Two Views of Zaire: Model of Economic Reform, Den of Thieves

This country is a long-suffering student in the free-market school of how not to be an economic basket case.

For four years it courageously has done what the Western financial experts said it must do. It has stopped wasting money on white-elephant projects and begun paying farmers prices that give them an incentive to grow food. It has lifted price controls and devalued its currency.

That is one view of Zaire, supported by mountains of economic reports and many very long speeches.

There is another, decidedly more cynical view, also supported by many observers here. It goes like this:

Zaire is a den of unregenerate thieves. Its president and top ministers mouth the free-market lingo that the International Monetary Fund, the World Bank and the Reagan Administration like to hear, while continuing to fill foreign bank accounts with loot. No government project is begun without payoffs. Payoffs are so ubiquitous and so exorbitant that many projects are never completed. Civil servants regard extortion as a part of their job description.

Corrupt but Reforming

The murky truth about Zaire, sub-Saharan Africa’s second-largest country, seems to be that both of these views are true and false. Corrupt Zaire is reforming as never before; reforming Zaire is still corrupt.

The IMF and World Bank were invited back to Zaire in 1983, after several years’ absence, to rescue this country from unpayable debts and its own venality. Their advice, after four years, appears to have taken some of the bite out of what many Africa scholars call the “kleptocratic” state, because of a long history of graft.

But not even the Western economists who designed and help implement the reforms are willing to say they see a new dawn of good government.

‘Corruption an Ethic’

“If you think structural adjustment is going to turn Zaire around, you are a bit naive,” said one Western economist who monitors reform here. “Corruption is an ethic. An economic program does not and cannot change a social malaise.”

What reform has wrought here in this vast, resource-rich country is a mixed bag.

Western governments have agreed not to tempt Zairian officials with more kickback-generating big projects, such as hydroelectric dams or office centers, which the country does not need and cannot afford.

And yet, according to a well-informed Western diplomat, a public hospital in Kinshasa was completed this year at 200% of cost--100% to build the hospital and 100% for payoffs to government officials.

The government has ordered that farmers be paid prices that are high enough to motivate them to grow food. Where the prices have been paid, there has been an impressive increase in food production.

Food Importer

And yet many middlemen across rural Zaire refuse to cut their exorbitant profits and do not pay fair-market prices to farmers. Consequently, those farmers refuse to grow more food than they need for their families. Zaire remains a food importer in spite of its enormous agricultural potential.

The new minister in charge of economic policy is a brilliant, hard-working and honest technocrat who Western diplomats agree is the best-qualified Zairian ever to hold such power. And yet the country’s authoritarian president, Mobutu Sese Seko, recently saw fit to dispatch a government-owned DC-8 airliner to Venezuela 32 times to pick up 5,000 sheep for his private farm.

In the halls of the United Nations in New York and in a number of Western capitals there has been a lot of sympathetic rhetoric this year about the intractable economic problems of poor African countries such as Zaire.

A recent report on Africa’s economic crisis appealed to Western governments to help the African countries that have implemented reform programs. The report said that even as these countries have tried to correct past mistakes and rebuild their economies, they have suffered “a calamitous decline.”

They have been hit, the report said, with a double whammy of unpayable debts and falling commodity prices, which have dropped to their lowest levels in 30 years.

Much Bad Luck

Zaire exemplifies this bad luck. The government says that in the last four years it has paid $2 billion in interest on its $6-billion foreign debt. This is a quarter of its export earnings over that period and half of the government’s budget.

Debt payments devoured most of Zaire’s new loans from the IMF and the World Bank. In the process, Zaire, which the World Bank lists as the ninth-poorest country in the world, became a net exporter of hard currency.

While this was going on, the price of the country’s main export, copper, collapsed. Consumer prices rose, and life for the common man in Zaire, always miserable, became more so. The country was “risking a social explosion,” according to a senior Zairian official.

This was not what the U.S. government and other sympathetic donors had in mind when they pressed structural reform on Zaire. Accordingly last spring, the country was given a debt reprieve.

The Paris Club, a group of Western creditor governments, granted Zaire six years’ grace on its bilateral debts and extended payment periods for up to 15 years.

