Friday, June 29, 2012

The Impact Dodd Frank Isn't Having

Here are two pieces coincidentally published today on how little impact Dodd-Frank is having on military developments in eastern Congo. The first is by the redoubtable Jonny Hogg of Reuters, who points out that the gold trade has been virtually unaffected by the law:
MONGBWALU, Democratic Republic of Congo, June 29 (Reuters) - G old traders in the eastern Congo district of Ituri have heard of the Dodd-Frank act, or "Obama's law" as it's known here, but don't see why it's got anything to do with them.
"I struggle to understand this Obama's law," says George Lobho, one of hundreds of traders operating out of tiny wooden shacks in the muddy streets of Mongbwalu. "What does it mean?"
Ituri is one of many areas of the country to have experienced bitter ethnic conflict between rival tribes in recent years. Massacres have left tens of thousands dead.
It is this fighting that led U.S. authorities to take the unprecedented step of naming Congo in section 1502 of the Dodd-Frank financial regulation act, which says U.S.-listed companies that source gold, tungsten, tantalum and tin from Congo or its neighbours must assure the U.S. stock exchange regulator that their business is not helping fund conflict.
Readers of this blog may remember that I've always predicted gold was too valuable and too easy to smuggle to be affected by DF-1502.

The second is by Mark Doyle at the BBC, writing about all the various ways the mutineers have of making money aside from the mineral trade: 

A controversial UN report on the Democratic Republic of Congo has focussed attention on Rwanda's alleged role in the current army mutiny, but the document also reveals intriguing details about how rebels in the area make their money.
It lists bank robberies and extortion rackets taxing charcoal and cows as some of the activities of the insurgents in east of the country.
The recent increase in violence was partly caused by government attempts to end racketeering by parts of the army, including the mining of precious minerals such as tin and gold.
Cynics might say the government army wanted to reassert its own control over these rackets. But in any case it is clear recent events were part of a long-standing struggle by Kinshasa to establish control over the east.
The legal and illegal export of precious minerals from the fabulously rich soils of eastern DR Congo is a multi-million dollar business in itself.
But in the run-up to breaking away from the national army in April, rebels also resorted to blatant criminality and robbed the International Bank for Africa (BIAC) in the main eastern city of Goma - twice.
On the first occasion, the UN study says, soldiers snatched $1m (£640,000), the currency of choice for well-off Congolese.
The second BIAC raid netted only $50,000.
But there were other heists too - at a well-known Goma hotel, the Stella Matutina, a customs office and several money transfer branches.
More mundane extortion also affects ordinary people every day.Trucks carrying charcoal for cooking, for example, are "taxed" $50 at illegal roadblocks and even motorcyclists have to pay a sort of licence fee of $2 a week, the report by the UN group of experts published within the last week says.

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