sharing in governance of extractive industries

What Conflict Minerals Legislation Is Actually Accomplishing in Congo - Sasha Lezhnev in Huffington Post

Ending the world's deadliest conflict is no easy task, but a growing consensus of Congolese civil society, electronics and metals companies, investors, and governments are now taking action to do so. A chief driver of their work is the Dodd-Frank legislation on conflict minerals, which is why a coalition of 40 Congolese human rights groups called it "the leverage needed to instill and impose ethical business practices in the Great Lakes region."

David Aronson's op-ed "How Congress Devastated Congo," misses the critical link in eastern Congo: the continuing role of the minerals trade as a fuel for violence and a major source of revenue for armed groups and military units responsible for atrocities. The Dodd-Frank legislation is the first policy initiative to start to change that equation in 15 years. Change will not come overnight, but the fact is the bill is setting into motion a series of modifications that will have lasting effects on the conflict. 

The economics are a driver that must be addressed, because the minerals trade fuels and enables the structures of violence and poor governance in eastern Congo. But we must also provide support to mining communities, promote responsible investment, and improve justice and security measures.

In trying to make change this dramatic, there will be unavoidable economic dislocations. While these temporary disruptions must be mitigated as much as possible, the alternative is to give up on this process part way through and revert to a brutal status quo ante that even critics of the bill surely don't endorse.

The rebels and Congolese army commanders who perpetrate the conflict and the government and businesses who partner with them are the real causes of misery in eastern Congo -- not Congress or human rights groups. As Delly Mawazo, then-director of CREDDHO, a leading Congolese human rights organization, told me in March, "Minerals are like a curse. They fuel war, help the economic balance in neighboring countries, and enrich elites."

Before the legislation, commanders and business elites were by far the main profiteers from the trade, and the majority of miners worked in slave-like conditions, as Free the Slaves and Congolese human rights organizationshave documented.

Talk of miners' "jobs" implies regular wages and benefits, where in fact the mines are filled with child miners as young as 11, miners in debt bondage and forced labor situations. As Justine Masika, director of Synergie, a Congolese coalition of 35 women's groups, said, "Saying that the population will die if there is no mining -- that is a lie. The comptoirs [exporters] are the ones making the money. People never saw that money anyway."

Contrary to Aronson's assertion that civil society is against the bill, many Congolese civil society groups are vocal advocates for the legislation and have written to the SEC asking for strong and timely regulations. Seven Congolese civil society coalitions set up the GATT-RN coalition in Goma in March to act as a watchdog to industry and government minerals tracing initiatives.

Local perspectives on conflict minerals, as on other contentious issues, vary dramatically, and there are groups who have different views. Notably, although Congolese civil society and resources expert Eric Kajemba may not agree with the Enough Project, he nonetheless supports the Dodd-Frank Act, even if he has a different view of how it should be implemented.

It is increasingly important that there be wide dialogue and ample opportunities for all of these viewpoints to be incorporated into the implementation of the legislation, as well as other policy measures to regulate the minerals trade. For example, Congolese civil society organizations should have a seat at the table in international negotiations around mining reforms, and directly participate in monitoring regimes in the region. 

Since the legislation passed, it has had a direct impact on armed commanders. Our team travels frequently to Congo, and we have seen first-hand how the Congolese army has pulled out of several major mines. For example, the Bisie mine produces some 70 percent of North Kivu's tin ore and was occupied illegally by a renegade unit of the Congolese army for years, but was demilitarized this year. Whether this demilitarization lasts is dependent on further reform, but it is starting to occur at Bisie and several other mines.

Minerals exports from the Kivus have decreased by approximately 75 percent, and the lowered exports are directly threatening commanders' multi-million dollar profits. Some commanders have resorted to smuggling, which has increased some 15-25 percent, but this smuggling is not nearly equal to the hand-over-fist profits that they generated in previous years. Other commanders have switched from trading in tantalum and tin to gold, and thus industry and the region must work more squarely on gold. The World Gold Council, OECD, and mining companies are starting with conflict gold initiatives, but more must be done.

The bill has also accelerated reforms in the region that were previously unimaginable. As the United Nations Group of Experts stated last month, the bill "has proved an important catalyst for traceability and certification initiatives and due diligence implementation in the minerals sector regionally and internationally."

