Correction: An earlier version of this post incorrectly stated that Section 1502 had already been suspended. We regret the error.
Most Americans think of the 2010 Dodd-Frank Act as a far-reaching effort to regulate the financial services industry to prevent another global recession. But there’s a somewhat obscure provision involving Congo that the Trump administration threatened to undo. And that might have been a good thing for Congo, since — according to our research — the provision had troubling unintended consequences and was not helping to reduce conflict, as intended.
This little-known provision of Dodd-Frank asked companies to examine their supply chains for conflict minerals
In February 2017, President Trump threatened to suspend Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which would have required his administration to replace it with ‘more effective means.’ Although the suspension did not actually take effect, his interest in suspending the law is a reminder of a contentious piece of legislation that had noble intentions but mixed effects.
Section 1502 dealt with “conflict minerals,” defined as the tin, tantalum and tungsten (known as the 3Ts) and gold that some armed groups in eastern Congo use to finance their activities. Section 1502’s backers aimed to break the link between conflict and minerals in the region. But our analysis shows that the legislation did not achieve its goal.
Section 1502 requires all companies listed on U.S. stock exchanges to trace the minerals used in their supply chains and declare whether they are conflict-free. “Conflict-free” means that companies can prove that the 3Ts and gold in their products from Congo and its neighbors were not mined, sold, taxed or otherwise used for the benefit of armed groups.
Several human rights groups lobbied for Section 1502 and deplored its possible suspension. Most Congo scholars, though, criticized the conflict minerals legislation and welcomed its possible suspension, saying that Trump was “right on Congo’s minerals, but for all the wrong reasons.”
But Section 1502 ended up hurting local miners, not warlords or armed groups
Section 1502 led to a de facto ban on artisanal mining — miners relying on simple hand tools such as hammers and picks — in eastern Congo. That deprived hundreds of thousands of those miners of their livelihoods. Yet it failed to cut off resources to warlords or do anything to resolve the reasons for their violence. As a result, entrepreneurial armed groups switched to alternative sources of income, such as timber, cannabis and palm oil.
That’s what political scientists Dominic Parker and Bryan Vadheim found. Using geo-referenced data on mining sites, battles between armed actors and looting of civilians from 2004 to 2012, they checked to see whether conflict in eastern Congo went down after Dodd-Frank took effect. They found that the de facto ban on 3T minerals made armed actors turn away from these minerals. Warlords and militias turned instead to looting civilians and fighting rival groups for the control of gold mines, as gold is much easier to smuggle than the bulky 3Ts, even though Section 1502 mandates that it, too, should be traced.
Our research found that to be true over the longer term as well
But what’s the longer-term impact of Section 1502? It’s certainly possible that these side effects faded and gave way to longer-term gains. For instance, if armed groups’ revenue declined because of the de facto ban, they may have a harder time buying weapons, potentially decreasing violent conflict. Over time, companies could also come up with ways to trace the mineral’s sourcing in ways that allowed them to buy from legitimate miners in the affected areas without inadvertently funding armed groups. But if the policy increases conflict for a full five years, any such long-term gains would have to be pretty large to offset those costs.
To find out the answer, we built on Parker and Vadheim’s approach. We expanded the analysis with three years — covering the period 2004 to 2015 — and looked at a much larger and more representative set of mining sites. We also expanded the type of violent incidents we measured, looking not just at battles between armed groups and looting civilians but also riots and violence against civilians.
Like others, we found that Section 1502 did not cut down on conflict. In fact, between 2010 and 2012, the monthly incidence of battles, looting and violence against civilians strongly increased in the mining areas targeted by Dodd-Frank. Riots also increased, a clear sign of social upheaval. When considering the period 2010 to 2015, these effects are mainly concentrated in gold-mining areas, suggesting that rebels continue to fight for gold mines.
So far, the Trump administration has not offered a response to the president’s order to seek “more effective means” for “breaking the link between commodities and armed groups in [Congo] and adjoining countries.” Clearly, reducing conflict in mineral-rich areas is not as easy as it sounds.
Any policy measure, whether targeting Congo or another war-torn region, is unlikely to work if it stays narrowly focused on the mineral supply chain. As other research shows, ending conflict in these regions requires systemic approaches that address the root causes of the violence. In Congo, scholars estimate that only 8 percent of all conflicts are over natural resources. Rather, rebels are fighting to control land and trade routes because of long-standing political and economic grievances and disputes.
What would a more effective policy look like? A report by the European Network for Central Africa — a network of 38 civil-society organizations working on Africa’s Great Lakes Region — suggests that any effort to keep minerals from funding conflict should create conditions for their responsible sourcing. The report recommends addressing existing governance problems in the mining sector, for instance by setting up reliable mineral-tracing systems, strengthening the public services that assist artisanal miners, providing technical and material assistance to mining cooperatives, and addressing the impunity of national military involvement in illegal mining.
But efforts like these are likely to work only if local stakeholders — who know how things actually work on the ground — are involved in designing them.
Nik Stoop is a senior research fellow at the Center for Institutions and Economic Performance of the University of Leuven.
Marijke Verpoorten is an associate professor at the Institute of Development Policy of the University of Antwerp.
Peter van der Windt is an assistant professor at the Division of Social Science of New York University Abu Dhabi.