Friday, October 28, 2011

Quote of the Day

“We don’t understand why President Obama would want to cut off Congo’s minerals,” said Idrissa Assani, expressing a sentiment clearly shared by his fellow miners who sat together in the dark office of their mining cooperative. “It is the innocents who are vulnerable” and who will suffer most from “Obama’s law,” he said.
                                                    --Laura Heaton, The Enough Project, April 20, 2011

The Critical Need for a Social Impact Assessment

How many Congolese children are going to bed hungry tonight because of Dodd-Frank 1502?

This is not a rhetorical question. In fact, we have no meaningful data regarding the extent of the harm caused by DF-1502. What we do know is the following:

1) The economy of eastern Congo was severely damaged by 30 years of kleptocracy under Mobutu and 14 subsequent years of war. As a result, eastern Congo is one of the poorest regions within Congo, itself one of the poorest countries in the world. Most of the economy is informal and subsistence in nature.
2) DF-1502 precipitated a de facto embargo of minerals from eastern Congo. This embargo began on April 1, 2011, after Western electronics companies, under pressure from Western NGOs, ordered major international smelting companies to cease accepting minerals from eastern DRC.
3) There were roughly 400,000 people working as artisanal miners in the Kivus before that date, more people than in any sector but agriculture.
4) Most of those miners supported families, meaning that somewhere between one and two million people depended directly on the mining trade for their livelihood. Mining was the region's major foreign currency earner.
5) Artisanal mining is difficult, dangerous work, but for most miners it is the best alternative within the universe of possibilities available to them.
6) The embargo led to a 75 to 90 percent drop in the export of tin, tantalum, and tungsten.
7) Of these "three Ts," the most important to the region was tin, or cassiterite, which miners are now able to sell at only one half to one third of its pre-DF 1502 value, to the extent that they can sell it at all.
8) The gold trade, to all appearances, has not been affected by DF-1502.
9) We have little understanding of the secondary economic impacts of the embargo. Visitors report visible signs of economic deterioration in Goma compared to the pre-DF period. Bukavu is less visibly distressed, but economic actors from market women to bankers report experiencing an economic downturn.
10) Numerous mining communities sprang up in remote locations in the Kivus. Once the embargo was put in place, these communities were virtually cut off from the outside world. The planes that had provisioned them no longer arrived, as the communities had nothing to sell.

The embargo is the direct, predictable result of actions taken by two Western NGOs: Global Witness and the Enough Project. They both campaigned for DF-1502 and threatened to cause reputational harm to companies that did not cooperate with them. They ignored warnings from credible Congolese mining experts of the problems they might cause, and failed to disclose those warnings in any of their reporting on the subject. Their actions led directly to the passage of DF-1502. As Jim McDermott, one of the provision's congressional sponsors, told a gathering of Enough supporters: "Without your efforts, this would not have happened."

Tuesday, October 25, 2011

Fisking the UN's Letter to the SEC

Fred Robarts, in his capacity as the Coordinator for the UN Group of Experts on the DRC, has written to SEC Chair Mary Schapiro asking that Dodd-Frank 1502 be implemented provided companies be allowed to put in place "mitigation strategies" that they can prove are working. These mitigation strategies are discussed in OECD guidelines, which state the following:
[Companies should take steps to] prevent or mitigate the identified risks by adopting and implementing a risk management plan. These may result in a decision to continue trade throughout the course of risk mitigation efforts, temporarily suspend trade while pursuing ongoing risk mitigation, or disengage with a supplier either after failed attempts at mitigation or where the company deems mitigation not feasible or the risks unacceptable.
To say that this is a little vague is an understatement. Nowhere does Robarts' letter get more specific about how to incorporate the guidelines--or even consider their adequacy to the situation. In fact, the longer I look at it, the less I think of the letter. To propose a new strategy for the SEC to consider this late in the game is a case of too little too late. First, it's not clear that the SEC even has the latitude to consider this sort of proposal: It cannot substitute its own judgment for Congress's directives. As I understand it, the only course available to it at this point is whether to allow companies a reasonable amount of time and latitude to implement the law--and if so, to determine what constitutes "reasonable." It cannot impose its own set of conditionalities on companies. Second, this proposal isn't nearly as thought out as it needs to be. What mitigation strategies, exactly? What would constitute proof that they are working? Who gets to verify a company's finding to that effect?  Third, I can't imagine that too many companies would be willing to enter the Congo under these conditions. As Wronging Right's Amanda Taub has argued, why would companies ever risk buying Kivu minerals, given the reputational and regulatory risks they would face?

