After the government of Netherlands announced freezing of financial aid to Tanzania mid this year following a commercial dispute between the government of Tanzania and a Dutch investor, Meljon B.V, it has been confirmed that the European country could resume the support anytime from now.

Diplomatic sources had told THISDAY that although government officials had played down the significance of the Dutch aid freeze at that time, Tanzania stood to lose 30 million euros (approx. 55bn/-) in direct support from the Dutch government for the country’s 2009/10 fiscal budget.

The Minister for Finance and Economic Affairs, Mustafa Mkulo said in Dar es Salaam yesterday that the government of Tanzania had discussed the issue with the Dutch envoy in the country, Karel van Kesteren, as well as that country's development minister, Bert Koenders and came to an understanding.

“We have already settled the issued raised by the Dutch government and we are now waiting for the support which is about 30 million euros...It will be released anytime from now,” confirmed Mkulo on the sideline of the 5-day national annual policy dialogue in the city.

At the centre of controversy was a commercial dispute involving the private Dutch company operating in Tanga Region.

The Minister for Natural Resources and Tourism, Ms Shamsa Mwangunga, had in an interview with THISDAY at that time, described the actions of both the company in question and the Dutch Ambassador, as “arrogant and stubborn.’’

She said both were behaving unreasonably in their handling of the matter, leading up to the suspension of financial assistance to the country announced by Netherlands Development Minister Bert Koenders, during a Dutch parliamentary session in The Hague.

Ms Mwangunga’s remarks echoed those of Mkulo, who had also blasted the envoy for “overstepping his responsibilities’’ in influencing his government to take such a drastic step on the basis of such a matter.

Besides the budgetary support, the Netherlands was expected to give the country another 51 million euros (approx. 94bn/-) to boost health care and governance during the 2009/10 fiscal year.

About 33 per cent of the government’s latest annual budget of 9.51 trillion/- is earmarked to come from external sources including the Dutch.

Minister Mwangunga told THISDAY then that the Dutch envoy and representatives of Meljon B.V had shown outright “arrogance’’ to herself and other government officials during talks on how to iron out disagreements regarding the harvesting of softwood in state-owned plantations at Mkumbara in the Usambara Mountains.

The softwood from the plantation was the source of raw materials for Tembo Chipboards Limited, a formerly state-owned furniture factory that was some years ago privatized to the Dutch investor company.

According to Ms Mwangunga, in the privatization agreement signed under the now-defunct Presidential Parastatal Sector Reform Commission (PSRC), Meljon B.V was to be allocated 15,000 cubic metres of logs each year as raw materials for the furniture plant.

However, due to shortage of mature trees in the Mkumbara Plantation, government officials later suggested that the Dutch firm be allocated 10,000 cubic metres, on the understanding that the remaining 5,000 cubic metres would be covered after the trees on another plantation block matured.

The investor company is said to have rejected the government proposals and protested against the move to the Prime Minister’s Office (PMO).

Said Mwangunga: “I had to call all the parties involved, including the (Dutch) ambassador, the investor and officials from my ministry, for discussions on the matter. We talked at length and finally reached an agreement that the investor would now get together with a technical team to work out the allocation and amount of cubic metres of logs to be given to the factory each year.’’

“In this plan, we wanted to ensure that the investor is allocated logs according to availability and the furniture factory should be accorded priority,’’ she added.

However, she continued, the Dutch ambassador (van Kesteren) then started threatening to cut off financial aid to the government and uttering other “arrogant’’ statements during the course of the talks.

She said the Dutch company later refused to attend a follow-up meeting with the ministry’s technical team without the presence of the minister herself.

“The investor (Meljon B.V) has now shut down the factory and failed to even utilize the initial 10,000 cubic metres of logs that were allocated to them,’’ she stated.

Mwangunga said the decision by the Dutch government to suspend aid to Tanzania over the incident was uncalled for because the government had all along been ready to reach an amicable solution.

The Dutch Minister, Koenders, had told his parliament in The Hague that he had decided to suspend aid to Tanzania because the country was an “unreliable partner for foreign investors.’’

Also speaking to THISDAY late last week, finance minister Mkulo pointed an accusing finger directly at van Kesteren, saying the Dutch envoy had gone too far in dragging his government in issues that are purely commercial and have nothing to do with bilateral relations between the two countries.

But he said the Dutch aid freeze will not have a serious impact on the government’s 2009/10 budget, stating: “We are still in a safe margin.’’

“It is true that the (Tanzanian) government has received a letter regarding the suspension of aid by the Netherlands, but we are yet to give them an official response,’’ Mkulo said then.