A “stylized fact” is a fact accepted as true for the sake of argument. Good stylized facts are true statements that have been simplified in order to allow the creation of tractable arguments. Bad stylized facts are oversimplified at best, and false at worst.
One stylized fact is that Rwanda extracted great economic resources from its control of eastern Congo in 1998-2004. It is accepted. But is it true? The answer is not as clear as you might think.
The Rwandan-backed RCD collected fees from local producers. In Bukavu, merchants who commercialized peasant production were forced to pay a $1,300 fee, in addition to a $3,000 deposit. In addition, the RCD used military planes to export palm oil to Kisangani. The rub, however, is twofold. First, there is not any evidence that the RCD taxes on commerce flowed to Rwanda ... although they did obviously reduce the subsidies that needed to flow the other way. Second, according to merchants involved in the trade (HBS is very well plugged in to Rwanda) palm oil exports were barely able to cover their costs during the period; Rwanda in fact subsidized the RCD’s profits by providing the planes.
Following the general pattern of the Mexican Revolution, Ugandan and Rwandan troops did not destroy the Sotexki textile plant during their invasion and occupation. On the other hand, the plant did basically shut down. The gave an advantage to Rwandan exporters, but it is hard to believe that the additional profits were significant, even in an economy as poor as Rwanda.
The Sominki gold mines (which also produced coltan and cassiterite) would have been, well, a gold mine, had they not gone bankrupt in the 1980s. The mine holding company was renamed Sakima, and wound up in the hands of a Canadian corporation, Banro. In 1998, the DRC expropriated the mine. (Banro sued Congo at the all-powerful ICSID ... the panel wisely decided to use the fact that Canada had not signed the Washington Convention to punt and let the DRC get away with the expropriation. Otherwise ... ugh.) The RCD took over the mines in 1998 and quickly requisitioned 312 tons of coltan and 190 tons of cassiterite. The DRC gave the concession back to the Canadians in 2003, but the RCD continued to pick over the bones until 2004. Still, they really were bones, at least in terms of gold; the mines were dead, even by Central African standards.
So far, so little. Rwanda “let them [the RCD] exploit the sub-soil for their survival,” and that certainly made it cheaper to maintain control of the area in an international environment that precluded formal annexation. (There is some evidence that Rwanda wanted to annex the region, which would have completely altered the game, quite possibly for the better.) That, however, was not a reason for Kigali to continue its occupation; it merely made it cheaper to continue a policy that it wanted to pursue for other reasons.
But that isn’t quite right either. The U.N. argued that the Congo Desk of the Rwandan Patriotic Army came up with a number of schemes to extract resources from its Congolese territories. There is even an unconfirmed report of Kagame calling the war “self-financing.” Thing is, theU.N. report really seems a bit dodgy. Its estimate of $320 million a year comes from one unidentified source. It also comes to 20% of Rwanda’s GDP, an four times its official military budget, an enormous sum. The report gives percentage breakdowns of coltan exports, without mentioning either prices or quantities. As social science, it is really really bad, inexplicably so. I could have done a much better job ... but I don’t have reasons to want to find evidence of massive resource extraction.
I don’t have reasons not to find such evidence either. In fact, there is solid data regarding diamond profits. The RPA and RCD apparently set up a powerful monopsony, using force to insure that exports went through their hands. In 2001, the RCD even studied how their designated tax farmer was performing. The quota was about $500,000 per month, and the fellow was meeting it ... but the market value of the quantity exported was over $2 million. The U.N. concluded that the Congo Desk diverted the difference, but in the absence of data on how much was paid to producers and middlemen (and harder price and quantity data) that conclusion is dodgy. In addition, the maximum estimate of diverted funds comes to a little less than $17 million per year. That is a lot of money by Central African standards, but it is not $320 million.
In short, it is undeniable that the RCD financed itself from local resources. It is also undeniable that the RPA got something from the occupied territories. What we do not know is whether it was anywhere near enough to provide an incentive to prolong the occupation in the absence of security concerns. It really depends on the coltan numbers, which AFAIK we do not have. Inexplicably. Here is a pretty bad journalist’s report. It has numbers, though, and it might be possible to use it to ballpark Rwandan coltan profits, if any. This report seems better, and it might be possible to tease out some real numbers. I am sure that there is other data available, for anyone with the time and the interest. (I have only the second at the moment.)
The really interesting counterfactual is whether the Second Congo War and its aftermath would have been as prolonged or as destructive in the absence of an effective taboo against de jure border changes. And that counterfactual, of course, depends on the amount of resources that could be extracted and the security concerns faced by the relevant parties. But it is food for thought: do our post-1945 institutions really contribute to peace and well-being? I honestly think that they do — but like all stylized facts, it bears the occasional reconsideration.
So ... I ask you all for two things. (1) Hard evidence on Rwandan extraction; and (2) thoughts on the impact of the effective end (with a few exceptions, here and there) of de jure annexation?