DRC: a demonstration of plunder and submission

11 July 2007 by Eric Toussaint , Damien Millet


The Democratic Republic of Congo (DRC) is a textbook case for those who wish to understand complex notions like the pillage of a country’s wealth, the intolerable loss of a State’s sovereignty, or the concept of odious debt. The manner in which the budget of 2007 was prepared and the orientations of the government led by Antoine Gizenga provide clear confirmation of what the Committee for the Abolition of Third World Debt and many other social movements have been asserting for a number of years.

The 2007 draft budget presented by the government to the National Assembly was marked by a strict neo-liberal orientation, and for an obvious reason: according to the Congolese Finance Minister Athanase Matenda Kyelu, it “was in line with what was agreed with IMF IMF
International Monetary Fund
Along with the World Bank, the IMF was founded on the day the Bretton Woods Agreements were signed. Its first mission was to support the new system of standard exchange rates.

When the Bretton Wood fixed rates system came to an end in 1971, the main function of the IMF became that of being both policeman and fireman for global capital: it acts as policeman when it enforces its Structural Adjustment Policies and as fireman when it steps in to help out governments in risk of defaulting on debt repayments.

As for the World Bank, a weighted voting system operates: depending on the amount paid as contribution by each member state. 85% of the votes is required to modify the IMF Charter (which means that the USA with 17,68% % of the votes has a de facto veto on any change).

The institution is dominated by five countries: the United States (16,74%), Japan (6,23%), Germany (5,81%), France (4,29%) and the UK (4,29%).
The other 183 member countries are divided into groups led by one country. The most important one (6,57% of the votes) is led by Belgium. The least important group of countries (1,55% of the votes) is led by Gabon and brings together African countries.

http://imf.org
services”. We should bear in mind that the IMF is the spearhead of financial globalization, and notorious among the poorest populations on all continents for the ravages caused by the antisocial measures it has imposed for a quarter of a century.

But the National Assembly was having none of it! On 14 June it adopted amendments to increase the budget, a development that the IMF lost no time in criticising. Again according to the Finance Minister, “the IMF Board of Directors having met on Monday, June 18 2007 to examine the progress of the macroeconomic stabilization program monitored by the IMF, expressed concerns on the evolution of the ongoing debate in Parliament on the 2007 Budgetary Bill [...] forecasted receipts and expenditure have been considerably increased, so that they no longer correspond to the macroeconomic framework underlying the preparation of this 2007 Budget”. The message couldn’t have been clearer. The government was then instructed to put out the fire by intervening with the Senate in this matter. A clear example of how a government bows to the IMF and its creditors, exactly as a slave serves his master.

Thus on June 23, the Congolese Finance and Budget Ministers took the IMF message to the Senate. As reported by the Congolese newspaper Le Potentiel, “Matenda Kyelu said he expected the Senate to amend the 2007 draft budget, in order to meet, in particular, the requirements of external partners, one of which being the International Monetary Fund [1]”. The manoeuvre was successful: on 29 June, the Senate “amended” the Congolese State budget. What can this budget contain to make the stakes so vital?

First of all, the total amount of the budgetary package is very low: about 2.4 billion dollars, equivalent to the sum spent by the United States in less than two weeks for the occupation of Iraq. How, in such conditions, can a country devastated by two wars in which 3.5 million people died, rebuild itself? For comparison purposes, France, which, like the DRC, has a population of around 60 million, has a budget of 520 billion dollars, in other words more than 200 times the Congolese budget, whereas the subsoil of DRC is a “geological scandal” - a treasure of mineral resources - and the country’s agricultural land is very fertile.

Another interesting point of comparison: the DRC’s budget barely exceeds the annual operating expenditure of the IMF, which employs only 2700 people! The scandalous truth is that Congolese wealth benefits neither the State nor the population of the country, but rather a small number of cronies and the transnational corporations whose interests are represented by the IMF and the major powers.

