Tuesday, March 30, 2010

China and the Congo Copper Deal

In 2008, the Chinese began to implement the first phase of the first tranche of $3 billion worth of reconstruction projects in the controversial resource-backed infrastructure loan that was held up by IMF concerns about debt sustainability. Apparently the first phase of infrastructure -- $350 million -- went rolling ahead while all the negotiations were going on. A Congolese colleague sent me a link to a French language story on the Radio Okapi website. A dozen new contracts for the second phase -- $400 million -- are up to be signed today, March 30, 2010, in Kinshasa. Congolese are pressing to evaluate the value-for-money so far in the first phase, which is still ongoing. According to early versions of the contract, external firms and independent engineers are supposed to assist in this effort. I'll be looking into whether this is actually happening. (Here's a link to an important 2008 speech by Minister of Infrastructure Lumbi, in English, outlining the parameters of this deal, and another link to a website hosting one version of the contract, in French).

The background of the controversial deal was expertly laid out recently by the always interesting Peter Lee, writing for Asia Times. Lee introduces more of the geopolitics, and his take on the role of the US, behind the resistance to the Sicomines deal, is fascinating. He notes something I have also been told numerous times, with regard to the attraction of the resource-backed infrastructure deals: "You can't put a highway in your Swiss bank account," goes a popular saying in the Congo." As I argue in The Dragon's Gift, these package deals can be an agency of restraint for countries subject to the resource curse, allowing at least some of their natural wealth to be hived off and pre-committed to development expenditures.

I highly recommend Lee's article, although I doubt the concerns laid out so well by Lee have any chance of derailing this deal. A hat tip to Science-Po grad student Solange Chatelard for this source.

1 comment:

  1. In 2007, as Congo emerged from civil war, a Chinese consortium concluded a US$9 billion agreement with the government. The Chinese investors would develop mines and infrastructure - including $3 billion in projects over the next four years - and obtain the right to mine 10 million tonnes of copper and 600,000 tonnes of cobalt in return (quantities that are undoubtedly subject to adjustment based on changes in market price for these commodities).

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