But more than that, the entire letter is rife with errors, self-contradictions, mis-statements of fact, and unproven claims. If this were someone's random comment I wouldn't consider it worth responding to.  I'd give it a "C" in a sophomore political science class--if I was feeling generous. Unfortunately, because of its provenance, it will be seized upon by all too many as a vindication of their work. (As indeed it has.) It may be crap, but it's UN-certified crap, and it will carry a lot of weight accordingly.

Saturday, October 22, 2011

Quotes of the Day

"We can not give you exactly the number of lives that are lost each day following the cessation of artisanal mining in the DRC and yet even if a child died or who is hungry or do not go to school because his father digger lacked money, this is a tragedy, it is a sad news that should challenge our humanity."
                               --Serge Mulumba, President of the CDMC, a mining cooperative that oversees and assists artisanal mining in the Democratic Republic of Congo.

“There are always unintended consequences to such sweeping but necessary changes... . Most of us, if not all, could foresee that this would be both challenging and bumpy. We are too far down the road to go back.”
                              --Joanne Lebert, director of Partnership Africa Canada's Great Lakes Program

Thursday, October 20, 2011

An Apology

In my post on Enough's decision to call for a one-year delay in the implementation of Dodd-Frank, I reported that Enough's Sasha Lezhnev had told me that their report on the topic would be coming out soon. He has written to remind me that he told me that off the record. He is correct. It was a mistake to report that. I apologize to Sasha and the Enough Project team.

Quote of the Day

 "U.S. Special Forces to Exterminate African Cannibals"
                                             --Pravda headline regarding Obama's decision to send advisors to help hunt down Joseph Kony's LRA troops

It's official: Pravda, the old Soviet propaganda outlet, is now (slightly) more accurate than Rush Limbaugh.

Blood Molecules

Tuesday's SEC roundtable on Dodd-Frank 1502 was a drily legalistic affair, with SEC staff grilling participants about how they should define key terms in the legislation, establish a feasible time-frame for its implementation, and how deeply they should drill into companies' manufacturing processes. The participants, including representatives from a variety of companies and investment firms as well as Global Witness and the Enough Project, provided  responses that generally fell on polar ends of the discussion.

Some specialist electronics companies, soi-disant socially responsible investment firms, and the two activist groups asked that the SEC interpret the legislative terms in the broadest manner, interpret the law in the strictest sense, and implement it immediately. Opposing them were manufacturers such as Boeing and Kraft, which said that their supply chains are so complex and dynamic that they would need time and consideration to properly implement the law. Surely some common sense rules ought to apply, they said--or would they have to account for every stray molecule in their product?[1]

Gold companies also chimed in, arguing that their products should be treated differently from the other metals under consideration, the so-called three Ts: tin, tantalum, and tungsten. (Companies using zinc or lead in their products should be grateful to the alphabet gods that none of these metals' typical mineral compounds begin with the letter "T." Since these minerals are also mined in the Kivus, they're lucky we're not now speaking of the four or five Ts.)

If you enjoy Talmudic discussions about whether muffins baked in tin molds need to be stamped conflict free or not--and whether that depends on how old the tin molds are--then the SEC was the place to be. In a comment I am certain she immediately regretted, the mouthpiece for Kraft told the Commission that the ramifications of DF-1502 made her hyperventilate.

Wednesday, October 19, 2011

Quote of the Day

“For those of us who enjoy these products every day, I’d like to enjoy it with a clear conscience.”
                                        --Senator Richard Durbin, D-Ill, at the SEC roundtable yesterday. 

Durbin, arguing that the conflicts in eastern Congo are being driven by "our insatiable appetite for iPads and BlackBerrys and cellphones,” favors an immediate implementation of DF-1502.

Tuesday, October 18, 2011

Eighty-Eight Less than Luther

I spoke last month at the New York City Bar Association* on the predictable but unintended consequences of DF 1502 on armed conflict and economic development in eastern DRC. The other speakers were Nicolas Grabar, a securities lawyer, who provided a wryly skeptical perspective on the law's likely effects; the redoubtable Kambale Musavuli, of Friends of the Congo, who laid out the context for understanding the situation in DRC; and Fidel Bafilemba, of Enough, who had the unenviable task of responding to me in English. I say unenviable because English is his 13th language; debating in a language you don't have near-native fluency in is a difficult proposition, and I imagine that much past your sixth or seventh language the remarkable thing is to be doing it at all.

I told the audience I had seven theses I wanted to nail to the church door, the church in this case being the heavily policed belief that going after the minerals, rather than the warlords, offered a shortcut to peace in Congo. After 30 years of Mobutu and 14 of war, there are no indulgences to reconstituting the state in eastern Congo.

