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Cablegate: Economic Impact of March Fighting in Kinshasa

VZCZCXRO6333
RR RUEHBZ RUEHDU RUEHGI RUEHJO RUEHMR RUEHRN
DE RUEHKI #0406 0951635
ZNR UUUUU ZZH
R 051635Z APR 07
FM AMEMBASSY KINSHASA
TO RUEHC/SECSTATE WASHDC 5925
INFO RUEHXR/RWANDA COLLECTIVE
RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY
RUEAIIA/CIA WASHDC
RUFOADA/JAC MOLESWORTH RAF MOLESWORTH UK
RHMFISS/HQ USEUCOM VAIHINGEN GE
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS KINSHASA 000406

SIPDIS

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: ECON ETRD EINV PGOV ASEC CG
SUBJECT: ECONOMIC IMPACT OF MARCH FIGHTING IN KINSHASA

REF: KINSHASA 375 AND PREVIOUS

1. (U) Summary. The March 22-23 violence in Kinshasa likely
cost business owners and the GDRC millions of dollars, but
the precise totals have not been tallied. Most of the
damage, like most of the fighting, occurred in Kinshasa's
central Gombe district, the home to many government buildings
and businesses. End summary.

2. (U) Small arms fire, rocket-propelled grenades, mortar
explosions and looting damaged many buildings in Kinshasa's
downtown Gombe district March 22-23. A handful appear to
need major repairs, including a several-story building on the
main boulevard (30 Juin) that houses a partially
American-owned bank (BIAC) and the Spanish and Greek
embassies. One of six storage tanks at SEP-Congo (DRC's
petroleum import and distribution facility), holding several
hundred thousand liters of fuel, caught fire after a mortar
pierced it, sending flames into the air and a plume of smoke
visible from miles away. Other buildings damaged as a result
of looting or fighting include the GDRC's Central Bank, in
which the IMF is located, several airline offices, REGIDESO
(the DRC's water authority), and private residences.

3. (SBU) Significant losses resulted from scattered looting
that occurred during and just after the fighting. One
expatriate business owner told EconCouns he watched from his
apartment as soldiers broke into his furniture store and
stole an estimated USD 300,000 in inventory. He later
discovered some of the stolen furniture in the apartment of a
neighbor, an officer in the Congolese army. A local newspaper
reported that looters took more than USD 600,000 in items
from a luxury-goods boutique near the Embassy. Some public
buildings also suffered from looting, including a municipal
office that was emptied of documents and all other property.

4. (SBU) The violence interrupted business activities for
several days. Businesses in the consumer goods sector, such
as gas stations and grocery stores, had returned to normal
operations in Gombe by March 26, but it is too early to gauge
the impact on sectors such as banking and manufacturing. The
effect on foreign direct investment is unclear and still
anecdotal. A Dutch diplomat told EconOff that three trade and
investment delegations from the Netherlands canceled their
visits to the DRC as a result of the violence, while the
Canadian Pol/Econ Counselor said the events did not appear to
have discouraged mining project development and investment.

5. (U) Representatives of the Congolese Chamber of Commerce
(FEC) met with the GDRC met on March 28 to discuss the
economic losses businesses incurred. The GDRC declined to
compensate business operators for their economic losses
during the fighting but is considering the FEC's request to
extend the 2006 tax return filing deadline by one month to
allow businesses time to tend to more pressing concerns the
violence caused.

COMMENT
-------

6. (U) The two days of fighting in Kinshasa and the looting
that accompanied it are likely to contribute to the
uneasiness of current and prospective investors. Despite
optimism following the successful elections and the recent
installation of the new government, the latest round of
violence has probably given pause to many contemplating doing
business in the DRC. End comment.
MEECE

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