The Costs and Consequences of Dodd-Frank Section 1502: Impacts on America and the Congo
The United States House of Representatives
Committee on Financial Services
Subcommittee on International Monetary Policy and Trade
Testimony by Mvemba Phezo Dizolele
Visiting Fellow, Hoover Institution on War, Revolution and Peace
Thursday, May 10, 2012
Chairman Miller, Ranking Member McCarthy and Members of the Subcommittee:
Thank you for the invitation and honor to testify before your committee today. This hearing is the most important and pertinent discussion yet on Section 1502 of the Dodd-Frank Act and its consequences for the people of the Democratic Republic of Congo.
Today, I speak before you as a Congolese, and a concerned US citizen and consumer. I own two laptops, a smart phone and several other electronic devices, which may or may not contain minerals from Congo.
I would like to thank our friends in the many organizations that promoted Section 1502. I know that they galvanized thousands of people in a campaign to raise awareness on the continued conflict in Congo. Thanks to their work, many more people know about Congo today.
The views expressed in this statement are mine, and mine alone.
The best way to assess the cost and consequences of Section 1502 is to look at its premise, claims and impact on institution-building and the lives of Congolese.
In essence, Section 1502 seeks to bring peace to eastern Congo by regulating mineral trade through US law, cleaning up the supply chain and reducing militias’ access to financial means. Such a regulation would de facto curb the violence and human rights abuses. This approach to conflict resolution, however, is not grounded in the sound fundamentals of political economy and public policy. Section 1502 may work in the short-run, but it is not sustainable.
Mineral trade in eastern Congo is part of a wider war economy, which can only be regulated either by the most powerful armed groups working in collusion, the biggest armed group imposing its way on the smaller ones or by their backers seeking to maximize profits and preserve their own interests. As such, Section 1502 builds on a weak foundation and requires the buy-in of the very negative actors it seeks to tame. This approach perverts basic peacemaking models and rewards criminals and would-be spoilers.
Proponents of Section 1502 build their case on the most widely accepted narrative of U.S. Congo policy, which defines the predicament as a humanitarian crisis through the binary prism of sexual violence and the so-called conflict minerals. 1502 oversimplifies the problem and makes American taxpayers believe that if only the challenges of sexual violence and conflict minerals were solved, then Congo will get back on track and peace will follow.
But this narrative is wrong, and it has led to several ineffective initiatives, which have effectively turned U.S. Congo policy into a Kivu policy.
The Kivus represent no more than one fifteenth of Congo. Their problems stem from the failure of the state to discharge its duties and should be treated only as a part of a comprehensive national policymaking.
This binary prism also reflects the bleakest image of Congo and disenfranchises the Congolese people before the world, casting them as incompetent and incapable to solve their own problems. It then becomes imperative that they be rescued from their hopeless situation by the good peoples of the world.
As a result, the Congolese have been excluded from the policy discussion around Section 1502. This was evident last October when no Congolese was invited to speak at the Securities Exchange Commission Public Roundtable on Dodd-Frank 1502 held here in Washington, DC.
The truth is that no one understands mining in Congo better than the Congolese. By failing to engage the Congolese in an honest dialogue on the relationship between conflict and mining, proponents of Section 1502 failed to spur a national ownership of the initiative through a true partnership with the Congolese.
Congo may be a dysfunctional state, but the Congolese are among the world’s most resourceful peoples. Over the past several years, they have quietly and effectively undertaken landmark initiatives that are positively changing the mining landscape in their country. These initiatives include the Lutundula Report, which exposed the opaque exploitation of mineral resources and led to a comprehensive revision of mining contracts. As a result, several companies, including Canada’s First Quantum, lost their exploitation titles.
Pressured by local civil society organizations, the Parliament pushed for the restructuring of the Chinese barter investment deal, revisiting its terms and downgrading its value from $9 billion to $6 billion. The Senate published a report by the Mutamba Commission, which audited the mining sector and documented millions of dollars of financial loss that the Congolese State incurs due to mismanagement and bad governance.
