PRIDE AND PREJUDICE BY VP BEMBA

C O N F I D E N T I A L SECTION 01 OF 02 KINSHASA 001553

SIPDIS

E.O. 12958: DECL: 08/17/2014
TAGS: EAID ECON EFIN EINV EMIN ETRD PGOV PREL CG HIPC OPIC
SUBJECT: PRIDE AND PREJUDICE BY VP BEMBA


Classified By: Econoff Peter Newman for reasons 1.5 b/d


1. (C) Summary. On Aug 12, Ambassador Meece paid a courtesy
call on DRC Vice President for Economic and Financial
Affairs, Jean-Pierre Bemba. Bemba made clear his pride in the
economic achievements of the past year and his extreme
prejudice toward Rwandan President Kagame as the primary
culprit behind the Kivus insecurity. The two also discussed
potential investments, OPIC and HIPC, elections planning,
regional confidence building and Bemba's interest in making
an offical visit to Washington (septel). End Summary.

ECONOMIC CREDENTIALS AND INVESTMENT


2. (C) Ambassador Meece opened by commending the economic
progress the DRC has made over the past two years,
specifically citing the impressive IMF report in Washington.
Bemba accepted credit for the DRC's macro progress citing
forecasts for CY2004 of inflation at 5 percent and GDP growth
of 6 percent. He also made a point to note that the exchange
rate has remained stable and that the GDRC is operating on a
balanced budget. Increased trade (traffic at Matadi has
doubled and exports have increased 26 percent) and general
commerce was also of importance as Bemba claims that economic
activity has increased twofold in the past six months.
However, he offered the caveat that the common Congolese are
increasing purchases of staple goods, for example bread,
demonstrating increasing purchasing power. (Comment. To his
credit, this shows that Bemba is looking at the local
population rather than just the big services, industries and
import-export firms. End Comment.)


3. (C) Bemba highlighted three main economic challenges:
bringing the informal sector into the formal economy,
improving the tax ethic, and deepening the fight against
corruption and fraud - particularly in the Eastern DRC.
Ambassador agreed with Bemba's estimate and expressed U.S.
support for reinforcing reforms and improving the private
sector through foreign direct investment. Bemba took this
opportunity to raise his desire to travel to the U.S. to meet
with potential investors and USG officials (septel).
Ambassador noted that the Overseas Private Investment
Corporation (OPIC) is currently considering enlarging its
program in the DRC, which will help potential investors
explore opportunities and manage risk in the DRC. (Comment.
Bemba appeared not to have any knowledge of OPIC or its role
in investment promotion, but quickly recognized the potential
benefits to actively working with the USG in supporting
OPIC's program. End Comment.)


4. (C) Ambassador also brought up the case of Phelps-Dodge,
which is currently in negotiations with Gecamines for a
several hundred million dollar investment project, as a test
case for large-scale investment in the DRC. Bemba assured the
Ambassador that his people are trying to finalize the
dossier. He stated that the Phelps-Dodge file in now securely
in the hands of the Minister of Plan Alexis Thambwe (MLC
affiliated) and that the legal questions will now be resolved
since the lead lawyer has returned from foreign travel.
(Comment. Bemba appeared poorly informed on the details of
the case, even though his economic advisor Yves Kisombe and
Minister Thambwe are both directly involved in evaluating the
file. Phelps-Dodge and Gecamines reps have told Econoff that
the legal issue was resolved on July 29. The question is now
the financial aspects of the joint-venture, particularly
Gecamines' equity stake. End Comment.)


5. (C) Ambassador assured Bemba that the Department is
working closely with Congress to secure funding for HIPC debt
relief based on U.S. obligations to the Paris Club. Bemba
commented that the deadline for the HIPC completion point was
2006 and he would like to reach completion before then. The
DRC arrived at a decision point in July 2003 and continues to
pay its debts to the U.S. in a timely manner despite its
fiscal difficulties. He hopes that Congress will take that
into consideration when deciding on appropriations. (Comment.
Post believes that he intended to both demonstrate the good
progress made by the DRC as well as maintain pressure on the
USG to fulfill its Paris Club obligations. End Comment.)
Ambassador reassured Bemba that for the coming fiscal year,
top level officials in the government are working hard to
convince Congress to appropriate the necessary funds for HIPC
debt relief.

A POLITICAL TOUR D'HORIZON


6. (C) Bemba focused on two issues: elections/integration and
Rwanda. Both Bemba and Ambassador commented that the
integration of the military and the DDR(RR) programs must
accelerate before elections can occur. Ambassador assured
Bemba that DDR(RR) is a high priority issue in Washington and
that he will take up the issue with SRSG Swing as well as the
World Bank and IMF resident representatives to make sure
there is enough institutional support and financing. Bemba
clearly believed that unless the intergration issues were
resolved, elections would not occur in a serene and secure
environment.


7. (C) However, Bemba stated that he was not convinced that
all actors (i.e. some in the Eastern DRC) wanted the DRC to
arrive at free and transparent elections. He opined that
Rwanda was obviously at fault for the continuing instability
in the Kivus. He stated that the Congolese people hold no
prejudices against the Rwandan people; however, Kagame must
halt his actions because the Congolese people do not deserve
to be mistreated by Kigali. Ambassador reiterated that the
U.S. position in support of Congolese sovereignty and
territorial integrity. Bemba said that he believes that the
U.S. needs to play the principle role in confidence building
between the Great Lakes states. He is looking for U.S. moral
if not material support to organize the CPGL and the Great
Lakes Conference as well as for follow through on the
tripartite border verification mechanism. He fears that the
U.S. and the international community have forgotten the DRC
in the rush to deal with the Darfur crisis. Ambassador
reassured Bemba that the U.S. has not forgotten the DRC and
was working to arrange not only the next tripartite meeting
but also supports efforts to have effective mechanisms to
secure Congo's borders. Bemba was keen on Monuc having a
central role in the proposed Joint Verification Mechanism
(JVM). However, he was cool on AU participation beyond
observer status.

COMMENT


8. (C) Bemba was engaged and said most of the right things
during the one hour conversation. He appears to have a good
handle on the macro aspects of the economic and financial
portfolio. However, his knowledge of ongoing investment cases
and investment incentives seems somewhat lacking considering
the stress he laid on improving the formal sector. Bemba's
political commentary reflected his susceptibility to feeling
stilted and ignored. He stated that he would like to see the
U.S. take a more activist role in the Congolese peace process
and is afraid that Darfur is distracting the U.S. and the
rest of the international community. His commentary on Kagame
and the situation in the East was typical and expected.
Noticably absent was any mention of Ugandan involvement in
the arms or the minerals trade in the Kivus and Ituri. End
Comment.
MEECE