International Network for Economics and Conflict

*This is a joint post with Brett Boor, Research Assistant at the U.S. Institute of Peace

A little more than two years since President Obama signed the Dodd-Frank Act into law, the eastern provinces in the Democratic Republic of Congo (DRC) are once again embroiled in violent conflict.  Section 1502 of the Act aims to break the link between the region’s mining industry and violent factions by requiring all US-registered companies to certify that their entire supply chains are conflict-free. The law is based on the presumption that the violence in north-eastern DRC is primarily fuelled by violent competition for control of the region’s lucrative gold and tin ore mines.  The recent flare up of hostilities suggests that this is not the case.  Not only has there been a resurgence of violent conflict following a decrease in ‘conflict mining,’ but we have also witnessed a shift in funding sources by the belligerents.  It is estimated that since the April mutiny that triggered the emergence of the M-23 rebels and the re-emergence of former Rwandan General Bosco “Terminator” Ntaganda, some 470,000 have been displaced, with around 51,000 crossing the borders into Rwanda (19,400) and Uganda (31,600).  It appears that U.S. Congressman Barney Frank (a co-sponsor of the Dodd Frank Act) has not achieved his goal of “…cut[ting] off funding to people who kill people”.

The latest round of fighting in north-eastern DRC is the result of the inability of the Congolese military to ensure security in this sensitive area.  Conflict-mining had relatively little to do with it.  While the jury may still be out on the efficacy of Section 1502, it is fairly apparent that its fundamental premise might have been naïve.  We still have a lot to learn about the relationship between mining and the financing of conflict. The attempt to choke the Congolese rebel groups through mining legislation treated the symptoms of the conflict without impacting the root causes. The key drivers of the violence are endemic and persistent insecurity and deep-seated governance failures.  The violence will continue until these issues are resolved. Addressing insecurity in north-eastern DRC will entail: removing all armed groups (including the DRC military) from mining areas; prosecuting those involved in illegal trade;  removing parallel command structures from the national army; using mining police to uphold the rule of law in mining areas; and reforming the systems and mechanisms used to remunerate soldiers.  Improving governance would require long-term investments in programs that improve human capacity, hold officials accountable, create predictable institutional frameworks and engage/empower all citizens at all levels.  Particular attention should be paid to the fragile north east.

Despite regulations like the Dodd-Frank Act, the warring factions have still been able to find ways to make money.  Financing war is a means to an end and those intent on violent conflict will find ways to finance their involvement.  Recent violence in DRC reveals two things.  First, rebel groups can find ways around embargoes, especially in fragile and unstable areas.  Second, rebel groups can innovate and implement predatory financing schemes, especially because they exercise a monopoly of force in the area.  Reports suggest that some rebels like Bosco Ntaganda circumvented Dodd-Frank by creating new avenues for smuggling and profiteering across the Rwandan border.  This enabled them to underpay DRC miners and effectively launder the minerals via export channels in Rwanda.  In addition, rebel groups are reported to have diversified their income generating schemes. A BBC report describes the diverse strategies ranging from bank robberies to extortion rackets that involve taxing locals for their charcoal and cows. The rebels allegedly robbed the Goma branch of the International Bank for Africa twice, stealing $1 million the first time in December 2011 and $50,000 the second in March. (The details start on page 28 of this UN report). These developments indicate that violence will persist and the warring factions will find ways to finance their activities unless comprehensive solutions are crafted and implemented to address the root causes of conflict.

Continued unrest in the DRC has national, regional and global implications.  It demands immediate, concerted and sustained action by a broad range of domestic and external stakeholders.  Recent action by the United States, the Netherlands and the United Kingdom to address some of the sub-regional drivers/enablers of conflict is a step in the right direction.  This is the time to reinforce efforts to contain the cross-border dimensions of this problem with credible measures to reform the DRC’s security sector, improve human security and strengthen governance.  The DRC government and its international partners must seize this window of opportunity.  There is also an urgent need for more research into the political economy of the DRC’s war economy.  This will improve our understanding of the prime motivators/de-motivators and contribute to the development of more impactful interventions and regulations.