Tuesday, October 30, 2007

Conflict management: Q & A with Global Witness

Yesterday, I discussed the Global Witness report on how cocoa helped fuel the war in Cote d’Ivoire. Having lived in Cote d’Ivoire briefly, I found the report to be thorough and have a good understanding of Cote d’Ivoire’s mixed history with the temptations of controlling the price of a hot commodity. (The report is also a good read on how the Gbagbo regime and the Forces Nouvelles do business. It doesn’t lend for much optimism.)

The reason I wrote so many words on the struggle, however, is that I’ve been a fan of Global Witness for a long time. Primarily because they’ve helped shed light on a once relatively-unknown topic: The relationship between resources and conflict.

In Cote d’Ivoire’s case, Global Witness proved that the country’s resources have helped perpetuate the war. But there are many arguments that clashes over resources help instigate wars. In the popular press, Jered Diamond’s book Collapse argued that a tipping point in the road to genocide in Rwanda was partly the product of high population density and decreasing area for food production.

Another reason I respect Global Witness is because they have enough power to be viewed as an important actor on the international front. They can make headlines. I am somewhat cynical about the capacity of how public opinion can shape issues and force the hands of otherwise risk-averse governments (see Darfur and Rwanda circa 1994), actors like Global Witness proves that events are influenced by more than just the bald power of nation states.

Guns may be more persuasive than reports, but information still holds a modicum of power. (In the International Court of Justice, at least.)

To prove their importance, Global Witness’s work has spawned a whole host of complimentary research on the ties between resource wealth and conflict. (Or, as my wife says: If there are resources to fight over, people will usually find a way to fight over them.”) For example, a horde of academics have begun tackling the subject. And let’s not forgot the movie Blood Diamonds. After Hollywood’s interest in the issue, the most surprising locale for innovative research on the economics of conflict in the post-Cold War world has been World Bank. The short take: The intersection of growing populations and diminishing resources could make conflict more common. (Now would be a good time to add the “water will be the next oil” remark here.)

Q & A with Global Witness
Anyway, this is a long introduction to the topic at hand: An Africa Flak exclusive Q & A with Maria Lopez, an author of the Global Witness report: Hot Chocolate: How Cocoa Fuelled the Conflict in Cote d’Ivoire.

Africa Flak: With Global Witness tracking “resource conflicts” in Africa and elsewhere, we have heard about wars funded by oil, diamonds, etc. How many other conflicts have been fueled by cocoa?

Maria Lopez: There is evidence that an abundance of natural resources (as measured by the ratio of primary commodity exports to GDP) is the single most important factor in determining whether a country experiences civil war. Cocoa is the main economic resource of Côte d’Ivoire and Côte d’Ivoire is the world’s biggest producer of cocoa. Global Witness’s research on conflict and transparency issues in Côte d’Ivoire has focused on cocoa, because the relation between cocoa and Côte d’Ivoire is unique. In no other country does cocoa play a role this important. For this reason, Global Witness has not looked at the role of cocoa in conflicts around the world.

AF: What is the difference between a war fueled by cocoa and one fueled by, say, oil or diamonds?

ML: Natural resources and their control play a key role in the dynamic of the conflict. Wars need money. Our report provides another example of how natural resources have played an increasingly prominent role in providing this money. As war remains an expensive business, belligerents have turned to easily accessible wealth from the exploitation of minerals, timber and other natural resources and commodities. In Côte d’Ivoire, in addition to funding the war, the profits each side derives from the cocoa trade are fundamental to understanding why the main protagonists have not shown greater commitment to solving the political crisis over the past four and a half years.

AF: “Hot Chocolate: How cocoa fuelled the conflict in Côte d’Ivoire” portrays the cocoa sector in Côte d’Ivoire to be shrouded in mystery. Hot Chocolate details the deliberately complex structure of the Ivorian cocoa sector; the appointment of many presidential allies to the leadership of cocoa boards and financial institutions; and, the complete lack of transparency that allows the government to misuse profits from the sale of cocoa. Investigators have found that international cocoa exporters and manufacturers condone this opacity to protect themselves and because they don’t want to lose their status with the cocoa boards. Finally, the report concludes with documented incidents of intimidation and violence against those who investigate and/or speak out against corruption in the cocoa sector.

With these overwhelming factors against developing a full-scale investigation of Côte d’Ivoire’s cocoa sector, how reliable is the information provided in this report?

ML: Global Witness relied on a wide-array of independent sources, who indeed often asked not to be quoted in the report. The information is based on in-depth field investigations conducted in Côte d’Ivoire, Burkina Faso and Togo in June and July 2006. Global Witness staff interviewed a wide range of sources in Abidjan in the government-controlled zone; in Bouaké and Korhogo in the FN-controlled zone; in Bobo-Dioulasso in neighboring Burkina Faso, and in Lomé, the capital of Togo. Those interviewed included cocoa sector officials, cocoa exporters, government officials, diplomats, academics, members of non-governmental organizations and journalists. Further research was carried out in France and from the United Kingdom in 2006.

