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					Conflict Resources
International and EU response initiatives


                     Natalie Pauwels
    Policy Officer, International Affairs Directorate
      European Commission - DG Environment
Definitions
Conflict resources/commodities
          No internationally recognised definition
          NGO proposed definition:
                ‘natural resources whose systematic exploitation
                  and trade in a context of violent conflict
                  contribute to, benefit from or result in the
                  commission of serious violations of human
                  rights, international humanitarian law or
                  violations amounting to crimes under
                  international law.’” (Global Witness)




29 April 2008                   Natalie Pauwels, Policy Officer,    2
                               International Affairs Directorate,
                            European Commission DG Environment
Types of conflict resources
 Oil
 Minerals (diamonds, gold, coltan)
 Timber
 Water
 Drugs (opium, coca)
 Agricultural products
 Arable land
 Valuable species


29 April 2008       Natalie Pauwels, Policy Officer,    3
                   International Affairs Directorate,
                European Commission DG Environment
How do resources contribute to
conflict?

1.      “Honey Pot”
2.      Government detachment
3.      Geography of natural resource wealth
4.      Financing for conflict
5.      Price volatility of primary commodities
6.      …


29 April 2008           Natalie Pauwels, Policy Officer,    4
                       International Affairs Directorate,
                    European Commission DG Environment
How to address the links
 between natural resources and
           conflict?
Measures focused on supply
                Good governance is key!

 Assisting DCs in developing good resource
  management policies and fair tendering
  procedures for concessions
 Developing capacity to enforce policies
  and programmes
 Promoting transparency and accountability
  in decision-making
 Promoting public scrutiny

29 April 2008           Natalie Pauwels, Policy Officer,    6
                       International Affairs Directorate,
                    European Commission DG Environment
Demand-focused measures
    Increasing public awareness
          Consumers
 Government public procurement policies
 Engaging the private sector
          Corporate Social Responsibility
          Image
    Market measures (regulating imports,
     standard-setting, outright bans)


29 April 2008               Natalie Pauwels, Policy Officer,    7
                           International Affairs Directorate,
                        European Commission DG Environment
Multilateral initiatives - examples
 Kimberley Process – conflict diamonds
 Forest Law Enforcement and Governance
  (FLEG) - and Trade (EU FLEGT)
 Extractive Industries Transparency
  Initiative (EITI)
 UN Global Compact




29 April 2008       Natalie Pauwels, Policy Officer,    8
                   International Affairs Directorate,
                European Commission DG Environment
Conflict Diamonds
The Kimberley Process
                            The problem

    1990s: diamond revenues fuel conflicts
               Sierra Leone, Liberia, Angola, DR Congo
    Alluvial vs. kimberlite mining
               Alluvial easy targets for rebels
    Estimated 15% of diamonds traded were
     conflict diamonds in late 1990s


29 April 2008                   Natalie Pauwels, Policy Officer,    10
                               International Affairs Directorate,
                            European Commission DG Environment
Rising awareness
    Angola conflict (1975-2002)
          Failure of UN sanctions regime
          UN Panel investigation & « Fowler Report »
           2000
          NGO reports (Global Witness 1998) based on
           field research, extensive interviews
          Media interest
          Spurred interest in other conflicts (Sierra
           Leone, Liberia, DRC) & other commodities


29 April 2008              Natalie Pauwels, Policy Officer,    11
                          International Affairs Directorate,
                       European Commission DG Environment
NGO activism
    Mounting NGO activism
          drawing public attention to problem
 Threat of consumer boycott
 Lobbying business and key
  governments/UN




29 April 2008              Natalie Pauwels, Policy Officer,    12
                          International Affairs Directorate,
                       European Commission DG Environment
Industry reaction
    Specificity of diamond sector
          quasi-monopolistic position of De Beers
                   Threat of boycott taken seriously
 First denial, then cooperation
 Industry „spin‟
          Argument re: dramatic effects of boycott on
           producer countries in Africa
          Opportunism
    Industry asked governments to work
     together to find solution
29 April 2008                       Natalie Pauwels, Policy Officer,    13
                                   International Affairs Directorate,
                                European Commission DG Environment
Government reactions
 Belgium: Antwerp a major cutting,
  polishing and trading city (90% of all
  rough diamonds pass through Antwerp)
 UK (diamond trade board)
 South Africa, Botswana Canada
 China, India, Russia, Israel, USA




29 April 2008       Natalie Pauwels, Policy Officer,    14
                   International Affairs Directorate,
                European Commission DG Environment
Launch of ‘Kimberley Process’
    Initially a bilateral process:
          Industry and key producer countries
          May 2000 meeting in Kimberley, South Africa at
           invitation of SA Government
          NGOs initially excluded
    Towards tripartite negotiations with inclusion of
     NGOs                 INDUSTRY




