Natural Resources and Violent Conflict - WaterWiki.net

follow the money 203means that the Democratic Republic of Congo with the best of intentionswill not be able, by itself, to discourage the exploitation of coltan.Very little information is available specifying the particular financialinstitutions and financial mechanisms most involved in handlingconflict coltan, although it is likely they are similar to those used inhandling illicit diamonds and other commodities. The lack of informationdoes not hide the basics of the trade, however, which involve(a) military forces (b) self-financing through (c) resource exploitationinvolving (d) the sale of coltan from local, low-paid miners to (e) intermediarieson the country’s borders who, in turn, (f) sell the coltanto middlemen from more developed countries by making payment ofelectronic funds to (g) neighboring banks. In turn, these banks conducttransactions upstream with financial institutions based in major financialmarkets and downstream with local institutions created in theDemocratic Republic of Congo to take advantage of the profits of thewar. The breakdown in governance did not create a correspondingbreakdown in the payments system. Instead, local, regional, and internationalfinancial institutions adapted to the conditions created by thewar to continue to provide services, without regard to the provenanceof the goods sold, the sellers of the goods, the buyers of the goods, orthe source or purposes of the funds involved in the transactions. Inshort, rather than constituting a technical failure susceptible to technocraticsolutions, the exploitation of coltan in the Democratic Republicof Congo represented an ongoing political problem arising outof decisions of parties throughout the region to exploit coltan and theDemocratic Republic of Congo rather than to cut off the trade andfinances used to maintain the war. Accordingly, even if the sensiblesuggestions for reform made by the UN panel of experts were put intoplace, regional agreement and regional corrective action are needed toaddress the financial mechanisms sustaining conflict in the DemocraticRepublic of Congo. 32Appendix 5.2. Narcotics and TerroristsSince the decline of state sponsorship of terrorism, terrorist groups haveincreasingly turned to the sale of illicit drugs to finance their operations.Indeed, in 1994, Interpol’s chief drugs officer, Iqbal HussainRizvi, observed, “Drugs have taken over as the chief means of financingterrorism” (Reuters News Agency, December 15, 1994). In everycase where large quantities of illicit narcotics have been produced andtransported to licit markets, the illicit drug activity, over time, hasdrawn terrorist organizations. Links between terrorist organizations