PRESS BRIEFING BY CHAIRMAN OF PANEL ON EXPLOITATION OF NATURAL

RESOURCES OF DEMOCRATIC REPUBLIC OF CONGO

At a Headquarters press briefing this afternoon, the Chairman of the Expert Panel on the Illegal Exploitation of Natural Resources and Other Forms of Wealth in the Democratic Republic of the Congo, Mahmoud Kassem, warned that political and diplomatic progress in the region would remain stalled unless peace initiatives addressed the critical economic issues at the heart of the protracted conflict.

Mr. Kassem cautioned that, welcome though the recent withdrawal of outside armed forces might be, it would not be enough to offset the harm done by entrenched “elite networks” that had carved out a “war economy” in the Democratic Republic of the Congo.  That economy extended far beyond exploitation of precious and natural resources; it encompassed fiscal revenues and disrupted trade at all levels.  Most significantly, the war economy directed by those networks functioned under the cover of armed conflict, manipulation of ethnic tensions and general violence, generating enormous profits for small coteries of individuals.

When he presented the Panel’s fifth report to the Security Council yesterday, Mr. Kassem said, he stressed that the risks of not tackling the economic dimensions of conflict had been clearly evident in recent armed confrontations along the eastern border of the Democratic Republic of the Congo and in the north-east.  Those flare-ups had been driven as much by economic advantage as political gain, and the Panel believed that restructuring and reorienting the region’s economies was essential to peacemaking and peace-building.

**Kassem Briefing

According to the Panel, the “elite networks”, exercising a grip on various economic fronts, were made up of three distinct groups operating within the Democratic Republic of the Congo -- Rwandan and Ugandan armies and the Kinshasa Government, which had depended on the Zimbabwean military to defend it.  Mr. Kassem said the strategies and operations of those groups -– run by top-ranking political and military officials, business persons and, in occupied areas, by select rebel leaders -- had become more covert as international attention had focused on them.

He said the elite networks had adopted new tactics to ensure continued control over revenue-generating activities and the ability to act with impunity.  Paramilitary groups, local politicians, military-backed companies with civilian facades and foreign soldiers quietly integrated into local defence forces were now operating on various fronts to monopolize economic power and profits.  The resulting war economy drained the public treasury of revenue, and had provoked cycles of aggression and violence, which had led to patterns of malnutrition, displacement and mortality on a scale never before witnessed.

The Panel’s seven-month investigation had revealed that economic exploitation in the Democratic Republic of the Congo involved organized and

documented systems of embezzlement, tax fraud, extortion, kickbacks and false invoicing, as well as other activities orchestrated in a manner that closely resembled criminal operations.  He added that the networks had collaborated with organized criminal groups in money laundering and counterfeiting schemes and illegal arms trafficking.

To correspondents’ concerns that many of the Panel’s findings had been dismissed as lacking in credibility, particularly by the corporations named in the report and the Rwandan Government, which had the said the Panel’s conclusions were "politically motivated", Mr. Kassem responded that information had been gathered following extensive investigation of the activities of the networks’ members.  Knowledgeable resources and a long paper trail had permitted the Panel to identify intermediaries that helped market precious commodities, provide financial services or buy, process and resell extracted resources.  He said the Panel was indeed well aware of the historical background of the conflict and the Rwandan Governments security concerns, particularly involving the ex-FAR (Forces Armées Rwandaises) and Interahamwe forces.

The Panel had emphasized the need to seriously take into account the role of all armed groups in the exploitation of resources.  So the withdrawal of such troops might be one element of the solution.  It should be considered in conjunction with the need for foreign and Congolese armed groups to be disarmed, demobilized and reintegrated, as well as the need to bring all Congolese people together to participate in building a representative Government and reforming State institutions.  The Panel had always supported the demobilization of ex-FAR and Interahamwe.  “All that is in the report”, he said, “but the Rwandan Government continues to deny it, as if they have not read it”.

“It is normal that anyone who was pinpointed or accused of wrongdoing would deny it”, Mr. Kassem said of the dismissive reaction by corporations named in the report.  “But there is nothing in the report that cannot be backed-up or corroborated”, he added.  Indeed, the role of corporations was crucial in the exploitation of resources in the Great Lakes region.  It would have been difficult for the elite networks to operate without their help.  The Panel was not asking that they be punished, however; rather, its was requesting that international and even African companies changed their policies when operating in conflict zones so that they acted with transparency and adhered to the Organisation for Economic Cooperation and Development (OECD) Guidelines for Multinational Enterprises.

He said the recommendations contained in the report were an essential part of what was envisioned as a holistic and viable peace process.  The report recommended that the international community emphasize a peace dividend in the form of economic incentives for the Democratic Republic of the Congo and the wider Great Lakes region.  That dividend could encourage adherence  by government to peace agreements and inspire confidence-building and reconciliation.  It had also recommended that certain restrictions, including travel bans and the freezing of assets, be placed on select business enterprises and individuals involved in the criminal economic exploitation.

The Panel also felt that a monitoring process could be put in place to continue to scrutinize the situation in the Great Lakes region to ensure that exploitation activities were significantly curbed.  Such a body could report to

the Security Council on a regular basis on its findings, including on further activities to curb or halt exploitation.  Finally, such a body could cooperate with international financial institutions, the African Union and the United Nations Economic Commission for Africa.

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