Wednesday, October 17, 2012

Four more NGOs Outed as Sleeper Agents for the Chamber of Commerce

In yet another demonstration of its sinister reach and influence, four more NGOs outed themselves last month as sleeper agents for the US Chamber of Commerce. The NGOs, including two based in England, one at the UN and the fourth in South Africa, all produced reports critical of Dodd-Frank 1502.

In writing about the negative impact the law has had on local communities in eastern Congo, they join numerous other seemingly legitimate scholars and NGOs who have thrown their lot in with the all-powerful Chamber, the earthly representative of the god Mammon. "We must not underestimate the scale of the Chamber's influence," said Enough founder John Prendergast. "Not only has it penetrated seemingly legitimate organizations all over the world, it did so decades before anyone knew what they were up to."

International Alert
Ending the Deadlock: Towards a New Vision of Peace in Eastern DRC
September 2012
by Alexis Bouvy and Maria Lange

The issue of conflict minerals has long been at the heart of the international debate about the priority steps to be taken for peace in eastern DRC. The links between mineral exploitation and the financing of armed groups were officially established by the UN panel in 2001. However, mining traceability and due diligence initiatives started gaining momentum in the run-up to the July 2010 adoption of the US Dodd-Frank Act/Section 1502 on “Conflict Minerals”. This law aims at stopping the exploitation and trade of minerals fuelling conflict and human rights abuses. Section 1502 requires companies reporting to the US Securities and Exchange Commission to disclose their use of minerals originating from DRC or neighbouring countries. This means that companies have to spend huge sums on audits to ensure minerals in their supply chain are not sourced from DRC; if they do source there, the companies have to provide evidence that they have done everything possible to avoid these minerals funding armed groups. ...

A major unintended consequence of Section 1502 has been to reduce the income of those generating a livelihood from the mineral trade (artisanal miners, transporters and traders), along with those working in other economic sectors that rely on the cashflow generated by the mining sector. The mining sector is a crucial part of the economy of North and South Kivu provinces, both in terms of provincial taxes and populations’ livelihoods. However meagre the income is, most people making a living in this sector do not have alternative sources of income or livelihood. This is in a context where insecurity continues to prevent the development of the agricultural sector which in the past – at least in North Kivu – was a more significant economic sector than the mining sector. Rather than addressing the funding of armed groups, the unintended result of the Act could be to reinforce smuggling networks and illegal economic activity, which undermines the implementation of traceability and certification initiatives.

Chatham House
Conflict Minerals: The Search for a Normative Framework
by Louise Arimatsu and Hemi Mistry
September 2012

As some experts have noted, the oversimplification of the causes of armed conflict or of endemic violence in post-conflict environments such as the DRC has often led to the introduction of inappropriate and, occasionally bad, law. Section 1502 of the Dodd-Frank Act has not only come under attack by its critics for simply being bad law, but even its supporters have raised a number of concerns with the terms of the provision; whether the standards demanded are even achievable, because not practicable; whether the demands set forth in the provision are such that the risk of reputational damage as a consequence of inadvertently violating the statutory requirement are too high; and whether the cost of the disclosure requirements are so prohibitive that businesses simply can no longer afford to source from the DRC. The SEC has estimated that the initial cost of compliance will be approximately US$3–$4 billion, while the annual cost of ongoing compliance is likely to be between $207 and $609 million. But setting aside both costand risk to US businesses, are these drawbacks outweighed by the potential benefits that the legislation seeks to deliver?

The initial signs are not reassuring since even before coming into operation, the Dodd-Frank Act has produced a number of unintended consequences of an adverse nature for mining communities in the eastern provinces. This was demonstrated by the events following the announcement by the EICC that, as from 1 April 2011, its membership would no longer permit purchases from refiners and smelters of tin, tantalum and tungsten that accepted material which did not comply with the regulatory requirement under section 1502. The announcement prompted an initial rush among traders to unload their stock with little concern as to whether any due diligence standards should be applied. Once the deadline had passed, traders in the Kivus and Maniema were unable to sell their remaining stock to those smelters and refineries that were seeking conflict-free smelter status under the CFS initiative. This left many traders with little choice but to sell to refiners and smelters not seeking CFS status, but at discounted prices. As revenue flows decreased, businesses were forced to close, unemployment rose, and poverty levels worsened.

The United Nations University
September 2012
by Estelle Levin, Cristina Villegas et als

 There has been a lack of socio-economic impact assessment and risk management planning on the legislation’s effects within DRC and GLR. The de facto embargo has devastated markets for artisanally mined tin, tantalum and tungsten, removing ASM as a viable livelihood option for tens of thousands of miners and their families, forcing them to relocate in search of work opportunities, move into gold mining and also other, less preferable livelihoods to them as individuals but also to society, e.g., bushmeat hunting and charcoal making which pose serious threats to local and international ecological resilience.

 Institute for Security Studies
Addressing the "Conflict Minerals" Crisis in the Great Lakes Region 
September 2012
by Andrews Atta‐Asamoah and Nyambura Githaiga

The year 2011 heralded the convergence of various initiatives seeking to curtail the financing of conflict in the Great Lakes region through the illegal exploitation of minerals. The combined effect of seeking to comply with the various processes has had significant implications at the national, regional and international levels by altering the dynamics of mineral exploitation in the region in both positive and negative ways. The positive impact has been in the area of the immense contribution of the initiatives to increased awareness of the role of illegally exploited minerals in financing conflict in the region and the need for various stakeholders to exercise responsibility in the sourcing and trading of minerals so as not to inadvertently fuel insecurity. On the flip side, however, this increased awareness has led to the labelling of minerals from the region, particularly gold, tin, tantalum and tungsten, as potential conflict minerals. While this has been important in boosting efforts at minimising conflict financing through the exploitation of minerals, the ‘conflict mineral’ label associated with the region has led to interrupted demand for minerals from the Great Lakes, the closure of some businesses dealing with the purchase and export of minerals, the loss of employment and a reduction in income within the local economy, and ultimately threatens to negatively reinforce the crisis created by the various conflicts in the region if nothing is done to stem the trend of unintended consequences.

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