Artisanal diamond miners at work in the alluvial diamond mines around the eastern town of Koidu, Sierra Leone. Credit: Tommy Trenchard/IPS

By Jim Lobe
WASHINGTON, Aug 5 2014 (IPS)

As the three-day U.S.-Africa Leaders Summit got underway here Monday, anti-corruption activists urged President Barack Obama to prod a key U.S. agency to issue long-awaited regulations requiring oil, gas, and mining companies to publish all payments they make in countries where they operate.

“The companies need to be held accountable, and we would ask President Obama to also support us in this message,” said Ali Idrissa, the national co-ordinator of Publiez Ce Que Vous Payez (Publish What You Pay, or PWYP), in Niger, a country rich in uranium and iron deposits.Anti-corruption activists are losing patience with what they see as pressure by the extractive industries to prevent the emergence of tough new disclosure requirements.

“We need to look at the entire production chain of these extractive industries; we need to continue putting pressure on this industry …so we can fight poverty and corruption and ensure we have a better development,” he added.

Idrissa, one of scores of African activists who have descended on Washington for this week’s unprecedented gathering, was speaking at a forum sponsored by the Open Society Foundations (OSF), Global Witness, Human Rights Watch, and Oxfam America, among other groups, on civil society efforts to promote government and corporate transparency and accountability on the continent.

The activists, whose numbers are dwarfed by the size of official government delegations, most of which are led by heads of state, as well as U.S. and African corporate chiefs eager to explore business prospects, nonetheless claimed at least part of the spotlight Monday.

At what was billed as a “Civil Society Forum Global Town Hall” meeting at the National Academy of Sciences, both Vice President Joe Biden and Secretary of State John Kerry echoed Idrissa’s concerns in general remarks.

“Widespread corruption is an affront to the dignity of your people and direct threat to each of your nations,” Biden declared. “It stifles economic growth and scares away investment and siphons off resources that should be used to lift people out of poverty.”

Kerry also stressed the importance of “transparency and accountability” not only in attracting more investment but also in “creat(ing) a more competitive marketplace, one where ideas and products are judged by the market and their merits, and not by a backroom deal or a bribe.”

While their words gained applause, it was clear from the OSF forum that anti-corruption activists are losing patience with what they see as pressure by the extractive industries to prevent the emergence of tough new disclosure requirements from the Securities and Exchange Commission (SEC), the federal agency that regulates U.S. stock and related markets.

At issue is section 1504 of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, an anti-corruption provision that requires all extractive companies listed on U.S. stock exchanges to publish each year all payments they make to the U.S. and foreign governments in the countries where they operate.

According to the legislation, which is designed to counter the so-called “resource curse” that afflict many developing countries, particularly in sub-Saharan Africa, taxes, royalties, fees, production entitlements and bonuses should all be reported down to the project level.

Eight of the world’s 10 largest mining companies and 29 of the 32 largest active international oil companies would be covered by the Act, which requires the SEC to develop specific regulations to implement its intent.

After nearly two years of consultations with businesses, activists, and other interested parties, the SEC issued draft regulations, but they were immediately challenged in a lawsuit filed by the American Petroleum Institute (API), a lobby group that represents the powerful oil and gas industry here.

The SEC has since reported that it does not plan to resume the rule-making process until March, 2015, a source of considerable frustration for the anti-corruption activists.

In the meantime, the European Union (EU), whose member countries have historically shown much less willingness than Washington to enact legislation to deter bribery and corruption by its companies operating abroad, has adopted and begun to enforce its own tough disclosure measures that go beyond the energy and mining industries to include timber companies as well.

“Until 2000, corruption and bribery by European [companies] was not only legal; it was tax-deductible,” Mo Ibrahim, a Sudanese-British telecommunications entrepreneur and prominent philanthropist for good governance in Africa, told the OSF Forum. “The United States, which has been a leading light on corruption, is now dragging its feet. Do you have a backbone, or what?”

He echoed the concerns of an open letter sent to Obama and signed by the heads of the national chapters of PWYP, an OSF-backed international anti-corruption group, in Guinea, Niger, Tanzania, the Democratic Republic of the Congo (DRC), Chad, Ghana, and Nigeria, on the eve of this week’s Summit.

“It has been more than four years since you signed the Dodd-Frank Act, section 1504 of which obliges all U.S. listed extractive companies to publish the payments they make,” the letter, which was also signed by the African representatives on the PWYP global steering committee. “The law will yield crucial data that can help us hold our governments to account, but it has yet to come into effect.

“We ask you to urge the SEC for a swift publication of the rules governing section 1504 to ensure that they are in line with recent EU legislation and the emerging global standard for extractive transparency,” it said, adding that more also needs to be done to strengthen multilateral rules on taxation and creating a public registry of corporate beneficial ownership information as other critical parts of the anti-corruption struggle in Africa.

