Artisanal mining and conflict financing in eastern Democratic Republic of Congo (DRC) : coping, conflict and shadow economy actors and the impact of the "conflict minerals" campaign

Within the puzzle of why conflict persists in natural resource rich countries, and why in the critical case of the DRC in particular, I looked at two questions in detail: First, how the incentive structures of different actors in a ‘conflict economy’, including ‘coping’, ‘conflict’ and ‘shadow’ economy actors, can shape the dynamics of conflict and conflict resolution. Second, how the physical and market attributes of high volume and low value cassiterite, as well as high value and low volume gold determine how effectively ‘conflict minerals’ trade control measures could be implemented, which the ‘conflict minerals’ campaign driven by International Advocacy NGOs proposes to resolve conflict. The implementation of trade control measures and their impact showed a misalignment with the incentive structures of ‘coping’, ‘shadow’ and ‘conflict’ economy actors. Instead of resolving conflict their implementation a) generated significant negative externalities in the form of loss of livelihood or reduction in earning potential for the ‘coping’ economy actors in the primary and secondary ASM economy; b) failed (on their own) to provide sufficient incentives for the ‘shadow’ economy to formalise and comply with trade control measures’ requirements. As grey markets remained open and gold continued to be traded indiscriminately (as its physical and market attributes meant its mining and trade continued despite the implementation of trade control measures), low prices offered by grey market buyers compared to world market prices offered by international ‘conflict free’ buyers inspired some ‘shadow economy’ actors to work towards compliance; c) they did not significantly impact ‘conflict economy’ actors’ ability to generate finance due to these actors’ diversified revenue base and trade control measures inability to control the lucrative gold trade. The puzzle of why conflict persists in natural resource rich countries, and why in the critical case of the DRC in particular is therefore due to a misunderstanding of local incentive structures resulting in a misaligned set of conflict resolution attempts, which in the case of ‘conflict minerals’ have further complicated conflict dynamics on the ground. Key practical suggestions from the thesis are: a) it is from a practical perspective important to mitigate the impact of the implementation of the trade control measures on the ‘coping’ economy; b) the most efficient way to do so is to make the measures obsolete by ending conflict in eastern DRC. This will require dealing with: the presence of armed actors directly, widespread impunity, privatised and violent governance structures, unaddressed underlying grievances (which includes intra-regional issues) and the excessive cost of doing business; c) to do so, research should establish how subnational governance structures currently internally function and what the key levers are to transform existing governance arrangements into ones that support peace and development; d) considering IANGOs are increasingly important actors in global governance, future research should also focus on how global ‘governance actors’ can be capacitated to accountably, responsibly, effectively and efficiently develop and implement solutions for governance challenges and to minimise externalities of such solutions going forward.