Natural Resources and Violent Conflict - WaterWiki.net

follow the money 171• Use underground or alternative remittance systems, includingblack market currency exchanges, to avoid cross-border currencycontrols• Exchange one potentially traceable commodity, such as oil ortimber, for another less traceable commodity, such as gold• Sell a poorly traceable commodity, such as gold, in a major commoditiesmarket, such as Dubai in the United Arab Emirates or theColon Free Zone in Panama• Smuggle cash to another jurisdiction for placement in a willingfinancial institution.To reinvest, use, or expend illicit proceeds:• Use funds held at a foreign bank in a false name or company topurchase legitimate businesses and then use those legitimate businessesto generate new funds• Purchase goods outside of the country with the illicit proceeds andthen sell those goods inside the country to generate new clean revenues• Receive payment domestically from a broker in local or hardcurrency at some discount in return for the broker making an offsettingpayment in another jurisdiction• Leave the funds in a foreign trust under the control of a localagent as an insurance policy against the day when the persons controllingthe money need to flee their home jurisdiction.Common Elements of Conflicts Financedby Illicit CommoditiesA recent study by Michael Renner for the World Watch Institute(Renner 2002) describes a number of common elements in conflictsfinanced by illicit commodities. As described by Renner, essential componentsof conflicts financed by illicit commodities are (a) the availabilityof “lootable natural resource wealth,” (b) licit or illicit taxation onresource extraction by various forces with uncertain legitimacy, (c) abilityto keep revenue streams “off the books” and hidden from oversight,(d) enrichment of corrupt elites, and (e) use of extreme violence againstcivilians to establish and enforce control over resources through intimidation(Renner 2002, pp. 10–14). These criteria are strikingly reminiscentof those applicable to traditional, mafia-style organized crimeand reflect the standard approaches to business still used by criminalorganizations and terrorist groups wherever they operate. Thus theconflicts themselves feature precisely the elements of the critical legal,social, and economic infrastructure required by criminals and terrorists.It is logical that such conflicts generate organized crime and terrorismto accompany the exploitation of natural resources undertaken