In addition, a disproportionate share Share A unit of ownership interest in a corporation or financial asset, representing one part of the total capital stock. Its owner (a shareholder) is entitled to receive an equal distribution of any profits distributed (a dividend) and to attend shareholder meetings. (50%!) of DRC fiscal resources goes to debt servicing, the cost of which constantly takes an increasing share of the country’s budget. As the Congolese Prime Minister declared when the budget was presented: “This situation reduces the Government’s capacity to devote its internal resources, from 2007, to the improvement of working conditions for State officers and civil servants, particularly the police force and the army, and to reinforce its financial capacity to make priority investments.” Finally, between making these priority investments and refunding rich creditors who are grabbing the country’s national resources, the government, strongly advised by the IMF, chose the second alternative. Obviously, expenditure for education and health are reduced to the meanest proportions.

It is obvious that the planned budget goes deliberately against meeting the fundamental human needs of the Congolese population. In doing so, it violates several fundamental charters, including the Universal Declaration of Human rights and the Preamble to the Congolese Constitution.

Indifferent to such arguments, the IMF and its local accomplices have built a budget whose goal is “to provide all opportunities to the DRC to guarantee its victorious march towards achieving the HIPC Heavily Indebted Poor Countries
HIPC
In 1996 the IMF and the World Bank launched an initiative aimed at reducing the debt burden for some 41 heavily indebted poor countries (HIPC), whose total debts amount to about 10% of the Third World Debt. The list includes 33 countries in Sub-Saharan Africa.

The idea at the back of the initiative is as follows: a country on the HIPC list can start an SAP programme of twice three years. At the end of the first stage (first three years) IMF experts assess the ’sustainability’ of the country’s debt (from medium term projections of the country’s balance of payments and of the net present value (NPV) of debt to exports ratio.
If the country’s debt is considered “unsustainable”, it is eligible for a second stage of reforms at the end of which its debt is made ’sustainable’ (that it it is given the financial means necessary to pay back the amounts due). Three years after the beginning of the initiative, only four countries had been deemed eligible for a very slight debt relief (Uganda, Bolivia, Burkina Faso, and Mozambique). Confronted with such poor results and with the Jubilee 2000 campaign (which brought in a petition with over 17 million signatures to the G7 meeting in Cologne in June 1999), the G7 (group of 7 most industrialised countries) and international financial institutions launched an enhanced initiative: “sustainability” criteria have been revised (for instance the value of the debt must only amount to 150% of export revenues instead of 200-250% as was the case before), the second stage in the reforms is not fixed any more: an assiduous pupil can anticipate and be granted debt relief earlier, and thirdly some interim relief can be granted after the first three years of reform.

Simultaneously the IMF and the World Bank change their vocabulary : their loans, which so far had been called, “enhanced structural adjustment facilities” (ESAF), are now called “Growth and Poverty Reduction Facilities” (GPRF) while “Structural Adjustment Policies” are now called “Poverty Reduction Strategy Paper”. This paper is drafted by the country requesting assistance with the help of the IMF and the World Bank and the participation of representatives from the civil society.
This enhanced initiative has been largely publicised: the international media announced a 90%, even a 100% cancellation after the Euro-African summit in Cairo (April 2000). Yet on closer examination the HIPC initiative turns out to be yet another delusive manoeuvre which suggests but in no way implements a cancellation of the debt.

List of the 42 Heavily Indebted Poor Countries: Angola, Benin, Bolivia, Burkina Faso, Burundi, Cameroon, Central African Republic, Chad, Comoro Islands, Congo, Ivory Coast, Democratic Republic of Congo, Ethiopia, Gambia, Ghana, Guinea, Guinea-Bissau, Guyana, Honduras, Kenya, Laos, Liberia, Madagascar, Malawi, Mali, Mauritania, Mozambique, Myanmar, Nicaragua, Niger, Rwanda, Sao Tome and Principe, Senegal, Sierra Leone, Somalia, Sudan, Tanzania, Togo, Uganda, Vietnam, Zambia.
(Heavily Indebted Poor Countries) initiative” [2]. An initiative whose purpose is nothing else than to impose very unpopular economic measures on the DRC, such as the reduction of social budgets, removal of subsidies on basic products, privatizations, the opening up of borders and tax policies which aggravate inequalities. Can a government feel any genuine satisfaction at being at the head of such a very poor and heavily indebted State?