1) Dodd Frank has resulted in a de facto embargo. 
According to Reuters, there's been a 90 percent drop in mineral exports as a result of the law's passage. According to Enough, there's been a 75 percent drop. And according to the Economist, there's been a 95 percent drop in productivity from some mines. My own impression, by the way, was that many miners continue to work because they don't really have alternatives. But they aren't working as often as they used to, aren't selling nearly as much, and are making much less per kilo sold--often less than half of what they were making before DF. (Some minerals are being smuggled out to neighboring countries and relabeled as local product; others are being stockpiled.) Whatever the law's intentions, an embargo has been the outcome.

2) The hypothesis that DF 1502 will play a decisive or even significant role in ending the conflicts is speculative, at best.
Most of the conflicts today in the Congo are overdetermined: that is to say, they have multiple, interacting causes. These include disputes over land use, arguments over chiefly succession, and politically manipulated debates about who is or is not a citizen. While some of the militia are clearly ethnic self-protection forces, others get support from neighboring countries and still others have a millennial, "spiritual" component and take their inspiration from colonial-era struggles.

Another complication is that militia make money in a variety of ways, not just from taxing the mineral trade. When I was in Congo this summer, for example, the FDLR kidnapped some villagers in Shabunda and held them ransom, demanding $6,000 and six virgins (!). Other groups extort money from market places or even hospitals; others just clobber women returning from market and take the $20 they may have earned from selling beans or manioc or charcoal. It doesn't cost very much in that part of the world to run a militia. Guns are cheap, and there isn't much in the way of alternate livelihoods that would give young men reason to defect.

Shut Me Up!

I asked representatives of Enough and Global Witness today whether they would join me in calling for a social impact analysis of the embargo "inevitable dislocations" that have been in place against Congolese minerals since April. Surely there are few things more important to know right now that what impact the law has had: who's been hurt, who's been helped, and why. I assured them that the call was for real: we could negotiate terms of reference and no doubt agree on proper unbiased researchers to conduct the analysis. There are plenty of such people: World Bank consultants, anthropologists and sociologists skilled at teasing out answers from survey questionnaires in fourth world contexts, micro-economists who have spent their lives studying artisanal mining, public health analysts practiced at mortality surveys. And they come cheap: Hiring three or four of these folks to do a reasonably thorough study couldn't possibly cost more than a hundred grand, peanuts in the scheme of things.

No will do, said Enough. We'll get back to you by next Friday, said Global Witness.

C'mon, guys. It should be apparent by now that name calling won't shut me up. Neither will questioning my motives or funding. But solid social science: That'll do it every time.

Here's to hoping.

Who's Paying Me?

I met someone from Global Witness today at the SEC conference. He wanted to know who I was working for. Who paid for my trip, he asked me. Who pays my salary?

I answered, and he looked crestfallen at my reply. All of it? he asked.

Gentle reader, I confess to you what I told him: Every single last dollar.

Are Enough and Global Witness Violating the Very Guidelines They Promote?

A penpal sends me the following observation: Activist groups like Enough appear to be in violation of the OECD Guidelines they promote as part of the solution to the problem of "conflict minerals."

Background: The Organization for Economic Cooperation and Development publishes a voluntary set of guidelines for multinational companies doing business in countries characterized by poverty or weak governance. The guidelines were first published in 1976 and have been updated five times since, most recently in 2011. The basic idea is to set forth general principles to help companies respect human rights and avoid contributing to conflict. The implicit promise is that if a company respects these principles, it won't get hassled by NGOs eager to make a name for themselves attacking greedy companies. Enough and Global Witness have stated that they provide a useful framework for establishing due diligence and supply chain verification.

Here are a few examples where the two groups don't seem to be in compliance with the guidelines, with my correspondent's annotations in italics.

The OECD Guidelines urge companies to "carry out risk-based due diligence, for example by incorporating it into their enterprise risk management systems, to identify, prevent and mitigate actual and potential adverse impacts."

Enough did not carry out risk-based due diligence before promoting DF1502. It ignored repeated warnings from the three major artisanal mining think-tanks/service providers in eastern Congo that its activities would result in a de facto embargo with devastating consequences for the miners. 

In Reversal, Enough Project to Call for Delayed Implementation of DF-1502

Even as it continues to push publicly for an immediate and strict implementation of Dodd-Frank 1502, Enough is preparing to recommend that the law be phased-in over a period of a year, according to Eric Kajemba, a leading Congolese civil society leader.

