How to comply with nearly the impossible, and who to hire to help do it?
A new U.S. law requires public companies that make personal electronic devices to audit the materials used in their products and make these findings public. This supply-chain challenge presents a daunting task and hopefully a human rights mechanism to encourage the private sector to do the right thing.
Most of the readers of this website know that many of the metals and minerals found in today’s personal electronics (e.g. smart phones, mp3 players) have the strong possibility of being extracted from Democratic Republic of the Congo (DRC) and/or its adjoining countries. For years, bloody conflicts and intra-state wars have been waged in this region, in fact the United Nations’ largest peacekeeping operation (18,000 personnel) is in the DRC, likely fueled by mining profits. Advocacy groups and both governmental and NGO human rights organizations have been trying for years to develop a foreign policy to end these conflicts and defund the warlords. However, with India, China, EU and other countries involved in exporting raw materials from the region, the right mechanism was hard to find.
However, on July 21st, President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act, otherwise referred to on TV as the financial reform bill. Deep inside on page 851, in section 1,502, the document reads, It is the …”Sense of Congress that the exploitation and trade of conflict minerals originating in the Democratic Republic of the Congo is helping to finance conflict characterized by extreme levels of violence in the eastern Democratic Republic of the Congo, particularly sexual- and gender-based violence, and contributing to an humanitarian situation therein…”. The document then goes on to require the companies to…”exercise due diligence on the source and chain of custody of such minerals, which measures shall include an independent private sector audit of such report submitted through the [sic. Securities and Exchange] Commission that is conducted in accordance with standards established by the Comptroller General of the United States, in accordance with rules promulgated by the Commission, in consultation with the Secretary of State.”
Very wordy, but these few paragraphs will force many “manufacturers to overhaul checks on their supply chain in an attempt to identify any “conflict minerals” that can be traced back to the Democratic Republic of the Congo or adjoining countries”, as Jean Eaglesham and Jeremy Lemer of the Financial Times reported earlier this week.
The law will affect thousands of companies. The Congo region is a widely used source of important industrial metals and minerals such as tantalum, copper, germanium, gold, manganese and cobalt. Tantalum, for example, is used in very small amounts in crucial electronic components such as capacitors, which find their way into everything from cars, to personal computers and mobile phones.
Regardless of the good intentions and valid policy goals of the law, the challenge still remains to verifiably trace the origins of these ingredients across oceans, refineries, shipping companies and through jungles to dangerous mining regions
Who can do this work? Supply-chain audit experts probably have not tackled a problem as complicated and dangerous as this one before. There also is a chance though, that the makers will simply disclose that their products contain materials from the Congo region, address any public relations concerns that arise and move on. The next implementation steps are likely to be costly and require very specialized firms to do the work. When the law goes into effect in 2012 it will be interesting to see the findings and learn who and how they produced the reports.
About as Juicy as Diplomacy Gets
International diplomacy got really interesting this week as celebrities, UN resolutions, Cold War espionage and diamonds splashed news headlines around the world.
A court room sketch of the spies
1. Running a close second place in the news cycle, only behind the Gulf oil spill relief effort, the US completed an intriguing round-up and swap with Moscow of 10 Russian spies living in America. Very swiftly after their capture, the 10 were traded for 4 individuals tied to western intelligence gathering efforts who sat in Russian jails. Facebook profiles, romantic encounters and disbelief from those who knew the deep-cover agents reignited Cold War nostalgia with a modern twist and increased online readership across many news outlets. Politico.com actually appears to have hit its monthly high right after the story broke. (source: Quantcast)
2. The island of Cyprus’ normally bland and now 36 year old smoldering civil war also got a celebrity spark this week, when Jennifer Lopez decided to cancel a concert in the Northern Turkish Republic of Cyprus due to public pressure. She was due to perform on July 24 for the opening of the Cratos Premium Hotel and Casino in Kyrenia, a beach resort town on the northern side of the island.
The beautiful harbor of Kyrenia, Cyprus won't be the newest exotic concert location for JLo
A statement posted on her website read, “Jennifer Lopez would never knowingly support any state, country, institution or regime that was associated with any form of human rights abuse…After a full review of the relevant circumstances in Cyprus, it was the decision of her advisors to withdraw from the appearance. This was a team decision that reflects our sensitivity to the political realities of the region.”
The conflict has spawned UN resolutions, peacekeeping missions and international court cases since the island split violently into a Greek-speaking south and Turkish-speaking north after a 1974 invasion by Turkey. In 1983, Turkish Cypriots declared the north’s independence, but Turkey is the only country that has recognized the region’s status. Meanwhile, the internationally recognized southern Greek Cypriot side of the island joined the European Union in 2004, further growing the economic development inequalities between the two sides. Remarkably, some saw J Lo’s planned performance as an endorsement of the breakaway state’s legitimacy – a bit of a stretch if you ask me. However, a week on the island in 2005 certainly taught me how seriously Cypriots, both southern and northern, take seemingly little things like this.
3. Lastly, the British supermodel Naomi Campbell announced through her PR firm this week that she will testify as a witness in the war crimes tribunal of Charles Taylor. Taylor, the former leader of Liberia, was captured while on the run by UN peacekeepers in Nigeria in March 2006. He is accused of mass murder, rape and mutilation, including financial support for rebels in Sierra Leone civil war that cut off the limbs of their civilian victims. Taylor, 62, is also accused of destabilizing Liberia and several neighboring countries while amassing a personal fortune from illicit trade in diamonds, guns and timber.
Charles Taylor, the former leader of Liberia, was captured while on the run by UN peacekeepers in Nigeria in March 2006. UN Photo/Mathew Elavanalthoduka
Campbell is being ordered to testify because, according to another celebrity, Mia Farrow, she accepted an enormous rough-cut diamond from Taylor when the two met at a house party hosted by Nelson Mandela in 1997. Farrow, who was also at the party, says Campbell told her about the gift soon after it was presented to her. The supermodel had previously avoided questions on the matter and said she did not want to be involved in the war crimes trial at The Hague, Netherlands. However, after the court issued a subpoena on July 1, ordering her appearance, she faced a prison term of up to seven years, a fine of about $500, or both, if she failed to appear.
International diplomacy probably won’t get this sensational again for a while.
World Cup Preview: Heather Martino w/ Jonathan Ledgard, Eastern Africa Correspondent for The Economist
South Africa’s place on the world stage, terrorism and the games
By: Heather Martino
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Brand new stadium in Cape Town, South Africa. Table Mountain, Cape Town's most prominent landmark in distance.
As the 2010 World Cup approaches, all eyes will be on South Africa, prompting many to take a larger look at the country. On his recent trip to the United States, I spoke with Jonathan Ledgard, Eastern Africa Correspondent for The Economist, and discussed South Africa and the upcoming World Cup, as well as several of today’s most pressing issues facing the continent.
With The Economist boasting articles with titles such as “South Africans can be proud about hosting the World Cup. Less so about the state of their nation,” I expected Ledgard to be less than optimistic about the country’s progress in preparation for the upcoming games. On the contrary, when asked about the state of the country, Ledgard spoke about the beautiful landscape, comparing it to California, with a mix of the south side of Philadelphia. He said that South Africa has “invested a lot in branding, or rebranding the country, and not just from a tourist potential.” The country has made progress in terms of infrastructure, and is reaching out to England, China, and India for investment. When asked about the United States, Ledgard stated that the U.S. is a smaller market for South Africa, and that they were concentrating their efforts on the aforementioned countries. “In all fairness,” said Ledgard, “FIFA is very tough, but they are pretty happy with South Africa’s corporations.”
“There really is no world comparison to South Africa,” said Ledgard, and the media does not always do a good job of presenting an accurate portrayal of the country. Maybe “awakening” is too strong of a word, Ledgard agreed, but there is the position held by many that “if it’s African, it must be rubbish and not work, and it’s a little unfair.” Ledgard spoke with awe about the vast construction of tremendous stadiums, new underground railroad systems, and airports. “I feel that sometimes there is such negativity about South Africa, that whatever happens is held up to the highest account,” said Ledgard, as he compared it to Greece. “When Greece was running the Olympics they were far more in shambles, [but] people were not getting on Greece’s case the way they are on South Africa’s,” adding that being chosen to host the 2010 World Cup is a “real success for South Africa and a chance to reboot its image.”
While the new and refurbished stadiums in ten cities throughout South Africa look beautiful, there has been some concern over their use beyond the World Cup. I asked Ledgard about the cost of these stadiums, especially given that some schools were bulldozed to make room for a 46,000 seat stadium in Nelspruit. Far greater than the cost of building this stadium, which is estimated to be $137 million dollars, is the cost of sending youngsters to hot and airless classrooms to make room for their construction. When asked about this, Ledgard said that this is a “big problem for South Africa,” because they are “damned if they do and damned if they don’t.” By this, Ledgard meant that “if they don’t build world class stadiums- people will criticize them,” especially given that the World Cup is the largest sporting event next to the Olympics. However, while soccer, or football, is popular throughout the world, Ledgard pointed out that it is not the number one sport in South Africa. “Maybe [soccer] is a large event spectator wise, but rugby brings in the most money for South Africa”, said Ledgard.
Touching on the issue of whether or not the new stadiums will be used after the World Cup, Ledgard talked of how “a lot of stadiums are trying to get rugby clubs to move in there” but this is almost like “trying to get the Red Sox to move to a new stadium,” adding that it is highly unlikely that the stadiums will be used in the long run. However, Ledgard reassured me of the necessity of their construction, saying that the key issue is “turning South Africa to global volumes,” to make the economy “more like Australia or something like that.” He added “If the price is a few empty stadiums, I’m sure people will accept that.”
South Africa's fans are ready to watch the games, but will they be safe?
While the first match, set to take place in Johannesburg between South Africa and Mexico, is just a day away, I asked Ledgard about the safety and security of the fans. Given the stampede at a friendly preliminary match between Nigeria and North Korea last Sunday, that left at least eleven people injured, I asked if this was any indication of the police forces’ lack of control. To this, Ledgard said that “the government invested a huge amount of money in overhauling the police force, to make sure they are prepared.” While assuring that the police force is up to par to handle the crowd, Ledgard expressed some concern for South African Intelligence, which is likely ill-equipped to handle the threat of terrorists, especially given the large faction of Somalia al-Qaeda operatives in the region. “If it [a suicide bombing] happens during the World Cup, it will not be surprising to me,” said Ledgard, adding “I know from experience there’s nothing good enough to protect against that- anywhere in the world, and it is definitely a worry for South African intelligence to handle this threat.”
Building on this topic of safety and security, I asked Ledgard about the condition of hospitals in the event that some catastrophic event might occur. Ledgard assured me that the “hospital issue won’t be a problem,” as they are held to a really high standard. He stated that the hospitals- especially in Cape Town and Johannesburg- are very sophisticated, pointing out that “South Africa was the first country in the world to do heart transplants.”
Ledgard added that, when looking at South Africa, it is necessary to put it in some kind of context with the rest of Sub-Saharan Africa. “Other African countries, like Nigeria and the Congo, will be looking on their television screens, and thinking my lord they [South Africa] have a real police force, electricity, sewer systems, and etc.” Despite all of the positive initiatives the chance to host the 2010 World Cup has brought for South Africa, Ledgard felt the biggest problem facing the country today is the issue of crime and HIV/AIDS. “Crime is appalling, and right behind it is HIV” said Ledgard, adding that these “two issues dominate the country and really need to be addressed.” However, Ledgard is optimistic of the positive effects of the World Cup, saying that it is a “step in the right direction for the country.” It will show that South Africa is “not a country that is collapsing, but a country that is very positive and trying to move toward a globalized economy and state its place in the world.” On a final note, Ledgard said that he is “much more positive that this is South Africa’s chance to shine, and I hope everything airs well.”
Only time will tell if the World Cup will help jump start South Africa’s economy, allowing for it to become a globalized nation. However, if hotel and ticket sales are any indication, the World Cup is promoting tourism and investment in the country. We can only hope that Ledgard’s fears regarding a terrorist attack will not materialize, and that South Africa’s hosting of the World Cup will be a bright light and a beaming example for the rest of the African continent.
When currency is both at once worthless and treasured
On the 105 year-old bridge that separates Zimbabwe from Zambia, over the mist of Victoria Falls, a curious currency exchange is turning heads and delivering 1,000%+ returns.
During Zimbabwe's period of hyper-inflation, people had to carry bundles of currency with them to purchase goods.
To set the scene – in early 2009, after nearly a decade of runaway hyperinflation, Zimbabwe’s bank note denominations climbed sky high to include a 100 trillion dollar note. Since these bills were only worth about .33¢ in US Dollars, people regularly pulled wagons, suitcases and large bags of bills with them when they went to markets, restaurants and banks. Perhaps finally admitting the futile battle to save their national currency, the country’s Finance Minister announced that Zimbabweans were permitted to use other, more stable currencies (e.g. Sterling, Euro, South African Rand and the United States Dollar) to do business. As of April 12 2009, the Zimbabwe currency was effectively worthless.
President Robert Mugabe, despite ruling a country with vast potential in many business sectors, had run Zimbabwe into the ground. As the result of his devastating economic and social policies, Mugabe led Zimbabwe into the record books as Steve H. Hanke, Professor of Applied Economics at Johns Hopkins University and Senior Fellow at The Cato Institute writes, laying claim to second place in the world hyperinflation record books. (see chart)
Despite being monetarily worthless for over a year, Zimbabwe’s bank notes have found new value on the border being traded for their novelty value and sold to tourists. Asking price for the rarest bill, the $100 trillion dollar note, is $20 USD. Subsequent haggling and a bit of patience can bring the price lower to $5 USD. Still this is 15 times its last exchange value and Zimbabwean men crowd the border-crossing zone around Victoria Falls hoping to convert their worthless paper into foreign currency. The US Dollar is the preferred trade medium, but South African rand and Euro are also gladly accepted.