Regional governments and industry are launching a minerals tracing and certification initiative through the International Conference on the Great Lakes Region, or ICGLR, and tin industry iTSCi, whereby 95 percent of Rwanda's minerals and 75 percent of Katanga's minerals are to be tagged by year's end.

USAID is planning to support similar initiatives in the Kivus through a public-private alliance with company participation. Electronics companies are also pioneering verifiably conflict-free Congolese minerals pipelines, for example the Solutions for Hope project by Motorola Solutions in Katanga.

Furthermore, Congolese army commanders are now being arrested and prosecuted for minerals smuggling and sexual violence crimes. For example, Congolese army Col. Chuma was reportedly arrested last week for minerals crimes, General Jerome Kakwavu is on trial for rape crimes, and several mid-level commanders have been convicted of mass rape in 2011. 

Aronson incorrectly asserts that Chinese companies have taken over the Congolese minerals market. In fact, only a trickle of small minerals exports have gone out from the region since April -- a total of five tin ore shipments in three months -- not a wholesale flood of minerals to China.

While a few small Chinese buyers have begun purchasing, Congolese exporters have been hesitant to use them because their prices are at least 20 percent lower and their business reputations are poor. Exporters and government officials have stayed engaged with the international minerals reform processes from the OECD, ICGLR, and tin industry, because they want the higher prices, reliability of business, and improved reputation that accompanies trade with the mainstream electronics industry.

In the transition from a war economy to legitimate business, mining communities must be supported. To this end, companies and donors should establish a mining community livelihood fund.

USAID is initiating a community mining program, and electronics companies have expressed interest in supporting similar work. Furthermore, companies should invest responsibly in the Congolese minerals sector, with full traceability, due diligence, and independent monitoring. The Motorola Solutions for Hope initiative is a step in the right direction, but more initiatives are needed. 

The fight to end the conflict is far from over. Going forward, the Obama administration should support an independent monitoring system for the regional tracing initiatives; gold and jewelry companies should partner with the region to invest in tracing and monitoring initiatives at gold mines in the Kivus; and the SEC should issue regulations as soon as possible, without a phase-in, which would act as a disincentive to progress on the ground.

Accountability is also critical, and the administration should press Congo to arrest Gen. Bosco Ntaganda and operationalize the Special Mixed Court for war criminals, which has strong local and i....

These reforms are critical next steps, but don't be fooled -- they are finally no longer pipe dreams, because of the window opened by the legislation. Let us not derail the growing consensus to end the war in eastern Congo and revert back to the dystopia that has plagued the region for the past two decades.


More @ http://www.huffingtonpost.com/sasha-lezhnev/what-conflict-minerals-le_b_922566.html 

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Comment by Elison Karuhanga on August 14, 2011 at 23:43
Eric Kajemba interviewed by Jason Stearns gives the other side of the argument..or rather gives a local perspective..
Comment by Elison Karuhanga on August 14, 2011 at 23:40

to make it look more chronological I put the first part of the interview here-alternative view from a Congolese citizen

Q:What has been your analysis of the export ban on minerals [imposed by the Congolese government between September 2010 and March 2011] and the Dodd-Frank legislation in the US?

A: In general, these two things are linked. The export ban came as a consequence of the Dodd-Frank law. The government was thinking it had to do something in reaction to the US legislation, so it suspended exports of minerals from the eastern Congo. This has had a very negative impact on the local population. One problem we had was that exporters were stuck with their stock and couldn't get rid of it. Secondly, the negociants [trade middle-men] usually work on credits, but they weren't able to pay their arrears, so they had to mortgage their houses. In sum, the artisanal mining sector employed many, many people - these people lost their jobs over night. Also, many of them were demobilized soldiers, so this had the added effect of producing insecurity. 

But the Dodd-Frank legislation did not explicitly require an export ban.

No. But the government was supposed to render transparent the chain in order to comply with the law. This had perverse consequences. The army kicked diggers out of the mines, only to become diggers themselves! That happened in many mines. The army just took over. 

But how did they export the minerals if there was an export ban?

There was fraud. Even today with the embargo, people export. Fraud has increased considerably.

But there have been other consequences as well, for example, with other aspects of the local economy. For example, in places like Shabunda, people relied on planes to bring them goods and merchandise - rice, sugar, and so on. Those same planes then left with minerals back to Bukavu. But now that the planes cannot transport minerals [due to the export ban and embargo] they don't fly there with goods any more. So the impact has been huge in many areas.  

