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UNITED NATIONS (Reuters) - Rwanda's foreign minister warned on Thursday that it would be "the biggest mistake" for any countries to withdraw aid to Kigali over a U.N. report accusing Rwanda's defense minister of commanding rebels in neighboring Democratic Republic of Congo.
The United States, Sweden and the Netherlands have all suspended some aid to Rwanda, which relies on donors for about 40 percent of its budget. Last month the European Union froze further budgetary support to Rwanda.
However, Britain unblocked part of its cash in September, praising Rwanda for constructively pursuing peace.
"It would be the biggest mistake that any donor country could make for Rwanda," Foreign Minister Louise Mushikiwabo told Reuters at the United Nations, shortly after Rwanda won a seat on the U.N. Security Council. "Rwanda is deserving of aid."
"I think Britain has made the right choice," she said.
A confidential report by the Security Council's "Group of Experts," seen by Reuters on Tuesday, said Rwanda and Uganda - despite their strong denials - continued to support so-called M23 rebels with arms and troops in their six-month fight against Congolese troops in the east of the country.
The Congolese government on Wednesday demanded targeted sanctions against Rwandan and Ugandan officials named in the U.N. experts' report.
Mushikiwabo dismissed the idea that action should be taken on the basis of a report that she said was flawed and untrue. She also said Rwanda felt vindicated by its successful election to the Security Council.
"It's wrong. This report is very problematic so anybody who would want to take action based on that report would be really unfortunate," Mushikiwabo told Reuters.
"The priority right now is to look at what it would take first to pacify the region and secondly to look at the root causes and look for ways to solve this problem in a way that would last," she said.
Nearly half a million people have been displaced due to the fighting. M23 has proven so resilient that one senior U.N. diplomatic source told Reuters that Rwanda has effectively "annexed" mineral-rich eastern Congo thanks to the rebel force.
U.N. peacekeeping chief Herve Ladsous said last month that the rebels had set up a de facto administration in eastern Democratic Republic of Congo, controlling the people and collecting taxes.
But Mushikiwabo said there was no "desire to cut off part of the DRC ... Rwanda is very happy with its size."
Rwanda has backed armed movements in the Congo over the past two decades, citing a need to tackle Rwandan rebels operating out of Congo's eastern hills.
Bosco Ntaganda, a former Congolese general wanted by the International Criminal Court for alleged war crimes, controls the eastern Congo rebellion on the ground and M23 leader Sultani Makenga is in charge of operations and coordination with allied armed groups, the U.N. report said.
Both Ntaganda and Makenga "receive direct military orders from RDF (Rwandan army) Chief of Defense staff General Charles Kayonga, who in turn acts on instructions from Minister of Defense General James Kabarebe," it said.
Mushikiwabo rejected claims in the report that Ntaganda regularly travels to Rwanda.
"He hasn't been traveling back and forth. If Bosco Ntaganda needs to be arrested why wasn't he arrested?" she said. "He hasn't been in Rwanda. He's not in Rwanda. He's in Congo. Those who want him know where he is."
The rebellion also is being funded by traders in Rwanda who are profiting from tin, tungsten and tantalum smuggled across the border from mines in the eastern DRC, according to the U.N. experts' report.
Editing by Eric Walsh