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Congo: Let’s be frank about Dodd-Frank

August 19, 2011

by Mvemba Phezo Dizolele

This Congolese teenager works in a coltan mine. Congo holds 80 percent of the world’s coltan resources, a mineral widely used in electronic products, without which wireless communication as we know it could not exist. This youngster’s hope lies not in the Dodd-Frank Act, which could cut off exports and his meager livelihood, but in a strong Congo government restoring peace and prosperity to the war-torn eastern Congo and an end to foreign plundering of its resources and the killing and exploitation of its people. – Photo: Myemba Phezo Dizolele
On Aug. 7, freelance journalist and blogger David Aronson published an important opinion piece in the New York Times on the effects and ramifications of the Dodd-Frank Act. I congratulate and commend him for a clear and lucid position. The op-ed has unleashed a healthy, robust and at times acrimonious debate online about the meaning of this legislation. Blogs are beaming with commentary and the Enough Project has been on the defensive with a response in the Huffington Post by Sasha Lezhnev. David deserves all the credit for this discussion.

Like the activists who lobbied for the legislation, Dodd-Frank assumes that minerals such as gold, wolframite, coltan and tin – which are extracted from areas under the control of armed groups – drive the conflict, and therefore, curbing the trade would bring peace to the region.

Organizations like Global Witness, the Enough Project and its partners that have invested considerable resources into this issue, contributed to this oversimplified reasoning. Proceeds from mineral trade provide the militias the financial means to acquire more firepower, they argue, which in turn perpetrates the conflict.

The historical truth, however, is different. Activists have reversed the cause-to-effect sequence of developments. In the Kivus, the local economy rested on agriculture and commodity trading, which suffered severe setbacks at the onset of the war in the late ‘90s as the conflict ushered in a rapid destruction of farms, fields and road infrastructure. The ensuing proliferation of militias, which exacted – and still do – a heavy toll on the peasants and commodity traders, drove the populations off the fields into the emerging artisanal mining.

In eastern Congo, from Butembo in North Kivu to Nzibira in the hills of South Kivu, thousands of families now live off this informal mineral trade, which generates between $300 million and $1.4 billion a year. The long supply chain ensures that people who would otherwise be unemployed and starve have a minimal income. These people, however, are likely to pay a high price for the legislation and lose their livelihood.

Thousands of families now live off this informal mineral trade, which generates between $300 million and $1.4 billion a year. People who would otherwise be unemployed and starve have a minimal income.


Coltan mining in the South Kivu, a mountainous region of Mushangi, is largely performed by children whose families were driven from their farmland by a combination of the war that began in the late ‘90s and the “coltan rush” beginning in 2000, the year the price of coltan exploded from $30 to $400 a pound. – Photo: Myemba Phezo Dizolele
Back in September 2010, they experienced the effects of a mining moratorium for the first time. In an attempt to pre-empt the U.S. legislation and its proponents, Congolese President Joseph Kabila suspended artisanal mining operations in the region. Expectedly, the outcome was devastating for the population, as the thousands of Congolese who depend on this trade could not find work in a country with 8.9 percent and 81.7 percent unemployment and underemployment rates, respectively.

Army units deployed to protect the mining areas turned their assignment into a business opportunity and joined the black market trade. Six months later, unable to enforce his decision, Kabila lifted the ban.

Currently, it is nearly impossible to separate clean ore from bloody minerals imported from the region. While the concerned industries figure out a credible certification process, anticipated compliance with the legislation increases transaction cost in one of the world’s most corrupt countries.

In order to protect their reputation, the electronics and high technology industries contemplate boycotting minerals from the region. The decision by U.S. companies to either scale back or stop sourcing ore from eastern Congo means that the people of the Kivus are likely to experience the same devastating blow that hurt the local economy when President Kabila imposed the mining moratorium in September 2010.

The government’s inability to assert state authority is the real cause of the insecurity that set off the emergence of militias and sustains the plunder of natural resources. With the collapse of the state, old, latent community grievances stemming from land disputes, demographic pressures, ethnic tensions and control of resources and trading routes turned eastern Congo into a tinderbox.

The government’s inability to assert state authority is the real cause of the insecurity that set off the emergence of militias and sustains the plunder of natural resources.


A child miner displays the unprocessed mineral ore, coltan, which he has dug from the ground. Mvemba Dizolele writes: “Ten-year-old Bashizi tells me, ‘I do this hard work because my father is too old to support me.’ He has been doing it for several months. ‘That is the only thing there is to do around here,’ he says,” since the farm families were driven from their land. As bad as mining conditions are, a Dodd-Frank Act moratorium on mining would leave the farmers-turned-miners with nothing but unemployment and starvation. – Photo: Myemba Phezo Dizolele
Ambitious demagogues only need to embrace a cause and find a sponsor – a community, business or political elite or a state – to start a militia. The three main militias, FDLR, CNDP and PARECO, have exploited these dormant grievances and benefitted from either community or state support. The pattern remains the same for the three dozen smaller militias that operate in the area.