Harmonising the SEC regulations with those of the EU is particularly critical, according to Simon Taylor, co-founder and director of London-based Global Witness. “If the SEC gets it wrong, we will then have a double standard,” he noted, suggesting that some European companies could move to the U.S. if the latter’s requirements are less stringent.

API and other critics of the section 1504 have argued that strict rules will put U.S. companies at a disadvantage in bidding for mining or drilling rights, especially vis-à-vis China whose trade investment in Africa, particularly in the continent’s extractive resources, have exploded over the past decade and now far exceeds the U.S.

Beijing has failed so far to join the 12-year-old Extractive Industries Transparency Initiative (EITI), an Oslo-based international organisation that promotes transparency and currently includes 44 governments, as well as extractive companies, civil-society groups, international development banks, and institutional investors.

But Ibrahim said it was “not acceptable for Europeans or Americans to say, ‘We want to be moral and ethical, but we can’t until this guy’” joins. “China is learning; it can understand and can change. They’re trying to find their feet [in Africa].”

George Soros, the billionaire philanthropist who created OSF, as well as a number of other foundations, said it was important to get China on board because “otherwise they are the spoilers. It is so important that I think we have to be willing to reconsider the whole structure of the [EITI which] they consider [to be] a post-colonial invention.

“They have to be involved in the creation of the system that they will abide by. That’s where civil society in Africa can be influential,” he added.

Jim Lobe’s blog on U.S. foreign policy can be read at Lobelog.com. He can be contacted at ipsnoram@ips.org

Edited by: Kitty Stapp

President Barack Obama signs the Dodd-Frank Wall Street Reform and Consumer Protection Act in July 2010. Credit: Lawrence Jackson, Official White House Photo/Leader Nancy Pelosi/CC by 2.0

By Carey L. Biron
WASHINGTON, Aug 28 2013 (IPS)

Three years after the passage of landmark legislation aimed at strengthening regulation of major U.S. companies, one of the most criticised disparities characterising today’s corporate culture – the outsized compensation offered to top executives – continues to grow.

These extraordinarily lucrative salaries and benefits appear to have little connection to overall corporate performance. According to estimates released Wednesday, 38 percent of the top-paid chief executive officers (CEOs) of U.S. companies over the past two decades were fired or headed companies that were either bailed out by taxpayers or forced to pay significant fraud-related fines.

“An alarming number of CEOs are not adding exceptional value to [the U.S.] economy. They are extracting vast sums from it,” a new report from the Institute for Policy Studies, a Washington think tank, stated.“An alarming number of CEOs are not adding exceptional value to economy. They are extracting vast sums from it.”
-- The Institute for Policy Studies

“American chief executive compensation continues on what has become an inexorable upward march, even as the overall economy sputters through five years of Great Recession and tepid recovery. The most widely heralded CEO pay reforms…have so far done little to slow the executive pay march.”

The study looks at the performance of the 241 CEOs who have ranked among the United States’ 25 highest-paid executives at some point over the past 20 years. Researchers found that many of their companies reported “blatantly” poor performances.

Nearly a quarter of the companies either shut down or received government bailouts following the 2008-2009 financial crash. Eight percent of these CEOs were fired but still received final bonuses averaging 48 million dollars, while an additional eight percent headed companies that had to pay fraud-related settlements of more than 100 million dollars per firm.

“Shareholder representatives say that the problem of excessive CEO pay is so widespread that even if you wanted to create a portfolio of those companies that enforce reasonable CEO pay, it would be very difficult to do so,” Sarah Anderson, an author of the new report and director of the Global Economy Project at the Institute for Policy Studies, told IPS.

“This is not just a problem of a few bad apples,” Anderson said. “Rather, it’s about a corporate culture that’s encouraging CEOs to demand this type of compensation – even though it’s bad for workers, shareholders and taxpayers.”

The U.S. model

The average compensation for heads of the country’s 500 largest companies was around 12.3 million dollars in 2012, according to estimates by the AFL-CIO, one of the United States’ largest trade union federations. Excluding an unusual massive pay cut taken by one executive (Apple CEO Tim Cook), that figure rose five percent over 2011, despite the fact that median incomes for most U.S. households fell from 2009 to 2011 by 0.4 percent.

CEO pay has skyrocketed in recent years compared to average U.S. salaries. In 1993, executive salaries were around 195 times those of average workers, according to the AFL-CIO. Last year, they were 354 times larger.

“Two decades have essentially recalibrated our nation’s moral sensibilities,” the Institute for Policy Studies report states. “The outrageous has become the everyday.”

Meanwhile, this U.S. “model” of outsized executive salaries is widely credited with encouraging executives in other countries, particularly Europe, to push for similar levels of compensation, to the anxiety of top economic analysts.

