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Conflicted Minerals – Predictable Disaster
It is something of a truism that the Road to Hell is paved with good intentions. I think if it is paved with such, the mortar between the paving stones must be made of NGOs. It would be hard to argue, for instance, that NGOs in Haiti in recent years have been especially helpful, considering there is a good argument that they are responsible for the death of local industry there and the spread of cholera, and their track record in many other endeavors is decidedly a mixed bag of horrible waste and fraud concocted of economic ignorance and meddling do-gooderism. So it is with no small bemusement on my part that yet another of their mad quests is now bearing fruit far different than they claimed to have desired. In this case, their crusade against mining in central Africa, ostensibly to shut down funding for a prolonged civil war, now appears to have made it far worse. That this would happen was, of course, predictable at the time.
This holy crusade combined, for these NGOs, what should have been all of their favorite checkboxes: a patronizing view of Africans as being unable to look out for their own interests (and therefore needing Western help), plenty of photo opportunities with impoverished peasants and thuggish militias, and moral proof that our modern lifestyle (in particular, our electronics) are murdering people and raping the planet. All that was needed was a catchy phrase. The practically poetic “blood diamonds” was already taken, and it being a bit of a mouthful to say “Bloody Tin, Bloody Tantalum, etc.”, they instead used the phrase “Conflict Minerals”, though as @midge rightly pointed out this does rather sound like a PC way of saying “a cage match between pet rocks”. So “Conflict Minerals” it is.
The claim was that the mining of 4 elements, Tin, Tantalum, Tungsten, and Gold (3TG, in the industry parlance), was directly funding the never-ending Congolese Civil War. These 4 elements are all found in abundance in the region, are all reasonably easily mined and smelted (coltan, the mineral form of tantalum, is commonly found just laying around in the area), and are all critical to modern electronics. And it is (or rather was) true that the militias were selling the stuff to buy desired weapons, ammunition, and supplies, but they were not the only ones selling.
The thinking of the NGOs was that an effective shaming campaign would force the major electronics manufacturers to source these materials elsewhere, and thus end the warfare. These international protest groups particularly singled out high-profile companies like Nintendo and some of the major cell phone makers in the mid 2000s. Consumers rightly ignored the pleadings of the NGOs, so the NGOs turned to trying to shame various governments into forcing some action or another. In the European Union they found a ready partner, especially since the EU had already shown itself to be scientifically ignorant in its ban on the use of lead and cadmium (often with there being not any viable replacements for these metals) just a few years before (look up RoHS – the Reduction of Hazardous Substances). In the US, though, there was no interest prior to 2009.
2009 and 2010 were high water marks of Democratic Party control, and they were filling the wish lists of many an international busybody, so in went the Conflict Minerals provision. Congress did not actually ban the use of Conflict Minerals, but it instead mandated that publicly-traded US corporations had to publicly declare, as part of their annual Securities and Exchange Commission (SEC) findings, that their products were either “DRC Conflict Free”, or else declare that their goods were funding the Congo Civil War. The corporations were also required to declare exactly how much products contained of Conflict Minerals. The declaration provision was, thankfully, struck down by the courts, but the actual content declaration still is law.
Well, US corporations do not want to be known for funding a civil war, and quite frankly divestment and supply-chain changes would mean less paperwork, so since this law went into effect (first reports were due in 2013) the world’s electronics component manufacturers have pulled out of Africa as quickly as they could. As the law not only stigmatized 3TG sourced from the Democratic Republic of the Congo, but also from neighboring countries too (since they might merely have been conduits), mining in the entire region has collapsed.
In the November 14, 2016 issue of the Wall Street Journal, Tate Watkins lays it out: (emphasis my own)
In a forthcoming study in the Journal of the Association of Environmental and Resource Economists, my colleague Dominic Parker and co-author Bryan Vadheim document that while the law may have cut off one source of revenue to armed groups, it led them to intensify their plundering of civilians in the region—exacerbating the humanitarian crisis. By their estimates, violent incidents more than doubled after the law was implemented.
The economists assert that before Dodd-Frank, Congolese militias acted as “stationary bandits.” The idea is that a strongman who seeks to rule for years won’t use his iron fist to crush the people entirely—and he may even invest a bit in roads, security and other provisions to ensure he avoids an uprising that could loosen his control. Messrs. Parker and Vadheim stress that stationary bandits are no saints, but the arrangement “may be safer and more economically productive than anarchy.”
