US embassy cable - 05KINSHASA911

C O N F I D E N T I A L KINSHASA 000911 
 
SIPDIS 
 
E.O. 12958: DECL: 05/22/2015 
TAGS: ECON, EMIN, EFIN, EAID, SENV, CG 
SUBJECT: WORLD BANK PLANS FUNDING SHIFT IN DRC 
 
Classified By: EconOff Wendy Brafman, for reasons 1.4 b/d. 
 
1. (C) Summary.  World Bank (WB) representative Pedro Alba 
told emboffs that the Bank intends to shift its funding in 
the DRC from emergency rehabilitation projects to sectoral 
projects.  The Bank is considering providing support for 
Rwanda's gas exploitation of Lake Kivu, but will insist that 
Rwanda first discuss this project with the DRC.  The DRC and 
Rwanda have asked the Bank to mediate in any discussions that 
arise regarding this project.  The Bank is working with the 
DRC to improve the process of paying demobilized Congolese 
combatants.  It has not transferred any WB money to the DRC's 
Social Fund, and would support removal of the current Social 
Fund director.  End Summary. 
 
Lake Kivu Gas Exploitation 
-------------------------- 
 
2. (C) Charge, PolCouns and EconOff met with Pedro Alba, 
Washington-based WB Country Director for South-Central Africa 
and Great Lakes on May 19.  Alba first raised Rwanda's 
interest in exploiting natural gas in Lake Kivu and Rwanda's 
contract for this purpose with a private enterprise, DANE 
Corporation.  Since two-thirds of the lake belongs to the 
DRC, Alba agreed that Rwanda must inform the GDRC of its 
intentions to proceed with the project.  He stated that the 
Bank would only provide funds if Rwanda reaches a 
satisfactory agreement with the GDRC on gas extraction, and 
that funding would include an environmental assessment of 
Lake Kivu.  Alba said that both Rwanda's and DRC's Ministers 
of Energy asked him to serve as intermediary in any talks 
between the GDRC and Rwanda on this matter. 
 
World Bank Funding Plans 
------------------------ 
 
3. (C) Alba said that a new Resident Representative, 
Jean-Michel Happi, will begin his duties June 1, replacing 
Onno Ruhl, who left the DRC in May.  Alba noted that the Bank 
wants to shift from funding ad hoc emergency projects in the 
DRC to planned sectoral projects, particularly in the areas 
of health, education and transport.  Alba anticipates a more 
tense relationship between the Bank and the DRC because 
projects will increasingly focus on accountability and 
capacity building.  Alba said the Bank will be more active in 
mining, forestry, public expenditure management and civil 
service reform, including improving the salary disbursement 
process.  He said these operations should commence during the 
funding period July 2006 - June 2007.  He also noted that the 
Bank is not comfortable with direct budgetary disbursement to 
the DRC and will continue to fund projects directly. 
 
4. (C) Emboffs asked about the Bank's current plans in 
support of the Demobilization, Disarmament and Reintegration 
(DDR) process.  Alba said that the Bank will sign an 
agreement with the DRC that aims to implement a new system to 
pay ex-combatants.  It will increase its DDR staff in the DRC 
and will look for ways to assist with funding transport of 
demobilized, disarmed combatants.  Alba noted that, while the 
Bank wants to fund projects that employ demobilized 
combatants, it is difficult to find longer-term projects that 
can effectively utilize unskilled labor.  He also said it 
would be difficult to require that contracts with 
implementing entities contain contractual provisions that 
require hiring ex-combatants. 
 
5. (C) Alba said that the Bank had not yet released any of 
the USD 60 million it had allocated for the DRC's Social Fund 
because the DRC's Vice Presidents do not support the Fund's 
activities, which they see as too politically weighted in 
President Kabila's favor.  Also, the Bank (along with other 
donors) has concerns about the Social Fund director and would 
support her removal. 
 
Comment 
------- 
 
6. (C) Alba said the Bank shares the IMF's concerns about 
recent overspending, particularly on official travel.  He 
noted that macroeconomic indicators seem to be stabilizing 
after significant declines that began in late 2004.  The Bank 
is waiting for the IMF's Fifth Review assessment, and hopes 
it will be positive enough to enable the Bank to resume 
disbursements this year.  End Comment. 
MEECE