“We must move in the direction of more prudent compensation practices,” Christine Lagarde, head of the International Monetary Fund, the Washington-based institution tasked with ensuring global economic stability, said in January at the World Economic Forum.

“Excessive inequality is corrosive to growth; it is corrosive to society…We can already see too many signs of waning commitment – dilution of reforms, delays in implementation, inconsistency of approaches.”

In the aftermath of the 2008-2009 financial crisis, much of the legislative push to reel in executive pay in the United States became part of a huge bill known as the Dodd-Frank Act, which is aimed at strengthening oversight of the financial services industry and broader corporate culture.

While that bill, signed into law in 2010, mandated federal regulators to take multiple steps to address the issue of excessive executive compensation, today relatively few of these rules have been finalised.

Some of those that have – including allowing shareholders to vote regularly on executive salaries – are less effectual than was anticipated. In fact, the new report includes a detailed “scorecard” of the efficacy of these reforms, both proposed and potential, that affect executive compensation in the United States and Europe.

Recent polling suggests that support among the U.S. public for strengthened regulation is growing. In July, pollsters found that 83 percent of likely U.S. voters supported tougher regulations for financial companies – up from 73 percent last year (respondents weren’t specifically asked about executive pay).

President Barack Obama has also recently stepped up calls for regulators to move more quickly on Dodd-Frank rules, including on executive pay and equality issues more broadly.

“We’ve got more work to do,” Obama said on Jul. 24. “Nearly all the income gains of the past 10 years have continued to flow to the top one percent.”

“The average CEO has gotten a raise of nearly 40 percent since 2009. The average American earns less than he or she did in 1999.”

Narrowing pay ratios

Some movement is ongoing to address executive compensation. In early September, the Securities and Exchange Commission (SEC), which regulates all companies listed on U.S. stock exchanges, is slated to finalise a rule that would require corporations to regularly publish the ratio of pay between its workers and executives.

While some business interests have derided such disclosure as unnecessary (and legislation proposed in June would undo it completely), at least one important lobby group, the Business Roundtable, told IPS that it would be withholding judgement until after details of the rule, known as Section 953(b), are published.

And while there is some concern over how the SEC will allow companies to define their employee pool when calculating this ratio, advocates of stricter regulation are saying this would be an important step.

“We do think this is a big deal, in that it legitimises the idea that narrow ratios are a good practice,” the Institute for Policy Studies’ Anderson says.

“Eventually, you could also use those ratios in other ways – considering that ratio when determining government contracts, for instance, or linking the ratio to favourable tax policies.”

A U.S. federal judge has upheld a key regulatory provision aimed at ensuring that the profits from products mined in central Africa are not used to benefit armed groups, particularly in the Democratic Republic of Congo (DRC).

Artisanal diamond miners at work in the alluvial diamond mines around the eastern town of Koidu, Sierra Leone. So-called ‘blood diamonds’ helped fund civil wars in Sierra Leone and Liberia, but now provide much-needed jobs as well as revenue for the government. Credit: Tommy Trenchard/IPS

Rights groups are lauding the decision, stating that the so-called “conflict minerals” provision has already led to positive impacts on the ground, both in Congo and in U.S. boardrooms.

“This is a major victory, and shows how important this rule is for holding companies to account and ensuring that they take responsibility for the impacts of their purchases,” Corinna Gilfillan, head of the U.S. office of Global Witness, a watchdog group that filed a court brief in the case, told IPS.

“This provision has generated unprecedented levels of attention towards the eastern Congo, significantly increasing scrutiny around supply chains. After all, what company wants to be associated with funding human rights violations in Africa?”

The rule, known as Section 1502 or the “conflict minerals” provision, was originally signed into law in 2010 as part of a massive piece of financial industry legislation known as the Dodd-Frank Act. Two years later, in August last year, U.S. regulators finalised details on how companies listed in the United States would be required to implement the provision.

Under Section 1502, starting in early 2013 companies using any of four minerals – gold, tin, tungsten or tantalum, widely used in modern electronics – sourced from the DRC or neighbouring countries would need to provide proof that they had carried out due diligence to ensure that these products were not benefiting armed groups.

Yet the rule immediately faced a lawsuit by powerful trade associations representing U.S. businesses and manufacturers. They claimed that the conflict minerals provision would impose inordinate costs that U.S. regulators had not fully analysed, among several other complaints.

Another Dodd-Frank provision, requiring large extractives companies to disclose any payments made to foreign governments, was struck down by the U.S. courts earlier this month.

On Tuesday, however, Judge Robert Wilkins rejected each of these contentions, finding the Security & Exchange Commission (SEC)’s economic analysis to have been “eminently appropriate”.