Today, as we discuss Section 1502, the Parliament, the Fédération des Entreprises Congolaises, which is the equivalent of the US Chamber of Commerce, and civil society organizations supported by international organizations, such as the Open Society Foundations, are engaged in discussions setting the guidelines for the new mining code that would be enacted in the near future.
The current mining code, which was written over a decade ago as part of a World Bank project, disproportionately favors foreign investors at the expense of the Congolese State and the Congolese people. So far, proponents of Section 1502 have marched to their own beat, antagonizing corporations, inculpating consumers and ignoring Congolese initiatives.
If they really want to affect positive change in Congo’s mining sector, here is an opportunity for them to join the debate and policymaking in Kinshasa to ensure that the new mining code addresses their concerns. This is the best way to empower the Congolese, strengthen local institutions and induce national ownership of the transparency they seek.
This conflict, which has indirectly caused the death of over 6 million Congolese, has gone on for too long, and is now a scourge on the face of the planet. As we struggle to solve this calamity we would be better served by looking into Congo’s early history.
Between 1885 and 1908, Congo, then known as Congo Free State or the private estate of Belgium’s King Leopold II, was the theater of yet another holocaust driven not by mineral exploitation, but by the world’s hunger for a commodity. The industrial revolution demanded rubber and more of it. Business’ insatiable need for rubber and King Leopold’s immeasurable greed pushed the Belgians to design one of the world’s most repressive forced-labor structures.
The King’s agents established a quota system, which required that each village produce a specific amount of rubber over a time period. Force Publique troops were then used to enforce the quota and demand taxes of the population. Failure to meet the quota or tax requirements led soldiers to chop off limbs of the unlucky Congolese who fell below the mark. Villages were torched, women raped and the people left to starve to death or die of diseases. By 1924, nearly 10 million Congolese had perished under the yoke of the Leopoldian regime.
The similarity to the current situation is eerie. Like the conflict minerals, which are primarily exploited in the east, rubber was only exploited in some areas of the Congo Free State. Both problems were symptoms of larger systemic and regime perversions that subjugated an entire country.
But there is a big difference between the approach the activists took to expose and denounce King Leopold’s crimes and the way we choose to deal with the calamity today.
At a time when there was no computer, no internet, no fax and the telephone was still a curious invention, a shipping clerk in Liverpool decided to expose the mighty king and launched a campaign that would not end until Leopold relinquished possession of the colony and the regime and the system changed.
Working under great stress, those activists could have chosen the easy route to fundraising on behalf of the victims, and send them medicine and physicians to mend their wounds. They could have also elected to set up a blood-free certification scheme to ensure that the rubber that reached Europe and America was clean.
No. they knew that such a timid campaign would make them Leopold’s tacit accomplices and enablers, and prolong the suffering of the Congolese. Instead, they set out to destroy and change the repressive system and took the necessary time to accomplish their goal.
Today, at a time of instant satellite imagery, internet, instant messaging and other technological advances, our activism is lackluster, and devoid of moral courage in the face of the unnecessary suffering of the Congolese. We hedge our action and refuse to see the reality before us by covering our faces like little children, hoping it would go away. Instead, we search for enemies where they do not exist.
Last month, over 300 Congolese civil society organizations and their international counterparts showed great courage and published a report on security sector reform in Congo. This report calls for an end to the conflict through a comprehensive reform of security institutions, which include the military, law enforcement institutions such as the police and the courts, as well as customs and revenue agencies.
Mr. Chairman, with your permission, I would like to submit a copy of that report for the record.
In Congo, businesses are not the enemies; armed groups and their international and local backers are. If we are serious we should go after them and help restore state authority so that the Congolese government can finally meet its obligations toward the people. This means that together we need to work on ending impunity at all levels of the polity. Only then can the Congolese know real peace.
The Congolese people want and deserve peace. We should empower them to that end. The Congolese government’s inability to protect its people or control its territory undermines progress on everything else. A competent, professional military – organized, resourced, trained and vetted – is essential to solving problems from displacement, recruitment of child soldiers and gender-based violence, to economic growth or the trade in conflict minerals.
In the absence of a strong Congolese state to protect its interests, Section 1502 will effectively certify the looting of Congo’s minerals.