Rebuttal to NYT op-ed regarding the Dodd-Frank Conflict Minerals Provision

News Brief
August 10, 2011

By Cydney Posner

A few days ago, the NYT published a disheartening op-ed, How Congress Devastated Congo, which contends that the conflict minerals provision of Dodd-Frank has had a catastrophic impact on the Congo (see my article from 8/8/11). A rebuttal to that op-ed, What Conflict Minerals Legislation Is Actually Accomplishing in Congo, written by a policy consultant to the Enough Project, was recently posted on the Huffington Post.  The author argues that effects of the legislation have been complex; however, on balance, the legislation has had a beneficial effect and has significant local support: Dodd-Frank is a "chief driver" of efforts to end the "world's deadliest conflict," and is supported by coalition of 40 Congolese human rights groups who view it as "the leverage needed to instill and impose ethical business practices in the Great Lakes region." Ultimately, he argues, the "transition from a war economy to legitimate business" will not be instantaneous and involves many challenges, but the effort is worthwhile. Instead of repealing the legislation, the author argues, mining communities must be supported in this effort through the establishment of mining community livelihood funds, community mining programs, independent monitoring systems and other initiatives.

The author contends that the NYT op-ed "misses the critical link in eastern Congo: the continuing role of the minerals trade as a fuel for violence and a major source of revenue for armed groups and military units responsible for atrocities." The conflict minerals provision in Dodd-Frank "is the first policy initiative to start to change that equation in 15 years. Change will not come overnight, but the fact is the bill is setting into motion a series of modifications that will have lasting effects on the conflict. The economics are a driver that must be addressed, because the minerals trade fuels and enables the structures of violence and poor governance in eastern Congo....In trying to make change this dramatic, there will be unavoidable economic dislocations. While these temporary disruptions must be mitigated as much as possible, the alternative is to give up on this process part way through and revert to a brutal status quo ante that even critics of the bill surely don't endorse."

The armed groups (and the businesses and governments that aid them) are the perpetrators here, he contends, not Congress or human rights groups, and the commanders and elites are the financial beneficiaries. By contrast, "the majority of miners worked in slave-like conditions [with] mines filled with child miners as young as 11, miners in debt bondage and forced labor situations. As [the director of] a Congolese coalition of 35 women's groups, said, ‘Saying that the population will die if there is no mining -- that is a lie. The comptoirs [exporters] are the ones making the money. People never saw that money anyway.' "

The author also takes issue with the op-ed's contention that "civil society is against the bill." Rather, "many Congolese civil society groups are vocal advocates for the legislation and have written to the SEC asking for strong and timely regulations." In addition, there are civil society coalitions set up to act as watchdogs to industry and government minerals-tracing initiatives. In fact, he contends, local perspectives on conflict minerals can be complex and vary widely. For example, although Congolese civil society expert Eric Kajemba, who was quoted in the NYT op-ed, "may not agree with the Enough Project, he nonetheless supports the Dodd-Frank Act, even if he has a different view of how it should be implemented." The author encourages "wide dialogue and ample opportunities for all of these viewpoints to be incorporated into the implementation of the legislation, as well as other policy measures to regulate the minerals trade. For example, Congolese civil society organizations should have a seat at the table in international negotiations around mining reforms, and directly participate in monitoring regimes in the region."

Teams from the Enough Project have seen the direct impact of the legislation, which, the author contends, has caused armed commanders to vacate several major mines. Decreases in minerals exports "are directly threatening commanders' multi-million dollar profits. Some commanders have resorted to smuggling, which has increased some 15-25 percent, but this smuggling is not nearly equal to the hand-over-fist profits that they generated in previous years." In addition, "Congolese army commanders are now being arrested and prosecuted for minerals smuggling and sexual violence crimes."

The author also argues that the conflict minerals provision has "accelerated reforms in the region that were previously unimaginable. As the United Nations Group of Experts stated last month, the bill ‘has proved an important catalyst for traceability and certification initiatives and due diligence implementation in the minerals sector regionally and internationally.' " He reports that 95 percent of Rwanda's minerals and 75 percent of Katanga's minerals are to be tagged for traceability by year's end. He believes that electronics companies are not necessarily walking away, but some are instead "pioneering verifiably conflict-free Congolese minerals pipelines, for example the Solutions for Hope project by Motorola Solutions in Katanga."

Crafting the final SEC rules to implement the conflict minerals provision has undoubtedly been challenging enough without this editorial debate. Whether the debate will have any impact on those rules remains to be seen. Barring repeal of the provision, the SEC has slated adoption of final rules for the August – December timeframe.