“Taking all of these elements of the disclosure scheme together, the Court finds a ‘reasonable fit’ between the relevant provisions of Section 1502 and the Final Rule and Congress’s objectives in promoting peace and security in and around the DRC,” Judge Wilkins wrote in a detailed 63-page opinion.

The U.S. Chamber of Commerce, one of the main litigants in the case, told IPS in a statement that it is still “reviewing the court’s decision and our options going forward. We continue to believe this rule, while well intentioned, is unsupported by the Agency’s own record.”

‘Major opportunity’

For now, Tuesday’s fairly resounding decision clears the way for full implementation of Section 1502, with no other lawsuits on the issue currently pending.

Yet despite the legal uncertainty, this rule has already led to significant action from the Congolese government as well as several major U.S. companies – including those technically party to the lawsuit.

“There has actually been a rather strong disconnect between these big industry groups and their extreme positions and what we’ve been seeing individual companies doing to comply,” Global Witness’s Gilfillan notes. “Many have not been counting on lawsuits to get them out of this, but rather have been proactively working to comply.”

The utilities giant General Electric (GE), for instance, stated in May that it “shares … a commitment to take responsibility to alleviate suffering caused by the conflict in the DRC”, and noted that while it is a member of the U.S. Chamber of Commerce, “the views and positions expressed by the Chamber are its own, and not GE’s.”

Other major electronics companies to break with the Chamber on this issue in recent months have included Microsoft and Motorola. International industry initiatives – such as the Conflict Free Smelter Programme – have likewise been started or strengthened in the aftermath of Section 1502’s passage.

“So now we’re calling on all of these companies to do everything they can to ensure that the minerals they’re using aren’t fuelling human rights violations,” Gilfillan continues. “We have a very difficult situation in eastern Congo, so we can’t afford any more delays.”

In addition, the Congolese government has sought to build on the groundwork laid by Section 1502. In late 2011, the country’s mining minister reportedly stated that the legislation offered a “major opportunity” to delink minerals and violence in Congo, which has been at the centre of natural resources-driven conflict for more than a century.

Last year, the Congolese government introduced legislation requiring companies using these minerals to undertake supply chain due diligence to ensure that the products weren’t funding rights violations. Since then, the government has suspended at least two Chinese export companies for failing to adhere to this process.

Global principles

Dodd-Frank is also catalysing broader global action on conflict minerals, with the European Union in particular currently considering adopting policies similar to Section 1502. A public consultation process on this proposal just closed, and some are expecting draft legislation by the end of this year.

But while the United States may be leading global policy in this particular area, some groups are frustrated that Washington has yet to implement nascent international guidance on the human rights-related responsibilities borne by multinational corporations.

On Wednesday, a dozen rights, development and environment groups, under the umbrella of the International Corporate Accountability Roundtable (ICAR), sent a letter to President Barack Obama, calling on him to prioritise implementation of the United Nations Guiding Principles for Business and Human Rights, passed in 2011.

During a fact-finding mission to the United States, the letter notes, a U.N. working group found “significant gaps” in the U.S. efforts to implement the Guiding Principles, as well as “little appreciation of human rights being material to the conduct of business”.

Tuesday’s court decision on Section 1502 “recognises that business has a responsibility to respect human rights, and that the government, including agencies like the SEC, can and should ensure that business operations do not negatively impact human rights,” Amol Mehra, director of the Washington-based ICAR, told IPS.

“In this regard, we are calling for the development of a government-wide approach to business and human rights, and for President Obama to use appointments to critical positions in agencies and departments to effectuate the U.S. government’s duty to protect human rights. We look forward to further engagement to ensure that precedents like the conflict minerals provision are defended, promoted and extended.”

Oil rigs and pumps. Credit: Bigstock

By Carey L. Biron
WASHINGTON, Jul 2 2013 (IPS)

A federal judge here on Tuesday struck down a key new regulatory provision that would require large U.S.-listed extractives companies to disclose payments made to foreign governments, a rule that rights groups had long pushed as a way to cut down on corruption in developing countries.

The judgement is being seen as technical, however, and could allow government regulators to tweak and re-issue the rule.

The ruling is seen as a major victory for the American Petroleum Institute (API), a lobby group that sued the U.S. government following the rule’s adoption, last August, on several grounds, including that it would force businesses to divulge proprietary secrets, impose significant costs and infringe on their Constitutionally mandated right to free speech.

“The court has vacated the SEC’s requirement that U.S. companies report competitive information that can be used against them by global competitors,” Harry Ng, API vice president and general counsel, said in a statement.

“U.S. companies are leading the way to increase transparency, but the rule would have jeopardised transparency efforts already underway by making American firms less competitive against state-owned oil companies.”