Several of Enough's allies expressed surprise that Enough, which has been leading the campaign against what it terms "conflict minerals," would appear to be reversing its position on the need for an immediate implementation of the law.

Corinna Gilfillan, with the U.S. office of Global Witness, the other major Western NGO leading the "conflict minerals" campaign, indicated she hadn't heard about Enough's reversal, but said that her organization stood by its call for immediate implementation. "Our position is what we stated at the hearing today," she said, referring to an all-afternoon hearing held at the Securities and Exchange Commission to discuss 1502.

Two Democratic congressional aides not authorized to speak on behalf of their bosses also appeared to be caught off-guard.

Many leading Western NGOs have signed on to Enough's call for an immediate implementation, including Amnesty International, Human Rights Watch, and the Open Society.

Enough refused to explain to me why it would be calling for a phase-in period. Enough's Sasha Lezhnev would only say that their report would be issued soon.

Congolese civil society leaders are calling for a three-year phase-in period to give them time to put mechanisms in place to determine which minerals are conflict-free or not within Congo.

Kajemba said that Enough asked him to sign on to their one-year proposal, but that he didn't feel this was a realistic time-frame. "It's good to see them recognizing the inadvertent harm the legislation has caused," he said. "But we need a reasonable amount of time to put proper mechanisms in place to insure that our minerals are conflict-free."

Special US Envoy Coming to Great Lakes Soon!

No name confirmed yet.
Supposedly a retired diplomat.
Sounds like a god-awful job, frankly. All the responsibility with, I suspect, very few if any new powers.
It'll be a trial by fire at the beginning, since the first thing he'll have to deal with is the postponement and/or aftermath of the election, neither of which will be pretty.

Friday, October 14, 2011

Reuters: U.S. buyers shun "conflict minerals" in Congo's east

Another article confirming the devastating impact DF 1502 has had on eastern Congo.

U.S. buyers shun "conflict minerals" in Congo's east
October 4, 2011
By Jonny Hogg

GOMA, Democratic Republic of Congo, Oct 4 (Reuters) - A battered pickup truck pulling up to Huaying Trading's back street office in Goma is about all that remains of Congo's once-bustling resources business as an impending U.S. crackdown on so-called "conflict minerals" scares most buyers away.

Eight years after the formal end of a war that killed millions and drew in six other African countries, rebel groups and the Congolese army continue to battle for control of mine sites deep in the hills of eastern Congo.
For years, the conflict has been sustained by revenues from mines that in many cases are controlled by armed groups.

Now, a local industry that has long operated in a near legal vacuum is facing an onslaught of legislative and regulatory initiatives that could amount to a "kill or cure" treatment.

Last year's Dodd-Frank financial oversight law requires the U.S. Securities and Exchange Commission to write rules forcing companies to disclose whether they use minerals such as tantalum, tin, gold or tungsten from Congo.

While it is unclear when the rules will be finalized or go into effect, firms such as Apple Inc and Hewlett Packard are not waiting to see the fine print.

They are no longer sourcing from the region, having launched in April their own industry drive against conflict minerals which anticipates much of the spirit of Dodd-Frank.

For now, only the Chinese has chosen to stay.

"Of 25 exporters that exist (in Goma), not more than three are operational, (all) belonging to Chinese. For China there is no problem, they continue to export to their country," local Congolese exporter Thierry Kituli Kaoma told Reuters.

Monday, October 10, 2011

The Brick Wall

Two otherwise well-respected Congolese civil society leaders met today with a congressional aide. I left the meeting early, though I was to provide translation, on account of the aide telling me (as it slowly dawned on him who I was, i.e., the op-ed writer) that I was "not a journalist or anyone who knows anything about Africa or could be seen as any kind of reliable person at all."*

The civil society folks told me after the meeting that they felt as if they were talking to someone who had been sent to talk up the benefits of Dodd-Frank and couldn't be persuaded by any evidence they could present to the contrary. Two things in particular worried them. The first was the aide's admission that the people who drafted the law knew it would cause short-term pain to the miners. The second was that he seemed convinced that in a year or two everything would work out for the best, but couldn't quite explain how it would. Here we have encapsulated the full folly of DF 1502: US legislators knowingly imposing real pain on real Congolese in exchange for an entirely hypothetical notion of how this will improve the situation.

Once upon a time, we were trying to save Congo from the people exploiting it. Now, it seems, we spend all our time trying to save it from the people who would be its saviors.

*If you're worried about my feelings, dear reader, don't be. I can give as good as I get. And in fairness, said aide has since made sincere efforts to start over.