                         GOVTs                          NGOs




29 April 2008                 Natalie Pauwels, Policy Officer,    15
                             International Affairs Directorate,
                          European Commission DG Environment
Launch of ‘Kimberley Process’
    Basic aims
          deprive rebels of their main source of funding
           (e.g.: Angola/UNITA)
          eliminate one of the root causes of conflict
           („resource curse‟)




29 April 2008               Natalie Pauwels, Policy Officer,    16
                           International Affairs Directorate,
                        European Commission DG Environment
Search for solutions
    Problem identification
          Difficulty in regulating diamonds because of
           their particular characteristics
          Very expensive and difficult to « label » or
           mark a diamond, especially in rough form
          No indelible marking technique
    Solution: certification system along lines
     of the Angola sanctions arrangement (i.e.
     only UNITA diamonds targeted)

29 April 2008               Natalie Pauwels, Policy Officer,    17
                           International Affairs Directorate,
                        European Commission DG Environment
The process
 About 12 meetings over 2.5 years
 Highly technical discussions
 Obstacles & issues:
          WTO waiver on security/humanitarian grounds
          Membership criteria
          Statistics
          Monitoring and enforcement




29 April 2008              Natalie Pauwels, Policy Officer,    18
                          International Affairs Directorate,
                       European Commission DG Environment
The solution: KPCS
 „Voluntary‟ system of industry self-
  regulation
 Certificate of Origin scheme
 Participants guarantee that diamonds
  “have been handled in accordance with
  the requirements of the Kimberley Process
  certification scheme” (KPCS)
 KP document (NB – not a treaty) agreed
  in 2002; entered into force 2003

29 April 2008       Natalie Pauwels, Policy Officer,    19
                   International Affairs Directorate,
                European Commission DG Environment
KPCS definition: ‘conflict diamond’
“CONFLICT DIAMONDS means rough diamonds
  used by rebel movements or their allies to
  finance conflict aimed at undermining legitimate
  governments, as described in relevant United
  Nations Security Council (UNSC) resolutions
  insofar as they remain in effect, or in other
  similar UNSC resolutions which may be adopted
  in the future, and as understood and recognised
  in United Nations General Assembly (UNGA)
  Resolution 55/56, or in other similar UNGA
  resolutions which may be adopted in future”
            - KPCS Document, Section I “Definitions”

29 April 2008        Natalie Pauwels, Policy Officer,    20
                    International Affairs Directorate,
                 European Commission DG Environment
KPCS: How does it work?
    Main instrument: strict control
     (certification) of all shipments of rough
     diamonds, backed up by internal controls
          Tracing diamonds from mine to point of export
          Chain of warranties between point of import to
           cutting, polishing centres or point of re-export
    Extensive monitoring and statistical
     reporting systems


29 April 2008               Natalie Pauwels, Policy Officer,    21
                           International Affairs Directorate,
                        European Commission DG Environment
KPCS requirements
    Gov‟t issued Kimberley Certificate to accompany
     all exports
          Minimum security requirements (Tamper-proof
           packaging, data/info, etc)
    Confirmation of receipt by recipient country
     authorities to exporting authority of country of
     provenance; archiving of certificates
    Imports of diamonds unaccompanied by
     certificate must be refused entry
    Quarterly trade statistics reporting requirement
     (transparency)
          Production, import, export data
29 April 2008                 Natalie Pauwels, Policy Officer,    22
                             International Affairs Directorate,
                          European Commission DG Environment
International endorsement
    UNGA Resolution 55/56 (1 Dec 2000)
          Urges all States to support efforts of the diamond producing,
           processing, exporting and importing countries and the
           diamond industry to find ways to break the link between
           conflict diamonds and armed conflict….
          Expresses the need to give urgent and careful consideration to
           devising effective and pragmatic measures to address the
           problem of conflict diamonds, the elements of which would
           include: (a) The creation and implementation of a simple and
           workable international certification scheme for rough
           diamonds;
    Security Council resolution 1459 (2003)


29 April 2008                   Natalie Pauwels, Policy Officer,        23
                               International Affairs Directorate,
                            European Commission DG Environment
KP Participation
    All major producing, trading and polishing/cutting
     countries included in process
    Participants can only trade with other Participants
    Non-Participants in the scheme effectively
     excluded from legitimate trade
    Annual reporting on compliance
    Currently 47 Participants: 46 countries and the
     EC (over 99% of global productn)
          World Diamond Council, Global Witness and Partnership
           Africa-Canada represent industry & civil society.