Ng points out that several major companies under the API umbrella are engaged in the Extractives Industry Transparency Initiative (EITI), a set of standards currently being implemented in around three-dozen countries. Yet the U.S. Congress had felt that the EITI standards were not strong enough (they have since been tightened), and thus mandated the SEC to come up with the extractives payment rule.

The rule is known as Section 1504, part of financial industry overhaul legislation known as the Dodd-Frank Act, signed into law in 2010. As finally adopted in August, Section 1504 requires that all oil, gas and mining companies listed on U.S. stock exchanges engage in annual, public reporting of any payments over 100,000 dollars made to foreign governments.

The rule would apply to around 1,100 companies, and disclosures would have been required starting next year.

Passage of Section 1504 was seen as an important victory by pro-transparency activists and development groups, who suggest that such transparency can crack down on rampant corruption and help to lift the “resource curse” in some resource-rich, governance-poor developing countries, particularly in Africa.

“Needless to say we are incredibly disappointed with this decision, particularly given that the United States has been a leader on this issue through the passage of Section 1504,” Jana Morgan, a Washington campaigner with Global Witness, an advocacy group, told IPS.

“We are now seeing similar initiatives in the European Union and Canada, with transparency in resource payments becoming the new paradigm and the new standard for best business practices.”

Senator Ben Cardin, who co-authored Section 1504, similarly expressed concerns over the potential broader effects of Tuesday’s court decision.

“The U.S. has been at the forefront of the transparency fight, and this decision will delay implementation of vital transparency rules,” Cardin said in a statement.

“Congress was clear in the letter and the spirit of the law that this information should be in the public domain. It’s unfortunate that the court believes that company disclosures to the SEC should remain hidden.”

‘Substantial errors’

The court’s decision revolves around the SEC’s interpretations of the law originally handed down by Congress. In this context, the judge ruled that the SEC had overreached the Congressional mandate in two important ways.

First, the commission’s rule required that company reports on this issue be made public, rather than publishing only, say, summaries of the reports. API-aligned companies had stated in court that changing this element would have cleared up most of their concerns over Section 1504.

Second, the rule did not offer any exemption for companies operating in countries where national laws disallow any such disclosure – Angola, Cameroon, China and Qatar are the four at issue in this case, though this is disputed by transparency advocates.

“The record of comments to the SEC shows clearly that no one has yet correctly identified a single country where Section 1504 disclosures would come into conflict with local laws,” Heather Lowe, director of government affairs with Global Financial Integrity (GFI), a Washington watchdog group, said in a statement on Tuesday. GFI has estimated that illicit financial flows cost developing countries a trillion dollars a year.

Yet companies say Section 1504’s lack of an exemption for national rules would force them to pull out of certain countries, resulting in massive economic costs.

U.S. District Court Judge John D. Bates noted these two points constituted “substantial errors … the commission misread the statute to mandate public disclosure of the reports, and its decision to deny any exemption was, given the limited explanation provided, arbitrary and capricious.”

Because Bates had already struck down the rule based on these two points, he did not offer a decision on the remaining arguments, including the issue of constitutionality. The decision now sends the issue back to the SEC to refashion a new rule, unless the commission moves to appeal the judgement to a higher court.

Contacted by IPS, John Nestor, an SEC spokesperson, said only that the agency is reviewing the decision.

Towards re-enactment?

While rights groups here and internationally are expressing disappointment over the decision, they are noting that the judgement leaves intact significant components at the heart of Section 1504.

“We strongly disagree with the court findings, but that said, the court hasn’t precluded the possibility that the rules will be re-enacted in the same form but with a stronger justification,” Gavin Hayman, the London-based director of campaigns for Global Witness, told IPS.

“Further, we note that nothing in the decision blocks the SEC from requiring public reporting or allows for exemptions from reporting. The oil industry has never been able to clearly show the existence of host country prohibitions against payment disclosure.”

Similar points were made Tuesday by the Washington office of Oxfam America, a humanitarian group that filed a court brief in support of the SEC in this case.

“Nothing in the decision says that the SEC may not require public reporting or deny exemptions – it just says that the SEC needs to use its discretion and provide a fuller analysis,” Ian Gary, Oxfam’s senior policy manager, said in a statement to IPS.

“We disagree with the court’s analysis of the SEC’s justification for not providing reporting exemptions. Despite the court’s conclusions, the SEC balanced the potential costs and benefits of granting exemptions.”

Gary also noted the court’s refusal to rule on the API’s free speech-related argument, but suggested that the judge “did recognise that the Supreme Court has upheld public disclosure requirements as an appropriate approach to regulation.”