…
Dodd-Frank upset the stationary-bandit equilibrium because, rather than spending resources to scrutinize a fragmented and opaque supply chain, many U.S. companies simply stopped purchasing minerals from the Congo. The Commerce Department admitted in a 2014 analysis that it did “not have the ability to distinguish” whether specific mineral purchases funded militias, and in August a Government Accountability Office report found that 97% of companies that filed disclosures “couldn’t determine whether the conflict minerals financed or benefited armed groups.”
Companies avoided the extra costs and red tape by boycotting tantalum, tin and tungsten mined in the Congo. They instead looked to suppliers in Australia and Brazil. Congolese mineral exports plunged by 90% in the wake of the legislation, according to DRC mining officials. Consequently, income to militias from such mines either plunged or vanished entirely.
None of this stopped the militias from killing. Some of them pivoted and became “roving bandits,” expanding their looting to make up for lost mining revenues. Mancur Olson, the late Nobel laureate in economics who outlined the theory of both types of bandits, wrote in a 1993 American Political Science Review article that the anarchy and theft wrought by the roving sort destroy “the incentive to invest and produce, leaving little for either the population or the bandits.” Messrs. Parker and Vadheim found that armed groups specifically targeted farmers during harvest time—especially after bumper crops.
All of this weighs heavily on my mind this time of year as this is the time when I, and many other manufacturers, begin our annual slog through thousands of declaration databases, bringing our own supply chain information up to date for another year. The workload is immense, and while my own small company does not have to declare per se, many of my customers are publicly traded and must declare. If I can’t provide them with my own supply chain data, they’ll switch to another company who can. But at least I’m not having to worry about some bandit group kicking in my door.
Published in Culture
Yes!
Does someone have some numbers on this issue? Something that might show that the sort of NGOs we don’t like would be hurt and the non-profits we do like would be fine?
And how much is going to these NGOs from the US and from what sources?
I know anecdotally that conservatives give much more than leftists when it comes to their own money.
The great thing about the charitable deduction that I see is not how it effects money going to charities, but that it sends less money to governments. Now, were it part of an over-all tax reform that lowers all rates considerably, that might be fine, but just removing the deduction means more of my money going to Washington. Bad idea. You don’t give an addict more of what they are addicted to. You try to wean them off of it.
The nearly perfect term for this came up on another post a few days ago: weaponized compassion, as in “How do you define social justice warriors? They’re the ones who weaponize compassion.”
In this particular case, they’ve taken a gun, pointed it carefully at someone else’s toes and pulled the trigger to see if it was loaded, you know, so it wouldn’t accidently go off an hurt some innocent bystander.
Well at one time you had imperialistic colonialism, it has now morphed into cultural colonialism. You need food or medicine then you must attend our diversity seminars.
So, I’m guessing you’re not a fan of Jeb Bush’s scheme of allowing corporate donors to charter schools to take deductions in order to get around the Democrats’ blocking of public funding for school choice?
This is another case of unintended consequences. Most of the comments here on the reporting requirements. The worst unintended consequences are for the people of central Africa.
Perhaps it is time for a sequel to Tears of the Sun where once again Bruce Willis leads the oldest living SEAL team members into Africa to do good by killing beaucoup bad guys.
For you fake news fans, Google “recolonize Africa” and see African news sources citing fake quotes from Trump. “Recolonization” sounds stupid but I suspect a lot of Africans would welcome living under international panels and some semblance of law and order rather than what they have now. How else do the pre-reqs for national democratic institutions come about? Would American society be possible without centuries of Roman imperial rule over Europe followed by a universal Church providing deep-rooted common cultural and moral assumptions? What is the recipe for tribal societies to become functioning nations?
Indeed they are. As Mr. Watkins pointed out in WSJ, it’s easier to entirely boycott the region than it is to try to gauge whether what you source from there is compliant or not, so the people there, once making a living (no matter how meagre) by mining, now have nothing.