29 April 2008                Natalie Pauwels, Policy Officer,    24
                            International Affairs Directorate,
                         European Commission DG Environment
KP working arrangements
    Annual Plenary hosted by rotating Chair
          India 2008
          EC (2007), Botswana („06), Russia („05),
           Canada („04), SA („03)
 Consensual decision-making (like a veto)
  makes progress in some areas difficult
 Participants required to implement
  national legislation and controls
 Independent monitoring and review
 Coordinator for Technical Assistance

29 April 2008              Natalie Pauwels, Policy Officer,    25
                          International Affairs Directorate,
                       European Commission DG Environment
Voluntary Peer Review system
 Added one year into scheme following CAR
  non-compliance complaint (review process
  started with CAR invitation)
 In two years, vast majority of Participants
  have invited and will have received a
  review visit
 Typically 3-5 day visits, visiting
  production/trading/polishing sites as
  relevant, KP authority, customs ….

29 April 2008       Natalie Pauwels, Policy Officer,    26
                   International Affairs Directorate,
                European Commission DG Environment
Peer review (continued)
 Teams composed of government (3 reps),
  industry and NGOs (1 rep each)
 Encourages engagement of all Participants
 Spreads best practice
 Annual reporting




29 April 2008       Natalie Pauwels, Policy Officer,    27
                   International Affairs Directorate,
                European Commission DG Environment
Reporting requirements
    Statistical reporting
          Quarterly trade data
          Bi-annual production data
          Taken very seriously – Participants can be
           « dropped » if they fail to provide required
           reports
          Analysis can reveal anomalies or issues to be
           resolved
    Annual Reporting
          All KPCS members must report annually as
           part of Peer Review mechanism

29 April 2008               Natalie Pauwels, Policy Officer,    28
                           International Affairs Directorate,
                        European Commission DG Environment
EC/EU and KPCS
    EC implements the KPCS as a single Participant
     (on basis of Art 133)
    Extensive EC legislation (Regulation 2368/2002
     and numerous amendments)
    COM represents EC in all KP bodies,
     monitors/ensures overall implementation
    MS have key role in implementation („Community
     authorities‟)
    Close COM-MS coordination through an EC
     Management Committee
    Very active EC role in KP from beginning
29 April 2008          Natalie Pauwels, Policy Officer,    29
                      International Affairs Directorate,
                   European Commission DG Environment
2007: EC Chair of KP
    5th annual plenary in Brussels, Nov 2007
          launched initiative to address diamonds from
           Côte d‟Ivoire
          Re-admission of Republic of Congo
           (Brazzaville)
          Brussels Declaration endorsed on internal
           controls
          Concerns/progress noted in Liberia, Venezuela,
           Ghana
          Reporting on peer review visits undertaken in
           2007, and on annual reporting.
          Global statistics made publicly available.
29 April 2008              Natalie Pauwels, Policy Officer,    30
                          International Affairs Directorate,
                       European Commission DG Environment
Is the KPCS working?
    Almost all international trade in rough diamonds
     now covered – including in post-conflict situations
     (Central and West Africa)
    Massive increase in legitimate trade / exports
     (e.g. DRC, Sierra Leone – doubling of legitimate
     exports)
    Huge impact on domestic governance of diamond
     sector (especially in alluvial producers)
    Action has been taken against large-scale
     breaches of the Scheme (e.g. Congo-Brazzaville,
     expelled in 2004)
    Substantial level of seizures of illicit shipments
     (in EU alone: 27 shipments since 2003, approx
     12,000 cts valued at US$ 1.5 m)
29 April 2008            Natalie Pauwels, Policy Officer,    31
                        International Affairs Directorate,
                     European Commission DG Environment
Future challenges…
    Moving towards „development diamonds‟?
          Global Witness, Partnership Africa Canada initiative on
           « Diamonds4Development »; Diamond Development
           Initiative (DDI)
          Taking the diamonds debate beyond Kimberley...beyond
           conflict
          Transforming a facet of the war economy? (reaping the
           peace dividend)
          Small-scale mining initiatives (CASM, DDI)
    „Terrorist diamonds‟? (post-9/11)
    From „conflict diamonds‟ to „conflict resources‟
     (e.g. in the G8; UK Commission for Africa) –
     timber (FLEGT initiative), gold, copper, tin,
     coltan…