A Congolese man transports charcoal on his bicycle outside Lubumbashi in the DRC. Credit: Miriam Mannak/IPS

By Joe Hitchon
WASHINGTON, May 17 2013 (IPS)

With casualties in the long-running conflict in the Democratic Republic of Congo (DRC) now surpassing every conflict since World War II, U.S. policymakers and advocates are stepping up campaigns to raise awareness and push legislation aimed at encouraging new negotiations, assisting in government reforms, and pressuring the neighbouring countries that have propped up the DRC’s government.

Some advocates say the situation today could be better than at any time in recent years for a durable peace process.

The U.S. House of Representatives is currently preparing to consider a bipartisan bill, unanimously passed by a subcommittee Wednesday, aimed at supporting international efforts to forge a peace deal in the long-running crisis in Congo.

The bill is an “important step forward in raising awareness within the U.S. Congress and among all Americans of this horrific and tragic crisis in the DRC,” Representative Karen Bass, one of the bill’s lead authors, told IPS.

“To date, this legislation has the support of nearly 60 Democrats and Republicans in the House and efforts are currently underway to introduce a similar piece of legislation in the Senate. It has also received significant support from the NGO community.”

Supporters say they expect that number to increase.

Recent months have also seen a strengthening of advocacy on the part of the Congolese diaspora here in Washington, as well as from the rest of the country and Canada. Legislators say this support has been key in helping the House bill gain the legislative backing it has.

One element of the new bill would respond to a longstanding key demand, urging the creation of a special envoy from the president to the DRC and the surrounding Great Lakes region.

“This legislation calls for such an envoy, and Secretary [John] Kerry, in testimony before both the House and the Senate, has indicated his plan to make an appointment,” Bass said.

“I am pleased that this effort is making progress and urge the secretary to move swiftly to make his decision and develop a comprehensive strategy that relies on diplomacy and engagement to address the complex set of issues that stand as barriers to peace and stability in the DRC and the region.”

Conflict-free consumerism

The war in Congo has been running for almost two decades, taking the lives of nearly six million people as several peace processes have failed. Militias engaged in the war have often used rape and sexual violence as a tool of repression and intimidation.

The economics of the mineral trade have also defined this struggle, with armed groups having been able to control mines and trading routes to prop up their actions.

“DRC is potentially one of the world’s wealthiest nations, but has been unable to unlock the potential of the riches above and below the soil due to the ongoing conflict there,” Sasha Lezhnev, a senior policy analyst at the Enough Project, a Washington advocacy group that published a new report on the DRC today, told IPS.

“However, a couple of different policy windows have created the space for a peace process that today has a better chance of success than anytime in the last decade.”

Lezhnev refers to the recent emergence of international pressure on Congo’s neighbouring states – particularly Rwanda – for supporting armed groups within eastern Congo. The World Bank has now withheld 135 million dollars from Rwanda for this reason, and there has likewise been pressure on the Congo to enact greater transparency reforms.

In addition, U.N. Special Envoy to Africa Mary Robinson has been working to establish a more comprehensive and inclusive peace process that addresses the core drivers of violence in the DRC. In February, she and 11 African heads of state established a diplomatic framework to identify reforms that would enable Rwanda, Congo and Uganda to cooperate on the extraction and export of minerals.

“This is a first step, but we think this provides a good roadmap for where we think this peace process should go,” Lezhnev said.

“What needs to happen now is Mary Robinson needs to lead regional negotiations between Uganda, Rwanda and the Congo on economic, refugee and security issues so that all these interests can be put on the table and can be worked out in a transparent and legitimate way.”

Also helping to break the link between the armed groups and the minerals that have in part funded them is new U.S. legislation, enacted over the past year as part of comprehensive financial legislation known as the Dodd-Frank Act. A section of this law targets so-called “conflict minerals”, and is reported to have brought about a 65-percent drop in profits for armed groups from tin, tungsten and tantalum this year.

“The Dodd-Frank Act has resulted in armed groups and their supporters finding it significantly more difficult to profit from an illicit trade, and so there is an opportunity to take advantage of these changing incentives and create structures for legitimate cooperation,” Lezhnev says.

“This shows there is a growing global consumer movement against conflict minerals, and conflict-free products have created new momentum to say that enough is enough when it comes to buying untraceable minerals and turning a blind eye.”

Temporary window

A further sign of the weakening of the armed groups is the sight of one of the chief Rwandan warlords, Bosco “The Terminator” Ntaganda, sitting in The Hague at the International Criminal Court (ICC) after he turned himself in to law enforcement in Rwanda in March. Analysts say this turn of events has weakened his militia, known as the M23, and increased opportunities for peace.

Meanwhile, countries around the world have increasingly taken notice of the trade and investment opportunities throughout Africa, resulting in greater levels of engagement. However, groups like the Enough Project warn this policy window will not remain open indefinitely.