And add to it this – the NGO most responsible for this mess, EICC (http://www.eiccoalition.org/) is seemingly the sole arbiter of who the ethical players are there. In the end, only large international mining concerns will ever get certified, and they are likely to import their own laborers to the region to do so.
Tax payers money is worth less to donors if rates are lower. As to corporate donors, I don’t want managers deciding who to spend profits of the companies I’m invested in. A lot of it is illusion and just another way to buy influence and there is a lot of corruption in all of it. No babies get tossed. You want to make a charitable donation, just do it.
Conquer everyone around you. extract their wealth. start figuring out how to keep it. (See Rome)
These occasional articles by Skipsul about industry are some of the best things published on Ricochet. I keep this one bookmarked.
As to the Congo, I remember several years ago talking about “blood diamonds” with a relative who supported a global embargo on them. I pointed out that every time an industry got going in Congo, the thugs got a cut of it, but if we ban them from ever exporting anything we are dooming the country to never-ending poverty.
I live with “Conflict Material” regulations and they are a nightmare. I always have the suspicion the raw material suppliers don’t really know the locations of the mines from where they get the material and they don’t want to know.
Rare earth metals…..figure out how to turn them into jewelry and they will appear in every other store in every cruise ship port in the Caribbean.
Thing is, “Life is One Unending Series of Miseries in Central Africa” and “Leftist Do-Gooders Screw the Pooch on Their Own Cause Again” are both “Dog Bites Man” stories these days.
I may be one of the only members here who works for an NGO (Iraq). I don’t take issue with any of the OP’s points, though I would like to offer my own observations from working in the field and advice for discerning good and bad. By and large, the broader the mission of an NGO is, the less effective. A group with vague mandates like “help the children” ends up helping very few people meaningfully. Conversely, NGOs that limit scope to serving a particular minority or demographic are more effective. This is especially true of NGOs that draw the bulk of their staff and leadership from the same population that they are serving; acting as a kind of check against bald-faced malfeasance. In Iraq, the Assyrian Christian and Yazidi-lead organizations, even if leadership is in the diaspora, far surpass foreign entities or local government programs.
I can’t speak for other war zones, but at least here, the NGOs really do fill a gap in services that would otherwise not be provided by either the UN or the local incompetent authorities. There’s nothing inherently un-conservative about them, even if they uniformly attracts liberals. Assuming they are privately-funded, they are free associations that work often in places where civil authority is broken or non-existent. Owing to their ideological makeup, some suffer from excess good intentions, but I would wager disastrous effects like the Congo are the exception rather than the rule.
Continued…
The bad practices I’ve seen in other NGOs and independent charities stems from either 1) good intentions and blindness to their effects or 2) ignorance of the local political and cultural dynamics (more common with foreigner-heavy organizations)
Addressing the second point first, NGOs, like anything else, are susceptible to corruption. Local governments, either out of capriciousness or paranoia, love to co-opt charities. They will pressure and bully NGOs into hiring government-picked staff, not only so they can give their cronies jobs, but so that they can keep an eye on what these entities are doing. Stupid or ignorant NGOs will fall for this, while the smarter ones remind the government what the ‘NG’ actually stands for in the acronym.
The most frustrating practice we encounter unfortunately happens with some religious organizations. On multiple occasions, it has been revealed that groups ostensibly providing humanitarian assistance are in fact fronts for evangelical missionary work. I have nothing against missionary work, but when humanitarian assistance becomes contingent on attending religious services, listening to sermons, or even converting, then it’s a problem. It’s especially scandalous when these missionaries specifically target people who were raped and tortured because of their ‘pagan’ religious beliefs. It’s downright predatory to provide assistance to these destitute people with strings. But again, a case of good intentions.
This sounds like a great Ricochet post, a look into a world we don’t see much of–could you please write it up–& would you be ok with it to go Main Feed?
Yes, I think that might be worthwhile. I’ll write something up.
Thanks a bunch! Can I bother you for one more thing–when you do publish it, come back here & offer us a link? I’m sure quite a number of us are interested & you might also hedge against the tyranny of time on the feed pushing everything beyond the reaches of mortal men, on page 2…
If anyone cares to read, I’ve written a long [sort-of] response to this post on the efficacy of NGOs.
http://ricochet.com/395149/2-cheers-for-ngos/
And it’s a good one too!
The title alone is worth it.