VZCZCXRO4597
PP RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHKI #0299/01 0730543
ZNR UUUUU ZZH
P 140543Z MAR 07
FM AMEMBASSY KINSHASA
TO RUEHC/SECSTATE WASHDC PRIORITY 5761
INFO RUCNSAD/SOUTHERN AFRICAN DEVELOPMENT COMMUNITY
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS SECTION 01 OF 02 KINSHASA 000299 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR AF/EPS (JPOTASH) 
 
E.O. 12958: N/A 
TAGS: ETRD ECON AGOA CG
SUBJECT: DRC'S INPUT FOR 2007 PRESIDENT'S REPORT ON AGOA 
 
REF: SECSTATE 22438 
 
¶1. (U) Post submits the following in response to reftel. 
 
Market-Based Economy/Economic Reform/Trade Barriers 
--------------------------------------------- ------ 
 
¶2. (U) The DRC's development of a market-based economy is 
progressing slowly.  The exchange rate has floated freely for four 
years without significant government intervention, although 
fluctuations of as much as twenty percent have occurred during 
periods of political uncertainty, particularly since mid-2006. 
Private sector development is a key GDRC objective under the 
newly-installed government, in partnership with international 
financial institutions. Privatization stalled under the Transitional 
Government. The IMF's formal Poverty Reduction and Growth Facility 
Program (PRGF) with the DRC lapsed in March 2006 and an informal 
Staff-Monitored Program has been in place since, pending negotiation 
to reestablish the PRGF. 
 
¶3. (U) The DRC does not have any specific barriers against U.S. 
trade and investment.  The GDRC has ratified key international 
intellectual property rights (IPR) conventions, but lack of 
enforcement and a weak judicial system often result in inadequate 
domestic IPR protection.  The GDRC welcomes foreign investment in 
principle, but it is often difficult and time-consuming to obtain 
final government project approval. Degraded infrastructure and 
complicated, opaque taxation schemes discourage investment. The 
GDRC, however, is working with the World Bank to improve the 
investment climate.  Investment, mining, forestry, and labor codes 
provide modern legal foundations for doing business in the DRC, but 
their implementation is uneven.  Several multinational mining 
corporations, including one U.S.-led consortium, are developing 
large-scale projects, with planned investments totaling billions of 
dollars over the next ten years. The U.S.-DRC Bilateral Investment 
Treaty (BIT) governs investment and trade disputes, although the DRC 
has yet to pay any arbitration awards in favor of American 
companies. 
 
Political Pluralism/Rule of Law/Anti-Corruption 
--------------------------------------------- -- 
 
¶4. (U) Political pluralism exists without government interference. 
The multiplicity of parties in the Government risks limiting 
productive dialogue, although parties have aligned themselves into 
large, loose coalitions. Representatives from several parties fill 
legislative and executive branch positions.  A variety of print and 
electronic news sources provide a broad range of political debate. 
Around 17 million Congolese voted in the July 30, 2006 round of 
presidential and National Assembly elections.  The second round on 
October 29, 2006 included provincial elections and a run-off between 
two presidential candidates. The National and Provincial Assemblies 
have begun meeting, and the Senate is expected to begin work before 
the end of March. 
 
¶5. (U) The international community continues to support and 
encourage the GDRC to focus on implementing the rule of law and on 
combating corruption, and President Kabila and Prime Minister 
Gizenga have explicitly stated that combating corruption is among 
the new government's highest priorities.  The GDRC is working with 
bilateral and multilateral donors to develop capacity- building 
programs for the law enforcement and judicial sectors.  The judicial 
sector is extremely weak, often corrupt, and due process is not 
regularly afforded, particularly in connection with pre-trial 
detention. International efforts to provide military and police 
training are improving the quality of Congolese law enforcement. 
 
¶6. (U) The GDRC suffers from institutionalized corruption, which is 
difficult to overcome because of inadequate civil servant salaries 
and decades of lack of accountability. Multilateral and bilateral 
donors, including the U.S., fund anti-corruption efforts, as the 
GDRC has yet to establish its own effective program or system.  The 
newly-formed government, however, has identified anti-corruption 
activities as a key priority.  Donors continue to work with the GDRC 
to accurately determine the actual number of civil servants and 
military in an effort to reduce and be able to meet the government's 
payroll. 
 
Poverty Reduction 
----------------- 
 
¶7. (U) The GDRC has gradually increased its level of pro-poor 
spending.  The GDRC began implementing its Poverty Reduction 
Strategy (PRSP) in July 2006. The GDRC's USD billion 2006 budget 
initially allocated about USD 520 million for social spending and 
poverty reduction programs. The GDRC, however, was forced to reduce 
that amount after bilateral and multilateral partners postponed 
interim debt relief and suspended budgetary assistance and support 
following the March 2006 lapse of the GDRC/IMF PRGF program. 
 
 
KINSHASA 00000299  002 OF 002 
 
 
Labor/Child Labor 
----------------- 
 
¶8. (U) The GDRC generally does not interfere with the activities of 
the 300-plus unions in the DRC, and it usually respects their right 
to strike.  Unions are not normally influential enough to obtain 
meaningful concessions from the government or the private sector. 
An estimated 80 to 90 percent of the Congolese workforce is in the 
informal sector, and therefore does not benefit from the nominal 
labor law protection. Many employers do not provide working 
conditions that meet Western health and safety standards, 
particularly in the industrial and mining sectors. 
 
¶9. (U) The GDRC has ratified key ILO Conventions against forced and 
child labor (Conventions 29, 105, 138 and 182). The Labor Code, 
enacted in 2002, requires that workers be 16 and have completed 
primary school. However, the GDRC has made few if any meaningful 
efforts to combat these problems due to the lack of capacity and 
political will.  Hence, child labor persists, particularly in the 
mining and informal sectors, although NGOs pressure the government 
and employers on this issue. 
 
MEECE