The very meagre debt cancellation resulting from these measures will help conceal the fact that the HIPC initiative is a vast laundering operation for former odious debts contracted by the dictator Mobutu to boost his personal fortune, with the complicity of various creditors who were handsomely paid in return. This debt has never benefited the people and is in fact an odious debt which should not be repaid. The international financial institutions (primarily the IMF and the World Bank World Bank
WB
The World Bank was founded as part of the new international monetary system set up at Bretton Woods in 1944. Its capital is provided by member states’ contributions and loans on the international money markets. It financed public and private projects in Third World and East European countries.

It consists of several closely associated institutions, among which :

1. The International Bank for Reconstruction and Development (IBRD, 189 members in 2017), which provides loans in productive sectors such as farming or energy ;

2. The International Development Association (IDA, 159 members in 1997), which provides less advanced countries with long-term loans (35-40 years) at very low interest (1%) ;

3. The International Finance Corporation (IFC), which provides both loan and equity finance for business ventures in developing countries.

As Third World Debt gets worse, the World Bank (along with the IMF) tends to adopt a macro-economic perspective. For instance, it enforces adjustment policies that are intended to balance heavily indebted countries’ payments. The World Bank advises those countries that have to undergo the IMF’s therapy on such matters as how to reduce budget deficits, round up savings, enduce foreign investors to settle within their borders, or free prices and exchange rates.

) and the Congolese policy makers responsible for this debt, such as the current president of the Senate and former Prime Minister of Mobutu, Leon Kengo wa Dondo, should be made accountable to the Congolese people. An audit of the Congolese debt made by DRC social movements with the aim of legally repudiating this debt is the only way forward.

Translated by Sushovan Dhar and Judith Harris

See also the article “Budget 2007: FMI s’inquiète, le gouvernement pour une revision”, in the Congolese newspaper L’Avenir of 23 June 2007



Footnotes

[2See Le Potential of 23 June.

Eric Toussaint

is a historian and political scientist who completed his Ph.D. at the universities of Paris VIII and Liège, is the spokesperson of the CADTM International, and sits on the Scientific Council of ATTAC France.
He is the author of Bankocracy (2015); The Life and Crimes of an Exemplary Man (2014); Glance in the Rear View Mirror. Neoliberal Ideology From its Origins to the Present, Haymarket books, Chicago, 2012 (see here), etc.
See his bibliography: https://en.wikipedia.org/wiki/%C3%89ric_Toussaint
He co-authored World debt figures 2015 with Pierre Gottiniaux, Daniel Munevar and Antonio Sanabria (2015); and with Damien Millet Debt, the IMF, and the World Bank: Sixty Questions, Sixty Answers, Monthly Review Books, New York, 2010. Since the 4th April 2015 he is the scientific coordinator of the Greek Truth Commission on Public Debt.

Other articles in English by Eric Toussaint (499)

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Damien Millet

professeur de mathématiques en classes préparatoires scientifiques à Orléans, porte-parole du CADTM France (Comité pour l’Annulation de la Dette du Tiers Monde), auteur de L’Afrique sans dette (CADTM-Syllepse, 2005), co-auteur avec Frédéric Chauvreau des bandes dessinées Dette odieuse (CADTM-Syllepse, 2006) et Le système Dette (CADTM-Syllepse, 2009), co-auteur avec Eric Toussaint du livre Les tsunamis de la dette (CADTM-Syllepse, 2005), co-auteur avec François Mauger de La Jamaïque dans l’étau du FMI (L’esprit frappeur, 2004).

Other articles in English by Damien Millet (46)

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