Unprecedented Move

The agreement was, according to an official in Zaire’s Ministry of Finance, “without precedent. No country in Africa had been treated as generously before.”

Since the spring, the World Bank has promised Zaire $165 million in loans to support imports. The IMF has come up with another $142 million loan, half of which does not have to be repaid for 10 years.

Zaire’s bad economic fortune and its four years as a quasi-faithful student of structural reform were important factors in its receiving this money. But there was something else involved. This government has friends in Washington.

“Our main interest is making sure that this big country, as big as all of Europe, does not fall to pieces, endangering the stability of all of central and southern Africa,” one senior Western diplomat here said.

Friend in U.S.

The United States, which has had a long and secretive relationship with Mobutu’s government, is first among those Western countries that have kept Zaire from falling to pieces.

Last spring, a senior IMF official in Washington reportedly resigned in protest when the U.S. government pressed the fund to ease lending conditions for Zaire. Sources here say that the United States was also a major force in the Paris Club’s decision in May to reschedule Zaire’s debts.

U.S. foreign aid to Zaire is now about $60 million a year, the second-highest figure in sub-Saharan Africa.

The quid pro quo for American largess goes far beyond Zaire’s efforts at free-market reform. It is tied to the country’s Western orientation and its strategic position in southern Africa. Zaire is the largest, most consistent ally of the United States in the region.

CIA Base for Rebels

The American Embassy in Kinshasa is one of the largest on the continent. U.S. military forces regularly conduct maneuvers in Zaire. According to diplomats here and officials in Washington, Mobutu’s government has allowed the CIA to use the southern Zairian air base of Kamina to airlift arms to rebels fighting the Marxist government in Angola.

Representatives of the rebel Union for the Total Liberation of Angola (UNITA) have a secret but semiofficial status at Kinshasa’s international airport. A witness saw them meet a commercial airliner there in October and usher foreign journalists around customs and immigration officials. They took the reporters to a private aircraft at the airport and flew them to the war zone in southern Angola.

Mobutu has categorically denied any role by Zaire in helping to supply or support the South African- and U.S.-backed UNITA rebels. When asked what the UNITA people were doing at Kinshasa’s airport, Zaire’s minister of information, Mandungu Bula Nyati, insisted that they were not there.

“It is not possible. It cannot be possible,” he said.

Cynical View

Thomas M. Callaghy, an assistant professor of political science at Columbia University, is one of a number of specialists on Zaire who take the cynical view. He argues that the Mobutu government has adroitly used U.S. strategic interests in southern Africa to keep open the spigots of Western money. At the same time, he said, it blocks substantive reforms that would cut into corrupt practices among Mobutu’s inner circle of ministers.

Shortly after the IMF and World Bank returned to Zaire for another try at economic reform, Callaghy wrote:

“There is little in the history of Zaire’s economy . . . that would lead most observers to conclude that Mobutu is seriously undertaking substantial economic reforms. Indeed, the corruption and mismanagement which have been associated with Mobutu and his ruling elite are the very elements which keep them in power.”

Economists and diplomats here who have watched the reform process firsthand in recent years say that Callaghy’s bleak view is now only half right. One economist acknowledges that “everything we try to do stops when it cuts too close to the bone”--meaning Mobutu, his family and his senior ministers. Another said “the solution for getting the most out of your money is not to come here at all.”

Some Graft Stopped

But there is a consensus among Western officials directing assistance programs in Zaire that some of the broadest avenues for graft have been closed. Said one diplomat: “Leakage in the system has gone down significantly since 1983. Reform has weeded out those who are there only to steal money.”

The biggest leak for years was in the revenues of Gecamines, the state mining corporation. In the past, millions of dollars in copper and cobalt revenue disappeared without a trace. Now those revenues are accounted for in a procedure supervised by the World Bank.

Besides plugging leaks in the kleptocratic system, many Western donors are trying to steer clear of the system. They target small-scale aid directly at rural areas, where 70% of Zaire’s 35 million people live. Most of the money is spent to solve the country’s most acute problem, transportation.

“This whole system puts limits on how far reform can go,” a Western diplomat said.