Tag Archives: United Nations

Finding a Middle Ground: the UN and Dodd-Frank

The UN Group of Experts on the DRC proposes a middle ground approach to both address the side effects of the Dodd-Frank Act and to allow its enforcement. Consumers can still take action, even as large and systematic change is necessary.

Though the Dodd-Frank Act has already been passed, the debate regarding its impact on the Congo continues. Thus, it is necessary to revisit the differing views to determine the appropriate path forward. Two weeks ago I delved into these varying perspectives, but I would like to return to them with a specific letter in mind dated October 21, 2011. It is written by Fred Robarts, Coordinator of the United Nations Group of Experts on the Democratic Republic of Congo (DRC) addressed to Chairwoman of the Securities and Exchange Commission (SEC), Mary L. Schapiro.

Mary Schapiro, Chairwoman of the SEC, Photo Courtesy of Sarah Mamula / Flickr Creative Commons

The letter predates an upcoming report from the Group of Experts that will be translated into the official United Nations (UN) languages, discussed by the Security Council, and then released by the end of November. The UN contacts listed on the letter declined to comment on it before the report was published. The timing of the letter—purposely preceding the full report—is of particular importance given the fact that the SEC will soon finalize regulations coming from Section 1502 of the Dodd-Frank Act. The Group of Experts seeks to influence these regulations; they want to ensure the SEC has as positive an impact on the Congo as possible.

The group’s conclusions come from a year’s worth of observations and investigations regarding “the activities of armed groups in the DRC and their sources of funding. The group has also evaluated the impact of due diligence guidelines for individuals and entities purchasing, processing and consuming minerals from the DRC…” Such due diligence guidelines refer to the investigation of a company’s involvement in a particular area of human rights concern.

The content of the letter represents a union of various views. It includes ideas aligning with both those who support the Dodd-Frank Act—demanding businesses stop purchasing minerals from conflict mines—and those who claim a diversification of approaches, especially politically, is necessary. The letter fully acknowledges the “important challenges regarding Dodd Frank” and the perspectives of those who oppose the act. Such “challenges” include the de facto boycott of Congolese minerals that the act has caused. Such an outcome occurred because smelters and electronics companies have, for now, stopped purchasing minerals from Congo—where the conflict mines are concentrated—since formal mine evaluation systems do yet not exist. Companies are compelled to end business with these conflict mines because Dodd-Frank demands they no longer conduct business with these mines. Thus, they have decided to pull out of the Congo altogether until these systems are in place and they know for certain where their minerals come from. As a result of this boycott, the letter speaks of the “increased economic hardship” faced in the Congo as a result of the Dodd-Frank legislation and the sudden lack of funds flowing into the conflict mines.

With this acknowledgment of Congolese adversity, however, the letter goes on to state that terminating or abating Section 1502 it is not the correct path. It advises the SEC to adopt the approach of mitigation, as well as to continue enforcing 1502. Rather than abandon conflict mines altogether, the smelters would reduce the degree to which they buy from such mines, and in the mean time, legitimate mine tagging and tracing processes would be established. The Group of Experts believes this mitigation tactic will reduce the impact of the de facto embargo. The letter sites the success of supply chain tagging already taking place in Katanga, Congo and Rwanda as evidence for possible success of tagging in the Kivu Region—the eastern region of the DRC where conflict mines are concentrated.

"Human Right Council - Special Session on DR Congo Sébastien Mutomb Mujing Representative Permanent of Democratic Republic of Congo ( Concerned country ) addresses during the Special Session on the "Situation of human rights in the east of the Democratic Republic of Congo." Photo and Caption Courtesy of UN / Jean-Marc Ferre / Flickr Creative Commons

This approach seeks to find a middle ground. However, it ought not be viewed as a cop-out. Such a strategy tries to establish a delicate balance between maintaining economic stability in the Kivu Region, while also trying to terminate human rights abuses by militiamen.

Even with such an approach, the Dodd-Frank Act still faces extensive blame for causing economic ruin for Congolese in the Kivu Region. David Aronson, whose New York Times article I discussed two weeks ago, as well as Joseph Paul Martin, Director of Human Rights Studies at Barnard College of Columbia University, constitute part of a group of scholars and journalists who have presented such blame. Martin stated in an e-mail, “The [Dodd-Frank Act] will have little impact on the current mineral and human exploitation in the DRC, a system which was established 140 years ago and has been reinforced and expanded over the years since.” Laura E. Seay, assistant professor of political science at Morehouse College, also looks down upon the effects of the Dodd-Frank Act: “In the mines, you can actually pay for things with coltan, so the economy is not entirely a cash economy, but that is all shut down now.”

Contrary to such points of view, the letter from the UN Group of Experts on the DRC goes on to applaud the Dodd-Frank Act for the awareness campaign it has started and that it has forced electronics companies to take responsibility for their impact on human lives. Before the Dodd-Frank Act, there was no legal obligation for companies to respond to the outcome of their Congolese mineral purchases.

The letter concludes by addressing the political changes that, along with these international business efforts, would lessen the occurrence of human rights abuses. It states, “We must keep up the pressure on the DRC authorities to prosecute and punish [the Armed Forces of the Democratic Republic of Congo] criminal networks involved in the minerals trade.”

The letter acknowledges the complexity of the conflict and that the solution will not be a simple process. Thus, it suggests a multipart approach to address the issue: both political and economic efforts must be simultaneously present to end violations of human rights—that occurred as a result of environmental exploitation—while also maintaining economic livelihoods.

This multi-solution system is directly relevant to consumer involvement. In addition to pressuring electronics companies to establish mine evaluation systems and to decrease purchases from conflict mines, consumers must also encourage U.S. legislative leaders to support Congolese government involvement.