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Gold is now one of the most problematic conflict minerals in the eastern Democratic Republic of Congo, and United Nations Security Council sanctions on the illegal mining of natural resources, including gold, have done little to prevent smugglers from profiting, says a new report from a German foundation.
The foundation, Friedrich Ebert Stiftung, is a political organization closely affiliated with the Social Democratic Party of Germany that primarily researches international development, peace and security issues. The group has offices in Berlin, Geneva, Washington and New York, where it works with the UN. The report was written by Compliance Capacity International, a three-member consulting group of former UN staff members and advisers.
Although there has been small progress in decriminalizing mines for tin, tungsten and tantalum in eastern Congo – three other major conflict minerals – gold is increasingly being used as a source of revenue by renegade government forces or other corrupt officials operating with impunity in the area, causing further destabilization. These are splinter groups that in the last few years have held occasional control over gold mines but were expelled by the government; along the way, armed militias like the Mai Mai also dipped into gold smuggling.
“Virtually all gold produced in the Democratic Republic of the Congo is extracted and smuggled out of the country without any legitimate checks and controls,” the report says. In 2011, less than 11.5 kilograms of gold (about 25 pounds), worth $5 million, were reported by the Congolese government to be exported from the country, but mineral resource estimates from the World Bank said the amount was most likely 30 to 36 tons of gold annually, valued at $1.5 to $2 billion.
With a current value of $1,673.50 a troy ounce, jewelers and investors buy 80 percent of gold, and the remaining 20 percent is used for electronics, dentistry and industrial purposes.
The UN has spent years trying to curb illegal gold trading. In 2010, a group of experts in the Security Council created due-diligence guidelines for trading and consuming minerals produced in eastern Congo, hoping to stem the violence there by shutting off financial sources to criminal gangs and armed militias. The guidelines were based on strategies designed by the Organization for Economic Cooperation and Development, the Paris-based group of developed nations, and were meant to help companies in supply-chain management to protect human rights and prevent the businesses from further contributing to conflicts and ensuing humanitarian crises, like millions of people displaced and women and girls raped.
But the guidelines and sanctions have not reduced the smuggling because gold is easily moved out of the country, as smugglers can fit $30,000 worth of gold in their pockets and $700,000 in a suitcase without detection, most of it ending up in United Arab Emirates for processing. Its export has not been closely regulated by the Congolese government, and no individual or group has been sanctioned for not complying with the UN’s guidelines.
“Insecurity at gold mines throughout the eastern Democratic Republic of the Congo remains widespread,” a 2012 report from the UN group of experts on Congo said. The report says that the notorious M23 armed militia, which seized Goma, the capital of North Kivu, in November but then backed off, uses gold to finance its operation.
Yet Enrico Carisch, an author of the Friedrich Ebert Stiftung report and a former investigator for the UN Security Council, said that there was no evidence of smuggling by M23, especially since it does not occupy gold mining areas.
Meanwhile, the UN has just arranged for 11 countries in central Africa, including Congo, to sign a peace agreement to help the country avoid more fighting and interference from its neighbors. The UN has also proposed to create a regional brigade to fight the territorial seizures by the many militias marauding throughout eastern Congo. This “robust” brigade, as the UN refers to it, will consist of about 2,500 troops operating within the UN’s peacekeeping force in the region. The troops will use surveillance drones to track guerrillas’ movements in the dense Congolese foliage, the first time such equipment has been authorized by the UN Security Council. (Procurement for the drones is under way, the UN says, and should be operational by the summer.)
It remains to be seen whether these new plans will put Congo on sounder footing. The German foundation report points to inadequate steps being taken to resolve Congo’s long bloodshed. The problems include “disparities between the legislative, regulatory and legal scaffolds that have been hastily built to address the Congo’s mineral disputes,” the report says. Numerous Congolese ministries and laws govern the gold trade, besides the due-diligence and OECD standards imposed by the UN. With so many different regulations, industrial companies comply with the guidelines inconsistently and erratically, particularly businesses from the global South. Enforcement of sanctions is weak.
“Generally, these sanctions show a strong trend that quite a few in the world – countries, actors, companies – choose not to observe them and are not following resolutions the Security Council is adopting,” Carisch said.
“As a result, what you have is a disequilibrium where those who observe the sanctions, they have additional costs associated with it and therefore they’re penalized if the other part of the world is not observing them.”
The report says that Congo’s two biggest trading partners, China and Zambia, are not members of the OECD and have neglected to follow due-diligence guidelines.
Of the estimated 30 to 36 tons of gold being mined annually in Congo, five to seven tons are produced in the Kivu provinces.
Enough Project, a Washington nonprofit group fighting genocide and crimes against humanity mainly in Africa, says that less than 5 percent of gold miners are registered with the government. It estimates that around 40 percent of the miners are children under age 15.
“They use children in particular because a lot of this gold is mined in different ways,” said Sasha Lezhnev, a senior policy analyst at Enough. “Some is down very deep shafts and the kids can really get down in these little holes.”
Enough is working on a three-tiered campaign to end illegal gold trade in the Congo. First, they want UN sanctions revised to be aimed at specific individuals who control important supply lines of the trade. Next, they hope to bring more responsible investors into the country to manage the gold mines more transparently, pushing out armed rebels and corrupt officials. One such business is the Canadian company Banro, which already operates a small mine in the region. Finally, Enough wants to help the Congolese government regulate the trade for the hundreds of artisanal mines that are too small to interest foreign investors.
“The gold trade in eastern Congo is about as bad as it could be,” Lezhnev said. “The danger is that nothing happens, nothing is done.”
Carisch added that the Security Council needed to start a more serious dialogue about the effectiveness of sanctions in Congo. “So far, there is minimal acknowledgement that there is a problem here,” he said. “People have been criticizing this, but this is one of the areas where they have to acknowledge the problem.”
One way to improve sanctions would be to enhance information about them. Many people in the UN – from national officials to administrators – do not understand the technicalities of sanctions or know who is responsible for carrying them out, Carisch said.
“There is some expression that there’s more need for awareness-raising to stick to the due diligence procedure on trade and gold,” said a European delegate who has worked on the Security Council but asked not to be named. More specific criteria for enforcing sanctions could improve their usefulness.
“If you look at the situation in eastern Congo, in the Kivus, nobody can be satisfied with how the situation is. It’s not O.K.,” the delegate said.