Mineral exploitation, the object of activism and legislation, is but one source of revenue for these armed groups. They literally rule over the territories they control, taxing every economic activity and terrorizing the civilians into submission. Losing access to the mines will marginally affect their capacity to generate funds, considering that weapons and ammunitions are relatively inexpensive.

In other words, if there were no minerals, the conflict would still rage on, as armed groups would find other sources of revenue. As long as the government is incapable of imposing its authority and addressing the various grievances, the region will not know peace.

If there were no minerals, the conflict would still rage on, as armed groups would find other sources of revenue. As long as the government is incapable of imposing its authority and addressing the various grievances, the region will not know peace.

The government has failed to build a professional army, perhaps the single most important element in ensuring Congo’s territorial integrity and the security of its citizens and coveted natural resources. President Kabila continues to deal with militias in the east in the same way that he did during the transition period: co-opting warlords into the government and security institutions.

Even as militia leaders get promoted into the Congolese army, they remain rooted geographically in their area of influence and continue to perpetrate horrific abuses on civilians with impunity. In short, the national army is little more than a patchwork of militias with parallel command structures and no incentive to change.

The predatory designs of neighboring Rwanda and Uganda also fuel the volatile situation. Both Rwanda and Uganda have invaded Congo twice, with continued incursions into eastern Congo where they still support militias. Several U.N. reports have linked both countries to Congolese militias and the looting of resources.

The predatory designs of neighboring Rwanda and Uganda also fuel the volatile situation. Several U.N. reports have linked both countries to Congolese militias and the looting of resources.

Furthermore, Uganda, Rwanda, Burundi and Tanzania benefit from the illicit mineral trade in eastern Congo as they serve as primary export routes. And while Uganda, Rwanda and Burundi have no gold, diamond or tantalum deposits of significance; they have become important exporters of these minerals.

Congolese children and adults, who farmed the land before the war, now dig their mountains for coltan in Mushangi. Due to the corrupt state of the Congo, aided by the U.S., Rwanda and Uganda, the Congolese miners are prevented from benefiting from the riches of their region. Only a strong Congolese government, not a Dodd-Frank ban on coltan exports, can bring peace and prosperity to eastern Congo. – Photo: Mvemba Phezo Dizolele.
In the past, high-level government officials and senior army officers were implicated in this trade. Whether this is still the case today is unclear. It seems, nevertheless, highly unlikely that these countries could export such large amounts of minerals without the collusion of government officials. Whether these leaders are actively sourcing these goods or simply turning a blind eye to the trade matters little to the bottom line: The result is still the same.

While the SEC is working out the details of the regulations, Rwanda actively capitalizes on the failure of the Congolese state. On May 13, 2011, Bloomberg reported that Rajesh Exports Ltd., India’s largest jewelry manufacturer, might invest as much as $1 billion over the next five years to develop Rwanda’s gold industry, including a refinery and a diamond-trading business.

With limited gold deposits and no proven diamond reserves, Rwanda is likely predicating its agreement with Rajesh on DRC’s resources. In the absence of a strong Congolese state to protect its interests, Dodd-Frank will effectively certify the looting of Congo’s minerals.

Oversimplification of issues often produces inadequate, counterproductive policies. Dodd-Frank and its proponents, who seek to curb U.S. companies, penalize the people of eastern Congo but do little to curtail the militias and their backers.

Dodd-Frank and its proponents, who seek to curb U.S. companies, penalize the people of eastern Congo but do little to curtail the militias and their backers.

We know the primary supporters of militias, whether in DRC, in neighboring countries or overseas. We also know the primary export routes and which neighbors profit from this trade. It is troubling that the legislation uses a shotgun approach to the illicit mineral trade quandary and inculpates all of DRC’s 10 neighbors. For instance, the legislation treats Zambia, a mineral rich country that is not involved with militias in eastern Congo but borders DRC to the south, with the same suspicion as Rwanda, Uganda, Burundi and Tanzania, which are the primary export routes.

The proponents of Dodd-Frank present the issue in such a way that one may think that eastern Congo is a sovereign, independent country. The legislation fails to place the problems of the Kivus in the context of a national crisis that requires robust engagement at the national level. The Enough Project has been eager to display a letter of endorsement signed by 35 Kivu-based civil society groups. That is hardly a buy-in by the Congolese at the national level.

Coltan mines consist of open pits and networks of narrow tunnels at constant risk of collapse, which child miners must navigate. Coltan has driven the exponential growth of the technology industry. – Photo: Myemba Phezo Dizolele
Unless Dodd-Frank is about U.S. consumers and companies, the activists and their partners in Congress should confront the real causes of the conflict, which are failed leadership and corruption in Congo’s capital, Kinshasa, and predatory policies of Rwanda and Uganda, which destabilize eastern Congo while benefiting from the mineral trade.

Congress should confront the real causes of the conflict, which are failed leadership and corruption in Congo’s capital, Kinshasa, and predatory policies of Rwanda and Uganda, which destabilize eastern Congo while benefiting from the mineral trade.

