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CGD in the News

Political Heavy Metal (Wall Street Journal)

July 9, 2012

A CGD working paper was referenced in a Wall Street Journal piece on conflicting minerals.

From the article:

For a case study in regulatory mission creep, we turn now to the Securities and Exchange Commission, where the body responsible for federal securities law is taking on a new rule about where businesses get the metal for their products. The rule, expected to be voted on August 22, will burden companies in order to appease an impulse in Congress to feel better about Africa.

The regulation concerning so-called "conflict minerals" is compliments of Dodd-Frank, which requires among its "miscellaneous provisions" in Section 1502 that all American companies that file with the SEC disclose their use of "conflict minerals" in the tin, tungsten, tantalum or gold in any of the products that they make. Think jewelry, planes and eight million kinds of electronics.

According to activists, those consumer products and the "greed" for natural resources have been a primary driver of murder and mayhem in the Democratic Republic of the Congo. Fighting there has claimed countless lives as rogue bands of thugs terrorize towns and use the proceeds from mineral sales to buy arms. As the theory goes, less demand for these minerals would shut down funds for the bad guys and reduce atrocities.

It hasn't turned out that way. Companies have radically reduced their use of the minerals from the region and put tens of thousands of Congolese miners out of work, but the carnage continues. In a January working paper for the Center for Global Development, Morehouse College Professor Laura Seay notes that while the legislation has ended most trade in conflict minerals, it has "done little to improve the security situation or the daily lives of most Congolese."

Hoover Institution fellow Mvemba Phezo Dizolele told a House hearing in May that the Congo crisis is political and requires political solutions. "Sexual violence and the looting of natural resources are ramifications and symptoms, not the causes of the political crisis," he says. The minerals trade is only part of the country's "wider war economy," so Dodd-Frank actually hurts ordinary miners and rewards criminals.

Read it here (subscription required).

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