The Mining Industry under Mobutu 1965-1997

=Nationalization of Mining Industry=

Following achievement of independence for the DRC in 1960 and Patrice Lumumba becoming head of state, he was overthrown by Colonel Mobutu Sese Seko, with alleged support from the US and Europe as a key Cold War ally. Just two years after seizing power and renaming the newly independent nation Zaire, Mobutu nationalized the country's mining industry in 1967, including the Union Miniere, the Belgian copper mining enterprise that had been a dominant force in the Congo since colonial times.

By discouraging private investment, the nationalization of major industries such as mining caused a general economic decline from the 1970s onwards.

=Theft, Corruption and Industrial Decline=

Mobutu was said to set up in the newly renamed Zaire the ultimate 'kleptocracy' where, according to Bill Berkely 'stealing was not just a distortionn of public service but its very purpose'. State-owned mining company Gecamines was a lucrative source of these illegal diversions of public money, and by 1980 it was estimated that officials were skimming off at least $240 million a year from the nationalized resource. In 1988 a World Bank investigation that up to $400 million had disappeared from the country's foreign exchange accounts without explanation.

According to academic Caitlin Dearing, Mobutu's failure to use revenue to benefit the population prompted enterprising civilians to establish clandestine national and regional trade network. As a result, a kleptocratic political economy was established, which further undermined development, peace and stability in the country. The ineffective state institutions fostered under Mobutu and virtual breakdown of law and order led to the creation of a 'shadow state', referring to a form of personal rule where the state's authority is based upon the decision and interests of an individual rather than a set of formal and codified laws. According to Amnesty International, large proportions of the revenues from state-owned mining companies such as Gécamines went not to the state treasury but straight into the pockets of President Mobutu and his closest allies.

The plundering of the nation's natural resources was seen to such an extent that Mobutu's personal wealth was once estimated as high as $8 billion to $10 billion. The theft of resources not only ocurred by smuggling minerals such as cobalt across borders, but by Mobutu taking a direct cut from Gecamines' bank account, according to industry source.

Foreign corporations were also complicit in the looting of Zaire's resources with many, including American diamond merchant Maurice Templesman, were willing to offer Mobutu bribes in order to secure contracts or access to natural resources. The pattern of illicit investment which flourished under these conditions continued through Mobutu's rule and subsequently persisted for many years into the future.

At its high point in the mid-1980s, state-owned Gecamines produced 480,000 tons of copper a year with 35,000 employees, earned three quarters of Zaire's foreign exchange, and educated 100,000 children in company-run schools. However, by 1997 the state-owned company was virtually bankrupt, in debt to most of its supplier and producing less than one-tenth of the metal that it did a decade earlier.

Infrastructure rapidly declined as a result of the lack of investment. Only one paved road in ten that existed at independence survived into the 1990s and the Congo river became virtually the only form of viable surface transport. Despite the $2 billion of foreign assistance from the US under Mobutu's rule, Zaire saw a dramatic decline in living standards.

=Post-Cold War Zaire=

When the Cold War came to an end, Zaire effectively became cut off from the global financial system and the US and International Monetary Fund (IMF) suspended loans to the country in 1990, which had run up arrears of $70 million.

Following the radical change in global politics pre-empted by the end of the Cold War, Mobutu agreed to the principle of a multi-party system with elections and a Constitution. In 1992, the long-promised Sovereign National Conference was staged and by the end of the year Mobutu had created a rival government with its own prime minister. Since the 1990s, much of the economy in the country has been in a state of general collapse and in early 1994 levels of inflation reached 9000%.

Following the outbreak of the first Congo War in 1996 Laurent Kabila, himself a coffee and gold smuggler, allied with the governments of Rwanda and Uganda to overthrow Mobutu. Each of these parties had mining interests in Zaire; Rwanda and Uganda sought access to mineral resources in the border regions and Kabila, allied with several mining companies, sought control of Zaire's mineral wealth. Prior to the invasion, Kabila had negotiated contracts with several prominent international mining companies, including DeBeers Consolidated Mines and American Minearal Fields. As Dena Montague comments, "by securing large mining deals with the Alliances des Forces Démocratiques de Libération du CongoZaïre (AFDL) . . . international mining interests helped create a relationship that established legitimate mining operations in rebel occupied territories and essentially provided revenues to the AFDL.”

Following the overthrow of Mobutu's government in September 1997, Kabila assumed nominal control over the country.

=References=