Cleaning up eastern Congo requires the courage to denounce and pressure all guilty parties through a variety of means, including International Criminal Court indictments, freezing the assets of militia leaders and their backers, and diplomatic pressure on the governments of DRC, Uganda, Rwanda, Burundi and Tanzania.

Real change will only happen when a combination of bold measures is part of a comprehensive policy that addresses the crisis’ multifaceted nature as was done with blood diamonds for Sierra Leone and Liberia. These measures included U.K.-sponsored military intervention and state-building initiatives, the restoration of state authority, the dismantlement of militias, the Kimberly process and the pursuit of justice, which eventually led to the arrest of Liberia’s former President Charles Taylor. Pretending otherwise in DRC would be disingenuous.

Incidentally, the declared mission of the Enough Project is to end genocide and crimes against humanity. No genocide has been declared in DRC, but over the years human rights organizations have produced several credible reports of mass killings and crimes against humanity perpetrated by different actors in Congo.

The most detailed of these reports, the U.N. Mapping Report, was published in October 2010 by the High Commission for Human Rights. Analysts may disagree on the exact number of the victims of the conflict in DRC, but most of them agree that hundreds of thousands of Congolese have died as a consequence of conflict. So far, however, the Enough Project’s response to these reports has been tepid at best.

Dodd-Frank hammers on the symptoms of a crisis, but shies away from the real fight for good governance, justice and rule of law.

Mvemba Phezo Dizolele, an independent journalist who has covered Congo’s war-torn Ituri and South Kivu provinces, is the Peter J. Duignan Distinguished Visiting Fellow at Stanford University’s Hoover Institution and the author of a forthcoming biography, “Mobutu: the Rise and Fall of the Leopard King” (Random House UK). His analyses have been published in the New York Times, Newsweek International, International Herald Tribune and other outlets and he has been a guest analyst on PBS’ NewsHour with Jim Lehrer and Foreign Exchange with Fareed Zakaria, BBC World News and more. A grantee of the Pulitzer Center on Crisis Reporting, he covered the 2006 historic elections in the Democratic Republic of Congo and produced Congo’s Bloody Coltan, a documentary report on the relation between the Congo conflict and the scramble for mineral resources. Visit him at Dizolele’s Eye on Africa, where this story first appeared, and contact him through Facebook, at Eye on Africa Dizolele.

 

5 thoughts on “Congo: Let’s be frank about Dodd-Frank

  1. GMH

    this is just the Americans trying to slow down the advance of China in Africa, been in the region in that trade for over 25 years, what is going to happen to all these people now ? what is going to happen in the region now ? all these NGO's have been paid by large mining group. same story as De Beers with rough diamonds out of Africa and kpc, just politics ………………………. and business. Someone from the American embassy in Rwanda with whom I had few meetings last years told me that the profit in the tin industry in the region is very very very far to by weapons for a war

    Reply
  2. Peter

    For an indepth look at coltan and conflict minerals in the eastern Congo, see the book, Consuming the Congo: War and Conflict Minerals in the World's Deadliest Place.

    Reply
  3. DRepCongo

    I personally know chiefs in the DR Congo who are trying to export Coltan and gold through legitimate means who cannot find a legitimate buyer anymore. One small private company that is co-owned by a DR Congo Chief and an American social entrepreneur has been lauded repeatedly by the DR Congo government and the Chiefs for their commitment to doing everything above board and their desire to build local potable water projects, clinics and schools from the profits. The express purpose of this company is to take the coltan, gold and other minerals out of the hands of war lords and get it to market without a dime going to conflict.

    But Dodd-Frank has changed everything. This company is not able to export coltan and other minerals now and these tribes are starving instead. One tribe has continued to dig coltan for the last two years without pay and refused to sell it to illegitimate buyers. They had dozens of tons of it stored and this company was trying to help them get it sold and to set up a regular monthly shipment through legitimate means. Because of Dodd-Frank the buyers are not there for this coltan and the private social entrepreneur company cannot export this coltan. The Chiefs have a decision to either let their people starve or sell it to war lords.

    So Dodd-Frank and all the well-meaning activists are now directly responsible for the forced sale of coltan and other minerals to the very criminal elements they wished to put out of business. And they are responsible for the continuing deaths by starvation in these poverty stricken areas.

    The free market was taking care of this problem and legitimizing it all (this company has coltan concessions with dozens of Chiefs who want to sell legitimately and all of them would get on board eventually). But government and activists have created a knee-jerk reaction that is killing people and lining the pockets of war lords.

    Who is perpetuating these crimes now? It's not the business world, but government that doesn't care about the outcome, only about the public perception that brings them votes, and by well-meaning, but mis-guided activists.

    I encourage these activists to re-think their support of Dodd-Frank and ask that it be repealed immediately.

    Glad to share confirm this social entrepreneur company, which chooses to remain private, to appropriate sources. Email me at drep congo @ yahoo.com

    Reply
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