AF: One insider told your investigators about situation in the South: “Of course the government used the cocoa money to buy weapons. Their only mistake is trying to hide it. They should have been open about it.” What has the government in the south done that is illegal?

ML: The distinction between levies on cocoa and taxes on cocoa needs to be made. Taxes on cocoa are collected by the government. Cocoa levies are collected by Ivorian cocoa institutions, the majority of which claim to be private companies. The government has used money from cocoa levies to finance the war effort. The national cocoa institutions, the majority of which were set up after President Gbagbo came to power in 2001, have used money from cocoa levies and directly contributed at least US$20.3m to the war effort. Until at least April 2003, when the reconciliation government became operational, the government diverted US$38.5m generated by levies on cocoa, to finance their war effort (in addition to the US$20.3m mentioned above). These payments are an obvious deviation from the cocoa institutions’ official role, stated in decrees, which is to regulate the cocoa trade and support cocoa farmers. In addition, all of these payments coincided with a period when some of the worst human rights violations by government forces took place.

AF: What about the north? How has the Forces Nouvelles’s manipulation of the northern cocoa sector broken the law?

ML: What is happening in the Forces Nouvelles’ zone is nothing more than institutionalized extortion. Global Witness estimates the annual average of cocoa revenues accrued by the Forces Nouvelles (FN) since 2004 at 15.1bn CFA (US$30m), because companies exporting cocoa from the FN-controlled zone have to pay an export tax and a registration tax. The FN, despite being part of the government of national reconciliation set up by a peace agreement, have progressively instituted their own parallel tax system, notably on cocoa, which has enabled them to survive as a movement and has allowed individual FN officials to enrich themselves.

The FN have imposed a cocoa blockade, preventing northern cocoa from transiting south, so that they can secure the taxes for themselves. FN political and military officials have raised a significant amount of money through a multitude of official and unofficial taxes on cocoa and other goods.

AF: Let’s talk about international actors. What role do major international exporters and chocolate manufacturers like Cargill, ADM, CEMOI and Barry Callebaut play in this issue?

ML: Cocoa-exporting companies need to operate in a transparent way and publish the payments they make to the Ivorian government and cocoa institutions. In the government-controlled zone, companies, including American multinationals such as Archer Daniels Midland (ADM) and Cargill, continue to trade without appearing to question the use or misuse of the significant taxes and levies they pay to the government and cocoa bodies. Publishing their payments would contribute to improving the management of cocoa revenues by the government and the cocoa institutions, as well as increasing accountability of the government to the people of Côte d’Ivoire, who have the right to know how their natural resources are being used.

Companies should press for all cocoa institutions’ accounts to be audited and published, as a way of ensuring that levies paid by exporters are not contributing to financing the conflict.

Companies should also audit their supply chain to find out the exact origin of the products they are buying. This would involve performing extended due diligence on all their cocoa purchases from the region to demonstrate publicly that they are not inadvertently providing money which is being diverted to the warring factions. For instance they should publish information on their website/annual report on the exact origin of the cocoa (department or region) they are buying their cocoa from.

AF: What about the International Cocoa Organization? Global Witness calls for more revenue transparency in the international cocoa markets. How much leverage would the ICCO have to institute this?

ML: Global Witness has called for more transparency in Côte d’Ivoire, a member country of the ICCO, and this message should be relayed by the ICCO. The ICCO and its decision-making body, the International Cocoa Council, should put revenue transparency on their agenda.

AF: What role does the World Bank have in this issue?

ML: Through their discussions with the Ivorian government, the World Bank and the IMF can push the transparency agenda. They have done so to a certain extent, but they could do more, for instance, urge that the investigation recently opened by the Procurer of Côte d’Ivoire on cocoa institutions and their activities is independent, impartial and exhaustive, that the investigation’s time line and terms of reference be widely publicised as well as its conclusions, in due time.

AF: We have a Kimberly process for guaranteeing the authenticity of diamonds. We have attempted tighter controls for the oil sector in some countries. What can be done to bring about more transparency in the cocoa market?

ML: Global Witness is not calling for a Kimberley process for cocoa. It is calling for a more open discussion of the economic motivations of both sides, as an important first step towards a sustainable solution to the Ivorian crisis. In addition to the measures recommended to cocoa-exporting companies, the Ivorian government should put pressure on all cocoa institutions to publicise where they hold bank accounts and should publish annual reports, including financial audits, with details of their activities and investments. The government can also make public the financial information it already has on the cocoa sector.

AF: Finally, what needs to happen in the cocoa sector to help usher in a peaceful Côte d’Ivoire?

ML: A huge push towards transparency, as well as a reflection on how the sector should work for the benefit of all cocoa farmers. This will contribute to improve revenues for farmers and will help greatly to soothe tensions in this vital economic sector.

No comments: