Laura Seay’s paper is a very useful account of the situation and dynamics surrounding Section 1502. And I believe her recommendations are sound.

I wonder, though, whether the link between the “de facto ban” on conflict minerals from the DRC and Section 1502 is quite as strong as she suggests. After all, the conflict free smelter program was “the culmination of a multi-stakeholder project that started in September 2009″ according to ITRI’s website–long before Dodd-Frank became law. And it’s a voluntary program at that.

In my research I am finding that a lot of very anxious reactions on the part of corporations to the legislation have softened once they came to understand what was really required of them under the law. A number of companies have told me that they do not believe they will be penalized by customers or advocates for including minerals of “indeterminate origin” in their products so long as they show progress toward improving the transparency of their supply chains.

This is very complex situation that blends political, military and commercial dynamics. Professor Seay’s work is a useful contribution to the discussion. I hope that discussion continues to be productive.

David, thanks for your comments. I think that’s a really useful point and one that I’d love to learn more about from the industry point of view. I do think, however, that 1502′s passage stepped up pressure on MSC to participate in the conflict-free smelter program, and am not convinced they would have done so had it not been for the legislation and the growing realization as to how hard it would be to implement these requirements. My main basis for arguing that is the timing, but I would love to learn more.

Excellent paper. A couple of thoughts and/or nits:

1) Plutonium 239, not enriched Congolese uranium, was used for the Nagasaki and (test) Trinity bombs.

2) Securities lawyers have told me they are not convinced that the Chamber would necessarily win a lawsuit. The DC Circuit Court of Appeals, which oversees the SEC, is stacked with pro-business judges, and has issued several pointed decisions against the SEC recently for failing to conduct proper cost-benefit analyses of a rule’s impact prior to its issuance. However, the lawyers tell me that it is hard to tell whether those precedents are on point in this case.

3) The Tulane results have been contested by a group called Claigan, a Canadian environmental compliance consultancy. Their estimate for initial compliance costs is slightly under $1 billion, compared to the $71 million in the original SEC estimate and the $8 billion from Tulane. Claigan appears to have been hired on Senator Durbin’s initiative after the Tulane study, which he also got going, came in with such a high figure. The Tulane people stand by their estimate, although they appear reluctant to engage in point/counterpoint debates about specific cost projections. On this issue, as on the legal one, I lack the expertise to referee competing claims.

In any case, $1 billion or $8 billion is still a lot of money–a lot more than anyone in eastern Congo is actually making off the minerals. When you compare these figures to the $18 million Hilary Clinton was able to scrounge up to help victims of sexual assault on her trip to eastern Congo two years ago, they certainly seem disproportionate. I can’t help but wish that some sort of “tax” could have been collected in some more useful way and put to the actual benefit of Congolese. Does anyone believe that there aren’t better ways to spend a billion dollars helping the Kivus than this?

4) I think your estimate of the number of artisinal miners affected by DF are on the high side. The number I kept hearing that there were about 400,000 or so artisinal miners in eastern DRC. When you multiply that number by the two to six dependents the average miner has, you get somewhere between one and two million people who have lost their livelihood on account of the de facto embargo, rather than the several million you suggest.

5) You mention the advocates’ failure to consult with local experts and civil society groups. I think it goes deeper than that: The advocacy groups did in fact consult with these experts when they were on the ground, and then deliberately excluded their misgivings from the reports. The upshot was that Congolese were left without any way to represent themselves or to make their voices heard, even as Western advocates campaigned in their name. Even now the advocates continue to insist that the debate is between idealistic advocates such as themselves and the (greedy bastards at the) Chamber of Commerce–as though the Congolese themselves didn’t count. And to whom can the Congolese appeal? What mechanisms are there for them to make their voices heard?

6) On the need for more collaboration among the initiatives, that’s what the recently launched USAID/State Department PPA Public Private Alliance seems to be focused on. So far, they’ve mostly issued self-congratulatory press releases, but this could still turn out to be a worthwhile initiative.

7) Stepping back from the immediate fight over the SEC regs, I think the broader problem is this: Western Companies–especially the ones that make our nice shiny gadgets–don’t want to touch Congolese minerals with an 29 1/2 foot pole. They’d much rather take the hit for being un-engaged in the region than for funding African warlord rapists.

So for the sake of the Congolese people, we better hope that more Chinese (and Indian, South African and Indonesian) companies jump into the Kivu mineral market soon.

In that regard, I don’t think the advocates whose interests in 1502 derive primarily from their support for a stronger international transparency regime appreciate how risky their support for 1502 is. Reports will continue to trickle out of the impact the law is having on innocent people in the DRC, and as they do so, they will undermine the moral authority of the transparency movement writ large. 1502 will become an epithet for good intentions gone awry.

David Aronson, thanks for your comments as well. As you know, getting a truly reliable estimate on the numbers of people affected by this is almost impossible – I tried to cover that in a footnote. I agree that it’s likely lower than the high estimate I gave (which is based on DRC civil society leaders’ estimates), but until someone does a solid impact assessment, it’s very much up in the air.

The Claigan point is interesting and one into which I need to delve further.

Re: the lack of consultation, my understanding is that the bulk of those consultations occurred after the strategy was formulated. If you have documentation suggesting otherwise, I’d love to take a look.

Re: the PPA, I’m waiting for it to actually do something to include an analysis in the final version of this paper.