sector, which Kabila has tried to do (somewhat) and failed, a boycott could disrupt the legal economy, and push more people into the illegal economy.


For all that Chinese companies don't give a damn about social responsibility, they answer to a functional government, that is concerned with maintaining a peaceful atmosphere where they can make money and not take a hit to their reputation in Africa. The Congolese government also has some interest in protecting foreign concerns within the country. Where Chinese companies are mining, rebels aren't.


None of this is to say that any country has found the right way to deal with what is easily the worst human catastrophe since world war II. It's mostly to say that its important to engage with the Congo, not turn our backs on them.

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Kuda makes an excellent point; the US did virtually nothing during some 13 years of war in the DRC. The US essentially stated the 1960-1966 Congo Crisis with the assassination of Patrice Lumumba replacing him with the dictator Joseph Mobutu. US policy in Africa has been to support some of the world's most brutal dictatorships and then talk about the need for democratic reform when it was convenient. While American's do not see this blatant hypocrisy, the rest of the world does and finds it quote irritating. That Chinese companies "don't give a damn about social responsibly" is true. But the same is true for American companies. One need look only as far as Central America and the maquiladoras. Finally, when people lack basic needs such as food, peace and shelter, the last thing on their minds are elections and freedom of the press. The DRC needs to develop and a boycott no matter how self-righteous will not help. Anyways lets not forget from where the US procures most of its consumer goods: China!
Another error the West makes is that just because you started becoming concerned about social responsibility in 2008, everyone has forgotten about your hand in Latin America, in the conflict in DRC, in supporting apartheid South Africa, in declaring Nelson Mandela a terrorist till 28 June 2006... people have long memories. The West created these problems and China is so far part of the solution; China has more peacekeepers in the UN while America just starts the wars...

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