Click to view larger photo
Above all the other trinkets being hawked in the craft stalls and by the shifty street vendors who make you constantly check your pockets; the obsolete bank notes elicit the most interest and stir huddled conversations in Shona (the local language) when a buy offer is made. The selling price is collectively discussed by the Zimbabwe sellers, taking market factors like the nationality of the buyer, time of day, high-tourism season and amount of rare bills still left in their pockets. (10, 20 and 50 billion dollar bills are more common) The buyer has the upper hand, but the rarity of the top bills and the limited face time between the sellers and the tourists, who understandably sequester themselves inside Victoria Falls’ 4 star resorts, increases the pressure to cut a deal.
Zimbabwe border on bridge over Victoria Falls
While this exchange market won’t budge Zimbabwe’s GDP, it does provide a necessary source of foreign currency for otherwise unemployed locals. With the average annual income per person below $400 USD a year (IMF, World Economic Report, 4/2010) entrepreneurial currency traders can manage to earn above average incomes around $50 a week.
I could not resist the opportunity myself and bought 100,350,000,000,000 Zimbabwe dollars from two men for $10.00 USD. Its good to be a trillionaire.
Developments in Chad have International Analysts, Aid Groups and the UN on Edge.
Chad, one of Africa's poorest countries is now the site of intense diplomatic negotiations
Over the past 5 years, genocide and proxy wars have ravaged the border region between the African nations of Sudan and Chad. However, in the face of strong misgivings by the United Nations and the international community, thawing relations between the countries’ leaders may bring an end to the cross-border battles and result in the expulsion of UN peacekeeping troops. Many international analysts, aid groups and the UN are on edge.
Chad’s President Idriss Deby said last Wednesday that he would travel to Khartoum this week for talks with Sudanese President Omar Hassan al-Bashir, his first visit there in six years of rocky relations between the two oil-producing rivals. Mr. Deby who has been in power since 1991 and pushed through a successful referendum eliminating term limits in 2006, is widely regarded as one of Africa’s most corrupt leaders. Mr. al-Bashir, we should not forget, has been indicted for war crimes by the International Court of Justice for his role in the Darfur genocide and does not rank any higher on the corruption chart.
Chad and Sudan have repeatedly traded accusations against each other, while overtly supporting each other’s rebel groups through weapons and safe havens. Sudanese backed rebels even nearly succeeded in taking control of Chad’s capital in February 2008, before being driven back by Deby’s forces. However, a new agreement between the two counties to form a joint border patrol has resulted in the government of Chad refusing to allow the United Nations to continue its peacekeeping and humanitarian role in the country. “We have officially notified the special representative of the United Nations Secretary-General of our wish to not renew MINURCAT’s mandate,” said General Oky Dagache, Chadian President Idriss Deby’s representative to the MINURCAT, as the UN mission in Chad is known.
One might deduct that this stipulation was a quid-pro quo request of Sudan’s government in the agreement as well.
view large map
The expulsion of the UN in this country would be a profound mistake at this time, but the governments of Chad and Sudan seem unconcerned about the practical ramifications. The UN force in Chad has been fulfilling a critical role in the maintenance of peace and order, the training of police forces and local judiciary, and the delivery of essential humanitarian aid assistance. After many years, the toxic mixture of armed rebel groups, drought conditions, corruption, oil profits and millions of refugees has critically impaired the people in this region to project and feed themselves.
The peacekeeping mission, established by the Security Council in 2007, is mandated to protect civilians and refugees as well as promote human rights and peace in the troubled northeastern part of the Central African Republic and eastern Chad. Right now 3,032 uniformed troops from 40 countries are stationed at four forward bases.
Sources at the UN Department of Peacekeeping say this posturing by Chad could be a ploy to extract greater concessions from the UN and reduce the scope of the mission, but others think Chad is not bluffing. Both Chad’s and Sudan’s leaders see the international presences as an infringement on their sovereignty and would like international observers out of this region so they could suppress rebel groups.
Despite Chad’s request, some western governments are maintaining a wait and see attitude. 200 Irish soldiers are still scheduled to depart on Sunday (Feb 7) for a four-month tour of duty and UN diplomats engaged in high-level discussions with Chad over the peacekeeping mission’s mandate have been reportedly instructed by the United States not to make any agreements in Chad, before returning to UNHQ in New York to debrief others. We’ll certainly look forward to upcoming developments.
