Shocker. Dodd-Frank,and its many provisions, has caused many unintended consequences. One obscure provision has devastated Congo’s ability ot export tin, tungsten, and tantalum.
From the Times:
The “Loi Obama” or Obama Law — as the Dodd-Frank Wall Street reform act of 2010 has become known in the region — includes an obscure provision that requires public companies to indicate what measures they are taking to ensure that minerals in their supply chain don’t benefit warlords in conflict-ravaged Congo. The provision came about in no small part because of the work of high-profile advocacy groups like the Enough Project and Global Witness, which have been working for an end to what they call “conflict minerals.”
Unfortunately, the Dodd-Frank law has had unintended and devastating consequences, as I saw firsthand on a trip to eastern Congo this summer. The law has brought about a de facto embargo on the minerals mined in the region, including tin, tungsten and the tantalum that is essential for making cellphones.
The smelting companies that used to buy from eastern Congo have stopped. No one wants to be tarred with financing African warlords — especially the glamorous high-tech firms like Apple and Intel that are often the ultimate buyers of these minerals. It’s easier to sidestep Congo than to sort out the complexities of Congolese politics — especially when minerals are readily available from other, safer countries.
Even more unintended consequences–the law is benefiting the people it was meant to punish.
Meanwhile, the law is benefiting some of the very people it was meant to single out. The chief beneficiary is Gen. Bosco Ntaganda, who is nicknamed The Terminator and is sought by the International Criminal Court. Ostensibly a member of the Congolese Army, he is in fact a freelance killer with his own ethnic Tutsi militia, which provides “security” to traders smuggling minerals across the border to neighboring Rwanda.
All this might be a price worth paying if the law were having its intended effect of economically asphyxiating the warlords who turned eastern Congo into the deadliest conflict zone since World War II. As Representative Barney Frank, the Massachusetts Democrat for whom the act is partly named, memorably put it, “The purpose is to cut off funding to people who kill people.”
But by the time President Obama signed the law last summer, the conflict had moved into a different phase. Most of the militias that wreaked havoc between 2003 and 2008 have since been incorporated into the Congolese Army. The two or three of any significance that remain get their money from kidnapping and extortion, not from controlling mining sites or transport routes. The law has not stopped their depredations.
This is what happens when Congress passes massive laws in responses to emergencies without really thinking it through (and how the heck are conflict minerals related to the economic meltdown in the US??)
The people of eastern Congo agree that it would be beneficial to bring greater clarity and transparency to the mineral trade. A variety of local and international initiatives to do so were under way when the embargo hit. Those efforts may now become a casualty of the Dodd-Frank law.