August 1, 2011 / 9:39 AM / 7 years ago

FACTBOX-Key political risks to watch in Congo

KINSHASA, Aug 1 (Reuters) - Democratic Republic of Congo is seeking stability while battling economic woes and rebel insurgencies as it gears up for elections later this year.

The polls for the presidency and parliament, due in late 2011, will be the second since the official end to the 1998-2003 war, which drew in six foreign armies and resulted in the deaths of 5 million people. Here are some factors to watch:

POLITICS

President Joseph Kabila came to power after his father was assassinated in 2001, winning presidential elections in 2006.

Rather than pushing through steps towards decentralisation set out in the constitution, Kabila has concentrated power and analysts say political oppression is on the rise.

Kabila’s chances of re-election later this year were boosted when parliament approved constitutional changes that scrapped the possibility of a run-off between the two leading candidates if neither has an absolute majority.

What to watch:

— Is the election timetable workable? The polls are due to take place on Nov. 28 but there are doubts over the date.

— The leading opposition parties have said the plan is unworkable. . The International Crisis Group think tank has warned of potential violence and chaos unless Congolese authorities shore up preparations.

— Electoral planning. By the end of June, more than three quarters of country’s estimated 31 million eligible voters had registered, but the process is going slowly and could lead to delays in several places, including Kinshasa, an opposition stronghold. The head of the electoral commission is close to Kabila, raising concerns over its neutrality.

— Can Congo’s fractured opposition unite around a single candidate for the first round? There is talk of a possible triumvirate, with veteran opposition figure Etienne Tshisekedi linking up with Vital Kamerhe, a former campaign manager of Kabila’s, and Jean-Pierre Bemba’s MLC party. However, official negotiations have yet to begin and analysts say a failure to unify would hand Kabila victory.

— Bemba’s trial. The former vice president and leader of the MLC is being tried before the International Criminal Court in The Hague, accused of war crimes in the Central African Republic. The MLC named Bemba its presidential candidate in July - and many in Congo say he would be a strong presidential contender if he were acquitted in time.

— Political crackdown. There are already allegations from opposition politicians that their supporters are facing intimidation at the hands of the authorities whilst the government has scrapped the old coalition for a more tightly controlled line-up seen centralising power around Kabila.

THE ECONOMY

Despite concerns over governance, Congo secured debt relief from most lenders last year, including $7.53 billion from the Paris Club in November, leaving a total stock of $2.9 billion. It has taken measures to stabilise its economy and keep in step with conditions for a three-year $550 million IMF loan.

The official interest rate has gone up to 29.5 percent from 22 percent at the beginning of 2011 but is still down from a high of 70 percent. A central bank official warned in May that Congo, a country heavily dependent on imports, would struggle to meet its 2011 inflation target of 13 percent due to global food and fuel prices.

The Congolese franc is trading at 920 to the US dollar, against 915 at the beginning of the year.

Sustained economic growth is vital to a country where 80 percent of a population of 67 million live on less than $2 a day and the country struggles with a budget of $7.3 billion. Congo grew more than 7 percent in 2010 and is expected to grow 6.5 percent in 2011.

— Corruption and bad governance are hurting economic growth and preventing the emergence of small businesses, seen as critical to bringing down unemployment, currently at 75 percent, a World Bank report said in June.

What to watch:

— Impact of debt relief. Congo says from 2011, $520 million a year intended for debt service will be freed up as a result, but the IMF warns against taking on more expensive debt.

— Macroeconomic policy. Looming elections may prompt a hike in spending, although the 2011 budget was praised by the IMF for maintaining fiscal discipline.

INVESTMENT CLIMATE

Congo moved up four places in the World Bank’s 2011 business rankings to 175 of 183 countries but risks remain high and several investors are pursuing international arbitration. Ministers agreed in May to publish all contracts for extractive industries after pressure for greater transparency.

What to watch:

— First Quantum case. The Canadian firm is seeking international arbitration after its $750 million KMT project was closed and the rights handed to mining group ENRC. The Kazakh company said it would pay $175 million for five Congo projects acquired through listed and offshore entities. A court hearing ENRC’s bid to strike out the First Quantum claim has so far not ruled.

— Efforts to trace minerals. New industry standards to tackle “conflict minerals” came into force in April. A government official said the new rules have already hit mineral exports in the east , while further U.S. legislation is due to come into effect later in the year.

While the moves are aimed at curbing the funding of armed groups, critics say they do not tackle the roots of Congo’s conflicts and have a devastating impact on local miners.

— Congo’s nascent oil sector. Following a tussle with the government over two oil blocks, London-listed Tullow Oil has said it is pulling out of Congo. French Oil giant Total has taken a share in another eastern oil block near Virunga. After buying into a block in the west, Italian major Eni would also like oil blocks in the east.

SIMMERING CONFLICTS

Open conflict between Kinshasa and Congolese Tutsi-led CNDP rebels has ended, and CNDP leader Laurent Nkunda is being held by Rwandan authorities. The CNDP have been integrated into the army, but rights groups and the United Nations say they maintain control of swathes of land, extract taxes and mines.

Congo’s army continues to fight against Rwandan Hutu FDLR rebels, whose numbers are down to 2,500 according to the U.N. But talks are also on-going between the two sides. Several other rebel groups, including the former pro-government Mai Mai militia, LRA and Islamic ADF-NALU fighters still roam.

Mass rapes continue, underlining the precarious security and raising questions over the effectiveness of Congolese and U.N. forces. However some high profile convictions this year have been welcomed as signs that impunity is being tackled.

What to watch:

— Restructuring of regiments in the east of the country has led to a spate of desertions by former rebels who had integrated into the army. The latest deserters, led by Colonel Kifaru Niragiye, have been accused of raping as many as 170 women in South Kivu in June.

— U.N. peacekeepers. The world body renewed its mandate in June, but Kabila’s calls for a full withdrawal of the 17,000 strong force could grow louder if he is re-elected.

— CNDP ex-rebels. Current leader General Bosco Ntaganda is wanted by the International Criminal Court for war crimes, but says he is second-in-command of U.N.-backed army operations, and the fragile alliance with the army is under strain.

— LRA threat. Attacks by the Ugandan rebel LRA in north-eastern Congo have risen sharply this year, with Ugandan and Congolese officials saying its leader, Joseph Kony, is back in the country.

— Intervention from neighbours. Relations with neighbouring Uganda and Rwanda have warmed but remain fragile. Meanwhile analysts say latent tensions with Angola over offshore oil in the west could destabilise the country if they worsen. (Editing by Mark John)

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