Foreign donors throw lifeline to struggling Congo

Justin Olondo's shop once did a modest but steady business from the civil servants and casual laborers living in the Yolo neighborhood here. But as customers feel the pinch of the government's economic reforms, their buying habits are changing.

"Instead of [selling] a can of milk powder, I have to open it and sell them five or six spoonfuls," says Mr. Olondo. "People can afford that much, but not a whole can." Instead of selling rice or sugar by the sakombi (about 2 pounds), he sells them by the glass. He even has to cut tiny tins of tomato paste in half.

Olondo's shop is a barometer of the Congolese economy as it stumbles from bad to worse. Bordered by nine nations, and with a wealth of resources and 55 million people, Congo could be an African economic powerhouse. Instead, its annual gross domestic product (GDP) of $78 per capita is one of the lowest in the world, down from $250 in 1990, when it was known as Zaire.

Now, in an effort to prevent Congo's economy from shriveling to nothing, some of the world's big donors - the International Monetary Fund, the World Bank, and the European Union - are resuming the flow of development assistance cut off since the era of Mobutu Sese Seko. "A lot of water has gone under the bridge since Mobutu's behavior and corruption caused us to suspend our activities there in 1990," says a World Bank official. "If we all sit back and wait, the tense economic and financial situation risks causing unrest in the country, and this would make the peace process more difficult."

But the idea of flowing millions of dollars into a riven country raises a longstanding debate over "constructive engagement" versus economic sanctions. What promotes democracy most - cutting economic ties, as the US has with Cuba, or reaching out with open arms, as with China?

Embroiled in civil war, Congo is a country where corruption is "a way of life," in the words of one Western diplomat. Congo's external debt is about $13 billion - the equivalent of foreign aid given to Mobutu's government - and most of it is in arrears.

Congo has never held a democratic election and, although President Joseph Kabila has vowed to hold them, there are no plans. International human rights groups condemn the government for trampling on journalists, students, and opposition figures.

It is for these reasons that donors should be putting money into Congo - and making aid conditional on progress toward peace and democracy, says J. Brian Atwood, a former administrator of the US Agency for International Development (USAID). "They're never going to move in that direction unless they're given some sort of encouragement," says Mr. Atwood, who visited Congo earlier this year for his Boston-based organization Citizens International. "There are serious problems, but this is probably the best Congolese government that has come around in decades."

In coming days, the EU plans to formally commit to $108 million in government aid, previously frozen because of what it considered a lack of democratic progress. On the heels of a $50 million grant for technical assistance - its largest injection in more than a decade - the World Bank plans to convene a "resource mobilization meeting" in March. And an IMF delegation made positive noises during a mission to assess President Kabila's economic reform program.

"There are very encouraging signs so far," the IMF's Jean Clement told Reuters news agency. "There is still a lot to be done to return things to a more normal situation, but the willingness of the government is there, and we hope it will continue."

Those in favor of resuming assistance point to the progress under Kabila, the 30-year-old major-general who came to power a year ago following the assassination of his father, Laurent Kabila, in January. He has allowed the deployment of UN peacekeepers, blocked by his father.

He has begun discussions with opposition parties, rebel groups, and civil society about sharing power and moving toward democracy, a process called the inter-Congolese dialogue. In May, four years to the day after Kinshasa fell from Mobutu's control, Kabila reversed a ban on political parties - albeit under certain conditions.

Kabila and Finance Minister Matungulu Mbuyamu, a former IMF official, also floated the currency, slashing inflation; eliminated price controls that caused fuel shortages; and welcomed foreign investment.

Even Kabila's critics acknowledge that he has taken positive steps during his first year in power. But they say the changes in Congo are not enough to resume aid. While Kabila may be open to engagement with the West, they argue, the last round of the inter-Congolese dialogue stalled, the decree on political parties is flawed, and the people still lack basic freedoms.

Donors should not reward Kabila's government with money now, says Dieudonné Munyinga, a lawyer with the Kinshasa-based African Association for the Defense of Human Rights. "The international financial institutions can put lots of pressure on the government," he says, adding that while some political restrictions have been relaxed, new ones are being added and arbitrary arrests continue.

"I can't get together with my members in a room," says Kabamba Mbwebwe, head of surgery at Kinshasa General Hospital's emergency room, and leader of the Congolese Patriotic Front.

"Inside the country, the methods of the father are being continued by the son," adds Jean-Joseph Mukindi, an adviser to Etienne Tshisekedi, leader of the prominent opposition Union for Democracy and Social Progress.

Kabila's critics wonder if Western powers are turning a blind eye to the government's shortcomings because they're keen to see companies profit from Congo's immense natural resources.

"Copper, cobalt, zinc, gold, and diamonds," says Information Minister Kikaya bin Karubi when asked about potential investment opportunities in Congo. Foreign companies are being courted to improve the country's telecommunications sector, its road network, and other heavy industries, he adds. "We will make the place - the whole country - attractive to foreign investors.... What we are courting are the long-term investors, people who will invest in long-term projects that will be here for years, that can develop this country."

In the meantime, the government is struggling just to pay its civil servants' and soldiers' salaries. Past governments have simply printed money to do so, sparking the kind of inflation seen in the country last year: 511 percent.

But other times, when they have waited too long to pay salaries, soldiers and police have responded by rampaging through Kinshasa, looting anything they could lay their hands on.

This time, the government and donors are hoping for a different course of events.