PARASTATALS: BEMBA SEEKS CONTROL, CIAT ARBITRATION

C O N F I D E N T I A L SECTION 01 OF 02 KINSHASA 001934 SIPDIS E.O. 12958: DECL: 10/18/2014 TAGS: PGOV KDEM ECON KPRV EIND CG SUBJECT: PARASTATALS: BEMBA SEEKS CONTROL, CIAT ARBITRATION Classified By: CDA TDougherty for Reasons 1.4 b/d. ¶1. (C) Summary. In a high-stakes move to gain control of the DRC's parastatals, Vice President Bemba called for CIAT to arbitrate his longstanding dispute with the presidency. Bemba, who heads the transitional government's commission for economics and finance, maintains the power-sharing agreement signed at Sun City gives his commission the right to control the parastatals. His position is apparently supported by the RCD/G and the political opposition who, like Bemba's MLC, are keen to get "their share" of the country's public enterprises. The Presidency's position is that Sun City called for a sharing of political (not economic) powers, and that an independent commission should be constituted to appoint the directors of the country's parastatals -- a position likely to be supported by the international community. Bemba has also called upon CIAT to decide which of the transitional government's component groups should have responsibility for territorial administration, the intelligence services, and the police. In an October 14 communique, CIAT called for "consultations" among the parties to resolve the dispute quickly so as not to jeopardize the transition and national elections "expected by the Congolese people." End summary. -------------- Bemba's Position -------------- ¶2. (U) In an October 11 letter addressed to SRSG Swing, Vice President Jean-Pierre Bemba called upon CIAT to arbitrate and "settle definitively" the remaining questions related to the division of powers called for in the Global Accord. Specifically, he asked CIAT to decide which component should be given overall control of the country's parastatals. Putting the parastals in his economics and finance portfolio would, Bemba wrote, "lead to economic reunification" and "end the multiplicity of structures" relating to the management of public enterprises. Bemba also asked for CIAT to arbitrate the division of powers relating to territorial administration, the intelligence services, and the police. ¶3. (C) Bemba's letter was (comment: not coincidentally) sent the day after SRSG Swing left the DRC for a long-planned working visit to Europe. The issues raised in his letter were therefore added to the agenda of the regular CIAT meeting of October 14 presided over by Swing's deputy, Behrouz Sadry. Before the meeting, however, both Kabila's and Bemba's staffs heavily lobbied CIAT members. Virtually all CIAT members were demarched by representatives of the government, and most CIAT members (but not the U.S.) were called in to meet with Bemba's senior advisers. ¶4. (U) Bemba's letter referred to interventions in April and May when CIAT called upon the presidency to end the delays in dividing powers among the Transition's various component groups with the creation of an ad-hoc committee. Acknowledging that some issues had been resolved, Bemba also noted that a majority of the committee had agreed to assign control of the parastals to his portfolio -- a proposal rejected by the presidency. In light of the stalemate, and citing Annex Four of the Global Accord as his justification, Bemba called for CIAT arbitration to resolve all pending issues. ¶5. (C) Bemba's senior staff made it clear they expected a decision in Bemba's favor. The British Ambassador, who was demarched on October 14, told Charge that Bemba's Chief of Staff had indicated that MLC supporters would likely demonstrate if a favorable decision was not forthcoming. Other CIAT chiefs of mission received similar messages about potential disturbances by those whose "patience is running out." -------------- The Presidency's Position -------------- ¶6. (C) CIAT members were demarched on October 14 by either Chief of Staff Boshab, Ambassador-at-Large Kapanga, or Ambassador-at-Large Ghonda. Charge and polcounselor were told by Kapanga the presidency strongly opposes "politicization" of public enterprises. Kapanga said the Global Accord never envisaged transferring control of the parastatals to one component group, and that Sun City only called for the division of political powers ("partage de responsabilities") - not of economic ones such as parastatals (where the Accord called only for the appointment of managers). He cited Article 198 which, in the presidency's interpretation, stipulates that the parastatals are to be left as is until after the elections. Moreover, he claimed, this was discussed at Sun City and known by all parties. ¶7. (C) Kapanga said the presidency proposes to replace all current heads of Congolese parastals. A committee would be established to select directors for the country's parastatals on the basis of their "morality, competence, and experience," and not on the basis of their political affiliation. The committee would be composed of representatives of the four "composantes," the three "entities," and national and international experts including the World Bank, the E.U., the UNDP, and the IMF. Kapanga underscored that the parastatals constitute the patrimony of the Congolese people, and that politicizing their management was unacceptable. ¶8. (C) On the other areas, Kapanga said the police and intelligence services issues were already being dealt with, and that the presidency could compromise on the remaining issue related to territorial administration. In that regard, he suggested that the Minister of Interior (from the president's component) and the Vice Minister of Plan (from the RCD) could work together to appoint local officials. (Note: Territorial administration does indeed fall in the category of "political powers," and appointments of local officials have not been apportioned equitably.) -------------- The Stakes -------------- ¶9. (C) Control of the parastatals is potentially a lucrative proposition for the various factions in the transitional government, as the president's advisers have repeatedly pointed out. Though almost all of the parastatals are perpetual money-losers, they are also useful cash cows for the unscrupulous. Salaries for senior managers are very high, and those appointed to such positions would be expected to share their good fortune with their political patrons. With elections on the horizon, the stakes are high. An audit of the parastatals released this month provides clear evidence of mismanagement and waste, and the World Bank Resident Representative spoke out publicly on October 14 against politicizing the parastatals. -------------- CIAT's Interim Response -------------- ¶10. (C) DSRSG Sadry told CIAT members at the October 14 meeting he had been advised that a separate request for arbitration was to be submitted by the RCD. There was consensus that any arbitration at the October 14 meeting was therefore premature. Instead, CIAT agreed to consultations with the various parties with the aim of reaching an "operational consensus...in a climate of mutual trust." The communique "took note" of Bemba's letter, but did not comment on its substance. In discussions at the meeting, however, it was agreed that the division of powers for the police and intelligence services were side issues. Members expressed their concerns about politicizing the parastatals and their resolve not to be rushed into arbitration. ¶11. (C) Within the transitional government, both sides read into the communique want they wanted. Bemba's faction interpreted it to mean that CIAT would arbitrate (and presumably had seen merit in Bemba's argument),and polcounselor was told by MONUC that Bemba's chief of staff has been calling daily to ask about the status of the case. For its part, the presidency has been surprisingly successful in the media, where newspapers that usually are not friendly to the government, have editorialized that the parastals should not be put under political control. -------------- Comment -------------- ¶12. (C) Though it would be naive to believe the presidency is making its case on the parastatals solely in the interest of transparency and good governance, it nevertheless is on the right side of this issue. The three other component groups in the transition government very much want to get "their share" of the parastatals, with the objective of milking whatever they can out of them while there is still time. CIAT will of course soon have to address the issue directly, and is all too aware of Bemba's none-too-veiled threats if he doesn't get his way. End comment. DOUGHERTY