How Dodd-Frank Led to More Mayhem in Africa – by Tate Watkins (Wall Street Journal – November 13, 2016)

http://www.wsj.com/

Spontaneously combusting smartphones may be in the news, but the danger not being reported is the one caused by the minerals inside these devices. Conflict minerals have fostered violence where they’re mined in central Africa, and the U.S. response has made the situation worse.

In the Democratic Republic of the Congo, where the average resident lives on about $400 a year, mining is the most lucrative game around. The value of the Congo’s mineral reserves is estimated at $24 trillion, according to the United Nations Environmental Program, most of them dug by informal miners working with picks and shovels. But in a nation that has been crushed by civil war on and off for two decades, much of the mining sector is now controlled by militias that have committed murder, rape and other atrocities against civilians.

When Congress passed the Dodd-Frank financial bill in 2010, it included a provision aimed at curbing the violence caused by these minerals. Companies like Apple and Intel use the metals to make electronic components in devices such as cellphones and laptops. Legislators hoped that by requiring U.S. companies to disclose purchases of tantalum, tin, tungsten and gold, the militias’ funding would dry up.

Rep. Barney Frank (D., Mass.) famously said at the time that the bill was supposed to “cut off funding to people who kill people.” But new research shows the regulation has had the opposite effect and escalated violence in the eastern Congo.

In a forthcoming study in the Journal of the Association of Environmental and Resource Economists, my colleague Dominic Parker and co-author Bryan Vadheim document that while the law may have cut off one source of revenue to armed groups, it led them to intensify their plundering of civilians in the region—exacerbating the humanitarian crisis. By their estimates, violent incidents more than doubled after the law was implemented.

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