A Modest Proposal*

If our cell phones are why Congolese are dying, shouldn't we just stop buying them? Or would that be asking too much of Americans? Why is it easier to ask Congolese to forgo their livelihood than to ask Americans to sacrifice their ipods?

*I realized after I published this post that I didn't actually get around to proposing anything. In my defense, there's a proposal embedded in there somewhere--though one probably not as modest as Swift's.

Sunday, October 9, 2011

Is a Special Envoy To Be Named Soon?

A stray remark by a well-connected Africanist at the Great Lakes conference last week left me with the impression that the US might soon be appointing a special envoy/advisor/coordinator for the region. This is uncomfirmed! It's even possible I might have misheard the remark, so take this for what it's worth. I'll follow up soon.

As long as we're on the topic, however, it might be worthwhile to quote Rebecca Hamilton's assessment of the role special envoys played in Sudan:
Another repeated achievement of advocates, the appointment of special envoys, did not have such a positive impact. The appointment of a special envoy was a relatively low-cost way for the administration to show it was listening to advocates and advocates repeatedly understood the appointment of an envoy as a signal that Sudan was being treated as a foreign policy priority. But contrary to advocates hopes and expectations, the appointment of special envoys generally increased bureaucratic infighting with the Department of State and sent mixed messages to Khartoum. 

Saturday, October 8, 2011

How Long Will this Shtick Keep Working?

Aside from attending the Great Lakes Policy conference, I spent much of last week shepherding several Congolese civil society leaders around DC to talk about conflict minerals. I came away impressed at how many people in DC are knowledgeable about the Great Lakes. There are a lot of highly educated people in this town with a lot of  Africa experience. They understand what it means to deprive people of their livelihood. And from what I could tell, almost all of them are dismayed by the impact Enough's campaign has had on the economy of eastern Congo.

So I was a little puzzled to read Enough's latest email blast:

Dear Friend,
Thought the fight for strong conflict minerals regulations in the U.S. was nearly over? Think again.Over the past year and a half, we've worked together to create momentum for conflict minerals reform so that our electronics products will one day no longer fuel the deadliest conflict since World War II. Last year you fought hard for conflict minerals regulations to be a part of the Dodd-FrankWall Street Reform and Consumer Protection Act. Earlier this year, over 27,000 of you called on the Securities and Exchange Commission (SEC) to create strong rules governing how companies must comply with these regulations by tracing and auditing their supply chains.
Now the U.S. Chamber of Commerce is threatening to undo all of your hard work.After a series of delays, a long uphill battle, and consistent corporate lobbying against provision 1502 of the Dodd-Frank Act, the SEC is set to release conflict minerals regulations in December. 

By continuing to frame the issue as a contest between brave activists and greedy corporations, Enough is ignoring the multitude of journalists, academics, Congolese expatriates, and Congolese civil society leaders who have spoken out against the minerals campaign--most recently at this week's conference. This sort of brave-us vs. greedy-them rhetoric may work among the tinseltown crowd. But it's going to underwhelm the knowledge producers in this town. And I'm not sure it's wise to disregard them. Credibility is a little like virginity: very hard to recover once lost. How many human rights groups are going to endorse Enough's next campaign? How many Hollywood stars will sign up next time Enough approaches them? How seriously is Congress or the State Department going to take its recommendations? What decisions will its funders make next year or the year after? All of these organizations rely on serious people doing serious work to make their internal recommendations. And right now, if I were Enough, I'd be worried that these were the people I was losing.

Friday, October 7, 2011

The Pretty Girl Knows my Name!

I can die happy now. Robin Wright, the Princess Bride, knows who I am. I haven't felt this pleased with myself since third grade, when the brother of Ayo Adufume, the girl I had a crush on, gave me a chance to sneak a look at her Top-Secret diary and I came upon this entry: "My mom thinks David is cute but I don't."

This is from an article published a couple of days ago by Rohan Patnaik in The Independent:

“It’s sad, you know. [Aronson] was there for a day.  He was taken to just a few places, interviewed just a few people, and wrote a story without understanding anything behind the context,” says activist and celebrated Hollywood actress Robin Wright. “When I went there, it was the first time I had done something like this.  I went to Kivu to put a face to an issue I had heard so much about; and I heard all the stories the people told me.  That’s why we’re here today, to speak to people like you and get the word out.  We all are responsible for the bloodshed and Enough is truly doing what is best for the local people.”
Listen Robin, if you're out there:  At some level, it's got to worry you that the next sentence in that article reads: "Nevertheless, many have found that Aronson's claims may, indeed, be true." If you're feeling any cognitive dissonance at all, I'll be happy to talk with you. I'm in the phone book, call me.