Do you disagree with the spirit of the Dodd-Frank law?

No. The motivation behind the law is very good - to impose transparency. But it the implementation has been the problem. We are not in a country with a functioning government, you cannot just assume that certification and due diligence can spring up overnight. Plus, there were efforts under way already by other actors to impose transparency; ironically, the Dodd-Frank law slowed these efforts down, as they were financed by the minerals trade.

No, I agree with the law, but it should have been implemented in stages, over two or three years. It was too strict, too abrupt: no tagging, no sale! But there were initiatives like that of the German Federal Institute for Geosciences (BGR) and the International Tin Research Institute (ITRI) - and other initiatives at the local level that may actually have been undermined in the short term by the law.

It is true that there is no official embargo on the Congo today, and that the Dodd-Frank law did not call for such an embargo. But the truth is that as soon as the Conglese export ban was lifted, the Electronic Industry Citizenship Coalition (EICC) [an electronics industry body] in the United States imposed a de facto embargo. Traders here only had time to sell their stock and then everything stopped again! Now most of the minerals seem to leak out through smuggling. It is the Chinese who are still buying officially, and we think that the rest of the stuff smuggled out might also be going to China


Comment by Elison Karuhanga on August 14, 2011 at 23:34
Comment by Elison Karuhanga on August 14, 2011 at 23:33

There has been speculation that Rwanda has been laundering Congolese minerals and then selling them as their own.

That's difficult to know. Rwanda has also been hit hard by Dodd-Frank, as well. It is true that there is a lot of cassiterite smuggled into Rwanda. I am sure there are parallel structures in Rwanda, a black market. On the other hand, I think there are intensifying efforts to be more transparent - for example, they turned back Chinese trying to export minerals through Rwanda. 

What do you think about the ITRI and BGR initiatives?

We need a big discussion on the way forward. We need a bunch of things, not just tracing and tagging. We need to sit together to figure out. There are a lot of initiatives that have been proposed, but this has added to the confusion. We need one approach. The centres de négoce and tagging are not enough. Tagging is good - but you can end up tagging dirty minerals, as well! There is a whole bunch of work to do. Let's not confine ourselves to tagging.

What else can be done, then?

What we are trying to is to support local communities to supervise their own mines at a grassroots level. We will try to give them a mechanism to overview the process - to see if soldiers are taxing the minerals. We want to do this as civil society and then make reports that will we publish that will help keep mines clean. This, we hope, will happen in synergy with our Congolese and foreign partners. In general, we feel that these initiatives haven't taken into consideration the contributions of local organization. But we are discussing with them now.

What about BGR?

BGR work on a larger scale, with state for training experts. They associate civil society, but they are very bureaucratic. We share a lot of information, but we can feel the competition between ITRI, PACT, ICGLR - this competition is not good. 

What about the advocacy done by ENOUGH in the US?

Unfortunately I think this is the opposite of what we want - ENOUGH has hardened its tone. They only show the negative side of artisanal mining here. This one-sidedness of their advocacy has had negative side-effects. No,  we know we can't stop Dodd Frank, but we need to be aware of these negative consequences - we are not very happy with Global Witness or ENOUGH, but we feel they are very influential, and we are ready to work with them. On the other hand, we are also afraid of our government and what they are doing.

Let me explain further. We have documented the links between minerals and armed groups, we know these exist. But minerals were not the initial source of the conflict, as you know. There were many other factors. So we think the emphasis should be on security sector and governance reform, not on an embargo.  We need to do more than just biometric IDs [one of the initiatives donors have supported] for the army, we need a real security sector reform.

How do we go about that?

Take the question of military involvement in the minerals trade. The soldiers who are involved in these things are known! There are Congolese generals are involved in this! But there is no real will by the government to clamp down on them. It is true, Umoja Wetu and Kimia II did have a serious impact on FDLR, and we need to consolidate this. The links between minerals and the FDLR was seriously broken during this time. But soon afterwards, the FARDC started to behave like the FDLR, exploiting minerals and taxing people. The real emphasis should be on building strong institutions, not just embargoes and export bans. We need to focus on the army. 

Then there is the whole question of zones of exploitation, which the laws in theory have called for - so long as artisanal miners don't have a place to mine, this situation will continue. But they don't,


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