Wednesday, December 31, 2008

Congo Suffers From Market Meltdown

The global economic meltdown may have dire consequences in the Democratic Republic of Congo. The BBC reports that crashing commodity prices have wiped out more than 200,000 jobs in the DRC's southern Katanga province, the economic engine that drives the country. More than 40 firms processing minerals had shut by November, with an additional 100,000 jobs expected to be lost this month.

According to Provincial Minister of Mines Barthelemy Mumba Gama, Katanga province generates nearly half of the country's revenue.

Job losses on that scale will not only cripple the economy in the region, but could have far-reaching effects throughout the country. One of the major problems facing the Kabila government is its inability to pay the soldiers in the army fighting Laurent Nkunda's rebel forces in the eastern provinces. Without pay, the army preys on the civilian population, extorting food and money from them with threats of brutal treatment as violent as anything the rebel forces inflict. Further cuts in government revenue from dwindling taxes on copper, cobalt, and other minerals mined in the country will certainly exacerbate that problem.

Rogue units of the Congolese army have also turned to trafficking in stolen minerals themselves, further undercutting the government's ability to raise funds. There have been many reports of government units cooperating with remnants of the Rwandan Hutu Interahamwe to operate mines and/or suck protection money from legitimate mine operators and mineral transporters in the Kivus. Downward pressure on commodity prices in world markets will have a devastating trickle-down effect on those operations, which are already squeezed by the criminal elements. Laborers in those regions work for next to nothing now; slave labor will be the likely next step.

In both regions (and possibly others), a major upswing in violence is on the horizon. Miners without jobs and rogue armies living on the backs of the impoverished civilian population are nothing but fuel for a major conflagration.

Dave Donelson, author of Heart of Diamonds a about in the

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