Africa and ‘Obama’s Embargo’
A provision of DoddFrank boomerangs on the continent’s poor.
The world is in the midst of a commodity boom, but in a mineralrich and desperately poor corner of Africa exports of tin, tantalum and tungsten have fallen by more than 70% since last summer. These are not the effects of war or natural disaster—although the region suffers from all of that and more—but rather of what local small-time miners are calling “Obama’s embargo.”
The African miners are basically right about the source of their troubles, though if they want to be more specific with the blame they might also call it the McDermott embargo, after the Democratic Congressman from Washington state. Jim McDermott is one of the architects of the Dodd-Frank financial-reform bill’s Section 1502, which is supposed to ensure that tin, tantalum, tungsten and gold sourced from central Africa is “conflict-free,” the latest trendy cause supported by those who claim to care about the welfare of ordinary Africans.
The goal of Section 1502 is to cut off money to those responsible for the fighting in the Democratic Republic of Congo, and by those lights the sales collapse shows that it’s working. A spokesman for Mr. McDermott tells us that if the trend persists, they hope to see a similar drop in the rate of carnage. Over the past dozen years, more than five million people have been killed and more than 200,000 women raped in the fighting between rebel groups and government forces.
Section 1502 requires companies that use these minerals—they have applications in everything from electronic gadgets to medical devices— disclose whether they, or anyone along their supply chains, source their minerals from Congo or any of the countries at its borders. If so, their SEC reports will have to detail the steps they’re taking to not “directly or indirectly finance or benefit armed groups” in the region. If companies cannot demonstrate such steps, they will have to declare on their websites that their products may be funding African atrocities.
Behind the scenes, companies are working to soften the rules. Some industry groups are also putting in place systems that will let them continue to source from central Africa while telling the SEC their supply chains are “conflict free.” But the logistics of guaranteeing this on a large-scale are daunting, and many suppliers find it easier to leave central Africa entirely. A case in point is the procurement policy of the H.C. Starck group, which affirms that it rejects all raw materials from the region, “even if we are offered material with allegedly official certifications from other state authorities.”
Shifting all sourcing to places such as Canada or Australia may drive up industry and consumer costs somewhat. But as Verizon points out in a letter to the SEC, “For the foreseeable future, it is going to be much easier to demonstrate that the minerals are from somewhere other than the DRC Zone, than to prove that minerals mined in the DRC Zone are responsibly sourced.”
The highest price is being paid in central Africa, where millions of people, and 16% of the Congo’s population, are dependent on small-time digging. By all accounts most of the money from central African mining goes to these artisanal miners. Soldiers and rebels do pocket some of the proceeds, and that’s a depressing reality.
But mineral operations also provide the local population with centers of commerce, with cash to pay for supplies and workers and easily traded goods. As money from the mines becomes increasingly scarce, Congo’s warlords have moved on to targeting the banana trade. Perhaps conflict-free bananas will be the next object of activist enthusiasm.
Meanwhile, the butchery continues, with recent reports of government troops raping more than 100 women and children over a three-day spree in the Congo’s South Kivu region. If all the money from minerals dries up, these killers will not shy from even more atrocious means to fund their ambitions. As for Western policy makers, Section 1502 is a useful lesson in how well-meaning attempts to “do something” in Africa unintentionally harm the innocent without touching the guilty.
A provision of DoddFrank boomerangs on the continent’s poor.
The world is in the midst of a commodity boom, but in a mineralrich and desperately poor corner of Africa exports of tin, tantalum and tungsten have fallen by more than 70% since last summer. These are not the effects of war or natural disaster—although the region suffers from all of that and more—but rather of what local small-time miners are calling “Obama’s embargo.”
The African miners are basically right about the source of their troubles, though if they want to be more specific with the blame they might also call it the McDermott embargo, after the Democratic Congressman from Washington state. Jim McDermott is one of the architects of the Dodd-Frank financial-reform bill’s Section 1502, which is supposed to ensure that tin, tantalum, tungsten and gold sourced from central Africa is “conflict-free,” the latest trendy cause supported by those who claim to care about the welfare of ordinary Africans.
The goal of Section 1502 is to cut off money to those responsible for the fighting in the Democratic Republic of Congo, and by those lights the sales collapse shows that it’s working. A spokesman for Mr. McDermott tells us that if the trend persists, they hope to see a similar drop in the rate of carnage. Over the past dozen years, more than five million people have been killed and more than 200,000 women raped in the fighting between rebel groups and government forces.
Section 1502 requires companies that use these minerals—they have applications in everything from electronic gadgets to medical devices— disclose whether they, or anyone along their supply chains, source their minerals from Congo or any of the countries at its borders. If so, their SEC reports will have to detail the steps they’re taking to not “directly or indirectly finance or benefit armed groups” in the region. If companies cannot demonstrate such steps, they will have to declare on their websites that their products may be funding African atrocities.
Behind the scenes, companies are working to soften the rules. Some industry groups are also putting in place systems that will let them continue to source from central Africa while telling the SEC their supply chains are “conflict free.” But the logistics of guaranteeing this on a large-scale are daunting, and many suppliers find it easier to leave central Africa entirely. A case in point is the procurement policy of the H.C. Starck group, which affirms that it rejects all raw materials from the region, “even if we are offered material with allegedly official certifications from other state authorities.”
Shifting all sourcing to places such as Canada or Australia may drive up industry and consumer costs somewhat. But as Verizon points out in a letter to the SEC, “For the foreseeable future, it is going to be much easier to demonstrate that the minerals are from somewhere other than the DRC Zone, than to prove that minerals mined in the DRC Zone are responsibly sourced.”
The highest price is being paid in central Africa, where millions of people, and 16% of the Congo’s population, are dependent on small-time digging. By all accounts most of the money from central African mining goes to these artisanal miners. Soldiers and rebels do pocket some of the proceeds, and that’s a depressing reality.
But mineral operations also provide the local population with centers of commerce, with cash to pay for supplies and workers and easily traded goods. As money from the mines becomes increasingly scarce, Congo’s warlords have moved on to targeting the banana trade. Perhaps conflict-free bananas will be the next object of activist enthusiasm.
Meanwhile, the butchery continues, with recent reports of government troops raping more than 100 women and children over a three-day spree in the Congo’s South Kivu region. If all the money from minerals dries up, these killers will not shy from even more atrocious means to fund their ambitions. As for Western policy makers, Section 1502 is a useful lesson in how well-meaning attempts to “do something” in Africa unintentionally harm the innocent without touching the guilty.
Printed and distributed by NewpaperDirect | www.newspaperdirect.com, US/Can: 1.877.980.4040, Intern: 800.6364.6364 | Copyright and protected by applicable law.
a