“We call on the Obama administration to deploy a high-level envoy and to work with Mary Robinson,” Lezhnev said.

“The administration needs to help shape this process, to incentivise the economic cooperation between the countries of the region by setting up a responsible investment initiative for working with the tech companies, metals companies and responsible investors to identify gaps and opportunities for investing in a conflict-free environment.”

Next week, World Bank President Jim Kim and U.N. Secretary-General Ban Ki-moon are slated to travel to Congo and the region.

Following last week’s approval of U.S. Senate bills that critics say would weaken a major financial reform law known as Dodd-Frank, watchdog groups here are cautioning that banks deemed “too big to fail” still pose a risk to U.S. and international economic security.

“Too big to fail” was a term associated with the 2008 Troubled Assets Relief Programme (TARP), which gave 700 billion dollars in taxpayer money to rescue large U.S.-based banks whose collapse could have had a devastating impact on global economic security.You’re not going to win this tinkering with the rules...You have to break up the banks.

At a panel discussion here in Washington on Wednesday, political leaders and regulators urged the break-up of big banks as the only viable solution to what they say is still a systemically dangerous concentration of power.

“You’re not going to win this tinkering with the rules,” Neil Barofsky, former special inspector general of TARP and author of a new book on the issue, “Bailout”, said at the headquarters of Public Citizen, a consumer rights advocacy group. “You have to go to the source of these corrupting influences … You have to break up the banks.”

The push against financial regulation flexed its muscle in Congress last week, as Senate bills watering down Title VII of Dodd-Frank, which deals with the especially risky derivatives markets, were approved. The bills now proceed to a floor vote.

That move has renewed a call from regulation proponents to curb the political power of financial institutions, which some say is possible only by ending too-big-to-fail.

Supporters of this move point to the central problem in the too-big-to-fail philosophy: that protecting banks from the consequences of their own actions shields them from accountability and, ultimately, can encourage risky behaviour.

“I think as long as [the too-big-to-fail mentality] exists, the administration of justice is severely undermined in this country,” said Brooksley Born, a former chairperson of the Commodity Futures Trading Commission (CFTC), a government regulator.

Born is known for pushing for increased regulation of the derivatives market, an especially risky slice of trading activity, during the 1990s, calling this market the “hippopotamus under the rug”. Her concerns were rebuffed at the time by Federal Reserve Chairman Alan Greenspan and, under pressure from the financial lobby, Congress eventually passed legislation prohibiting derivatives regulation.

A decade later, Born’s concerns were vindicated by events that played out in the 2008 collapse, which largely began in the derivatives market.

Regarding the extent to which too-big-to-fail shields banks from prosecution, Born cited comments made by U.S. Attorney General Eric Holder last month, especially his admission that “it does become difficult for us to prosecute [the banks] when we are hit with indications that if you do prosecute … it will have a negative impact on the national economy.”

She also revealed a less public example of the government protection she says she witnessed firsthand as a member of the Financial Crisis Inquiry Commission, an official task force appointed to investigate the causes of the 2008 financial crisis.

“The Financial Crisis Inquiry Commission was given a mandate to focus on causes of the financial crisis, but our statute also said that if we came across evidence of violations of U.S. law, it was our obligation to report those violations to the Justice Department,” she said.

“We made a number of such referrals … and I have not seen anything happen on those.”

That failure, she suggests, was just one symptom of a broader illness.

“I became convinced there was a philosophy in this administration of letting the banks earn their way out of the insolvency they were in,” she said, “that the banks had to be protected from the rule of law in order to preserve the financial system.”

Cognitive capture

For some, though, the prospect of breaking up the banks is both too abstract and too politically unviable to be discussed as a serious policy proposal.

Dennis Kelleher, CEO of Better Markets, a financial reform advocacy group, says that any move to break up the banks would come in one of two guises: either as a prohibition on banks dealing with more than a certain amount of gross domestic product, or government regulators using all the authority already vested in Dodd-Frank.

“The Federal Reserve could say banks with more than 50 billion dollars pose a significant threat to the financial stability, and they have to put up 50 percent of capital [in case of extreme losses],” Kelleher told IPS. “If they did that – which they have the power to do – that wouldn’t be ‘breaking up the banks’, but that would eliminate the too-big-to-fail threat.”

Under this approach, the key problem is ensuring that regulators are aggressive enough, and especially strong enough to counter Wall Street tropes that invoke the common citizen as the main victim of regulation.

“[Regulators] actually believe the spin that comes from Wall Street and its lobbyists,” Kelleher says, calling it “cognitive capture, reinforced by a culture that equates money with brains”.

Regulation proponents, though, seemed confident that shifting public opinion was becoming a formidable opposition to these entrenched interests, even if the time is not yet ripe for putting a hard cap on the size of major banks.

