FACTBOX-Key political risks to watch in Congo
KINSHASA Dec 1 (Reuters) - Democratic Republic of Congo is seeking political stability, battling economic woes and stubborn rebel insurgencies as it gears up for elections due next year.
The polls for the presidency and parliament, due to start in November 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. Here are some factors to watch.
President Joseph Kabila came to power when his father was assassinated in 2001, winning presidential elections in 2006. But he still relies on the support of other parties such as PALU, a veteran opposition party, for a parliamentary majority.
Factions within the coalition have complained about Prime Minister Adolphe Muzito, from PALU, while opposition parties in parliament have repeatedly tried to topple the government.
Rather than pushing through steps towards decentralisation set out in the constitution, analysts say Kabila's rule has seen a concentration of power and rising political oppression.
This perception was exacerbated in June when leading human rights activist Floribert Chebeya was found dead in mysterious circumstances, prompting the suspension and questioning of police chief John Numbi, previously considered a Kabila ally. A military trial of eight police officers, three of whom are on the run, is due in December. Numbi is called only as a witness.
What to watch:
-- Growing political instability. With politicians looking to 2011 elections, factions within and outside the coalition have already started jockeying for position. Vital Kamerhe, a key Kabila ally in 2006 and a popular leader of the lower house of parliament, has spoken of the need to change the old order. Etienne Tshisekedi, based in Belgium and head of the UDPS opposition party, has already said he will run.
--Jean-Pierre Bemba's trial. Former vice president and leader of opposition MLC party is being tried before the International Criminal Court in The Hague accused of war crimes in the Central African Republic. Many in Congo believe he would be a strong presidential contender were he acquitted in time, and any verdict could be incendiary on the streets of Kinshasa.
-- Provinces seek more power. Congo missed a May 15 deadline for decentralisation, which would see its 11 provinces divided into 26 and receive more local funding. The failure to do so has led some districts like oil-rich Ituri to declare as provinces.
-- Political crackdown. Should the coalition waver or face serious internal opposition, it could trigger unrest given the the government's track record of cracking down on dissent.
Congo secured debt relief from most lenders this year, despite concerns over governance, 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.
Interest rates have come down to 22 percent, from 42 percent at the start of July. Congo's inflation is running at an annualised rate of 8.35 percent, down from 69 percent in January and beating a 15 percent target. The Congolese franc has stabilised against the dollar, hovering at 910 Congolese francs to the dollar after falling 40 percent in 2009, although Congo forecasts it will depreciate to an average 962 in 2011.
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 $5.69 billion. Congo forecasts growth of 5.4 percent in 2010 and 6.83 percent in 2011, while the IMF forecasts 5.4 percent and 7 percent.
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. A looming election year may prompt a hike in spending over the next 12 months.
Congo moved up four places in the World Bank's 2011 doing business rankings to 175 of 183 countries, short of a 20-place hike targeted by the president. Investors still complain of high risks and several are pursuing international arbitration.
Model contracts in accordance with the new mining and oil codes have been drafted, but are yet to be decreed by government.
What to watch:
-- First Quantum case. The Canadian firm is seeking international arbitration after its $750 million KMT project was closed and rights handed to mining group ENRC ENRC.L, after the Kazakh company said it would pay $175 million for five Congo projects acquired through listed and offshore entities. On Oct. 26, First Quantum said an international court had failed to give its assets protection during the dispute. First Quantum has also been ejected from two other sites, over rights. [ID:nLDE68E05M]
-- Mining ban. Congo banned mining in three eastern provinces in September in an effort to clean up the trade, but officials and U.N. experts say elements of the military are involved, as well as armed groups. Several schemes aim to improve traceability, and U.S. legislation kicks in in April.
-- Congo's nascent oil sector. Congo awarded two oil blocks on the Uganda border to surprise new offshore entrants, claimed by the South Africa president's nephew Khulubuse Zuma. London-listed Tullow Oil (TLW.L) says it holds the rights to the blocks, but lost its interim injunction to halt rivals' activities at a Carribbean court. After buying into a block in the west, Italian major Eni (ENI.MI) would also like oil blocks in the east.
Intervention by Rwanda in 2009 helped end fighting by Rwandan Tutsi-led CNDP rebels, whose leader Laurent Nkunda was arrested and is awaiting trial in Kigali.
CNDP have since officially been integrated into the army, but rights groups and the U.N. say they maintain control of swathes of land, extract taxes and mine cassiterite and coltan.
Congo's army continues to try to oust Rwandan Hutu FDLR rebels, whose numbers have reduced to 3,500 according to U.N. experts, and several other rebel groups throughout the east.
Former government militias, known as the Mai Mai, have splintered and mount random attacks. Attacks from Uganda's separate rebel LRA in the north underscore wider instability.
While backing an army that sometimes commits human rights abuses, U.N. peacekeeping bases have twice been attacked in the past four months, leaving three blue helmets dead.
Mass rapes of civilians carried out by predominantly Mai Mai and FDLR rebels between July 30-Aug. 3 in North Kivu province underlined Congo's precarious security and raised questions over the effectiveness of Congolese and U.N. forces. [ID:nN07254542]
What to watch:
-- U.N. peacekeepers. The U.N. acquiesced to Congolese demands and withdrew 1,494 troops in June, leaving 17,625 in country. The U.N. says further withdrawals will depend on the security threat, but Kabila wants them gone by end-2011.
-- Crackdown on the army. Pressure on the army is rising as more human rights abuses and illegal mining come to light, and Congo may seek to launch investigations into criminal networks.
-- 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.
-- Land and ethnicity. These two issues remain at the heart of Congo's simmering conflicts, especially in the east.
-- ADF-NALU rebels. U.N. experts say they are funded from London, and around 600 well-trained rebels who want an Islamic state in Uganda remain despite a Congolese army operation against them that prompted more than 90,000 people to flee.
-- FNL rebels. U.N. experts say Burundi rebel leader Agathon Rwasa is amassing hundreds of fighters in South Kivu. The army continues a U.N. special forces operation to clear armed groups.
-- Intervention from neighbours. Relations with neighbouring Uganda and Rwanda have warmed but both countries face a testing year and trouble in either country could have repercussions.
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