“If there is another major megabank blow-up, it could easily change the political dynamics,” Kelleher told IPS. “While these too-big-to-fail banks have political support … [that support] is broad but it’s not deep – it’s very fragile.”

The media did their best to make the U.S. presidential election look important, the altar on which democracy is built. But there has been a problem ever since the Supreme Court legalised unlimited campaign spending (six billion dollars this year), thereby authorising one more freedom of expression, called “commercial speech” even though much of this speech is libellous, often neither true nor relevant.

Johan Galtung

There were real disagreements, some kind of rhetorical left-right. However, the real problem lies somewhere else, not in what was said but in what was not. The list is long. The Washington Post on election day (Manuel Roig-Fanza): “A tough day for causes without a candidate”. The article mentions climate change, gun control and immigration as issues that werent picked up by either one of the party conventions, nor in the debates. But there are many more pressing problems confronting the country.

Two major lobbies advocating the use of force were left untouched: the National Rifle Association, NRA, for violence in the U.S., and the American-Israeli Political Action Committee, AIPAC, for violence abroad, mainly anti-Muslim wars.

They both exercise power through their impact on the media, denying critical politicians access to political power, thereby removing obstacles to violence. Dennis Kucinich, a voice for peace in Congress, and other critics, had the boundaries of their districts changed so that they were not reelected, fatally reducing the political spectrum in Congress and elsewhere. Both presidential candidates knew that to take them on would be suicidal.

Foreign policy was twisted in the debates to economic relations with China, trying to sound tough. But the U.S. majority cannot live without affordable Chinese goods with adequate quality/price ratios. Unless a big unless the U.S. restructures its economy from below, with cooperatives and self-employment, activating the countryside and local communities with numerous small enterprises focused on basic needs, food above all, housing and clothing, health and education, direct from producers to consumers.

No country in the world has a population so creative and cooperative. But the blossoming Occupy Movement has so far limited itself to occupation and critique, not to constructive action. They left untouched the basic change in the world: the U.S. grip on elites in other countries is loosening, in Latin America, even Africa, in the Arab awakening.

Instead they recited the “largest economy in the world” (the European Union is bigger, and China will overtake the U.S. soon) and the “strongest military power in the world” (losing Vietnam, Afghanistan, Pakistan, Iraq, Yemen, Somalia, Sudan is a strange concept of “strongest”).

Climate change: the U.S. is dragging its feet, delaying action in any international fora. Not the candidates, but Nature, in the shape of Sandy, talked, a brutal reminder of climate reality. How much is man-made is uncertain but the change is certain enough. And the self-proclaimed world leader does not lead.

Then, incredible: the fact that 16 percent are in misery and hunger, while one percent live in opulence, feeding on speculation, was drowned in glib talk about the “middle class”. Yes, it is large, and stagnant. But far from 100 percent.

Neither candidate had answers, possibly agreeing to be silent. The U.S. desperately needs more parties that are less afraid of truth (as they will not win anyhow), for democratic transparency, and open dialogue.

Does the election make a difference? What change will the second Barack Obama term bring? Obama said in his victory speech that he will focus on deficit, the taxation system, and immigration. None of the above mentioned issues. In foreign policy Mitt Romney, like George W. Bush, might have been more reckless, accelerating the fall of the empire. Obama, like Bill Clinton, is better informed, more sophisticated, holding up the fall a little longer. And democrats are more inclined to do what Israel wants.

Obamacare will continue, whatever that is worth given the rise in costs for any medical care possibly because the “state will pay”.

On Jan. 1, 2013, the debt ceiling strikes, according to the Congress consensus, with major “austerity” for those who can least afford it, touching the military gently. Misery will accelerate and so could military deployment and wars waged the Obama way, with drones and SEALs, extrajudicial executions.

Imagine a Politburo committee in China studying photos to decide whom to kill abroad for anti-Chinese activity or threats to China’s security. Or China arming Cuba and Haiti countries as close to the U.S. as Taiwan is to China to the teeth; with a fleet cruising in the Caribbean. The U.S. would find this unacceptable.

But Obama will play, “I am above the parties uniting the nation. In his first term he was leaning over backward to the Republicans and was badly punished mid-term; this time that makes Romney a de facto co-president. The Dodd-Frank finance economy reforms will be very bland, Wall Street will by and large continue its lethal games. The rich may be taxed and may find more loopholes including settling abroad. Like the French super-rich in London?

Is U.S. democracy a two-party system becoming a one-party state? If so, other countries beware. Do not imitate. Democracy is more than elections. It is also transparency and dialogue, for real change. (END/COPYRIGHT IPS)

* Johan Galtung, rector of the TRANSCEND Peace University, is author of “The Fall of the US Empire–And Then What?” ( www.transcend.org/tup)