29 April 2008                 Natalie Pauwels, Policy Officer,    32
                             International Affairs Directorate,
                          European Commission DG Environment
  Case study:
Illegal logging
Illegal logging: the problem
    Multi-dimensional
          Economic: revenue loss,
           livelihoods/poverty
          Social: competing land claims,
           indigenous peoples, human
           rights abuses
          Environmental: biodiversity,
           GHG emissions/climate change,
           soil erosion, water cycle, air
           pollution…
          Links to conflict (an early
           example: Easter Island !)
29 April 2008              Natalie Pauwels, Policy Officer,    34
                          International Affairs Directorate,
                       European Commission DG Environment
Modern examples
    Asia-Pacific:
          Cambodia (Khmer Rouge)
          Nepal
          Burma
          Indonesia
          Philippines
          PNG
    Africa:
          Liberia (Taylor)
          DRC
    Latin America
          Bolivia
          Brazil – future conflict over competing uses

29 April 2008                     Natalie Pauwels, Policy Officer,    35
                                 International Affairs Directorate,
                              European Commission DG Environment
Contributing factors
          Democratisation processes, growing
           transparency/scrutiny, tackling corruption
          Demand and supply side factors: increased
           commodity prices, ease of extraction, illicit
           trade networks and routes…
          NGO role: Global Witness, Environmental
           Investigation Agency, Greenpeace
          Limitations of working with forest certification
           – need for broader framework



29 April 2008               Natalie Pauwels, Policy Officer,    36
                           International Affairs Directorate,
                        European Commission DG Environment
Introduction
    FLEG(T) = Forest Law Enforcement
     Governance (and Trade)

    Enforcement:             often lacking... judiciary

    Governance:         broader goals

    Trade:     “lever” – revenue loss




29 April 2008          Natalie Pauwels, Policy Officer,    37
                      International Affairs Directorate,
                   European Commission DG Environment
Regional FLEG processes
    NB: no Trade
          East Asia (Bali 2001)
          Africa (Yaounde 2003)
          Europe / North Asia (ENA) (St Petersburg
           2005)
          Central America 2008?
    Declarations, Action Plans




29 April 2008              Natalie Pauwels, Policy Officer,    38
                          International Affairs Directorate,
                       European Commission DG Environment
EU FLEGT Action Plan
     Adopted by the European Commission in 2003
           supply-side and demand-side measures to combat
            illegal logging and associated trade:
                1.   Development co-operation
                2.   FLEGT Partnerships
                3.   Public procurement
                4.   Private sector initiatives
                5.   Financing and investment
                6.   Use of existing criminal legislation
     FLEGT Regulation 2005
           allows for licensing system
           mandates COM to negotiate VPAs
           Covers only primary products (not pulp, paper,
            furniture…)
29 April 2008                         Natalie Pauwels, Policy Officer,    39
                                     International Affairs Directorate,
                                  European Commission DG Environment
1. Development co-operation
 range of civil society projects, 2 involving
  EU private sector importers
 support for follow-up of FLEG processes
  (World Bank)
 major project in Indonesia;
 planned EC projects for Asia, ENPI East
  region, Central Asia, All-ACP, Malaysia,
  Ghana, Cameroon,
 European Commission + EU Member
  States
29 April 2008       Natalie Pauwels, Policy Officer,    40
                   International Affairs Directorate,
                European Commission DG Environment
2. Voluntary Partnership Agreements
    FLEGT Voluntary Partnership Agreements
          bilateral arrangement with EU = binding
          FLEGT Regulation controls imports from
           partner countries
          legality licensing scheme
          tracking systems, independent monitoring
          process support for governance reform
          legality, not sustainability
          Malaysia, Indonesia, Ghana, Cameroon


29 April 2008              Natalie Pauwels, Policy Officer,    41
                          International Affairs Directorate,
                       European Commission DG Environment
3. Public Procurement

 green public procurement policies for
  forest products in Belgium, Denmark,
  France, Germany, Netherlands, UK
 forthcoming EU GPP Communication
 legality minimum - sustainability preferred




29 April 2008       Natalie Pauwels, Policy Officer,    42
                   International Affairs Directorate,
                European Commission DG Environment
4. Private sector initiatives
          Codes of conduct of timber trade federations
          Major purchasers of Russian logs have
           ISO/EMAS
          EU drinks carton manufacturers commitment
           to reach 100% traceability of fibre




29 April 2008              Natalie Pauwels, Policy Officer,    43
                          International Affairs Directorate,
                       European Commission DG Environment
5. Financing and investment
 risk strategies of major banks eg. HSBC
 more work to be done




29 April 2008       Natalie Pauwels, Policy Officer,    44
                   International Affairs Directorate,
                European Commission DG Environment
6. Use of existing legislation

 eg. trafficking stolen goods, money
  laundering
 MS studies
 chain of evidence often a problem




29 April 2008       Natalie Pauwels, Policy Officer,    45
                   International Affairs Directorate,
                European Commission DG Environment
‘Additional options’
    Action Plan calls for further legislation
     “banning” illegal timber on EU market
          Internet consultation
          Impact assessment study
          Decision on possible further measures at end
           of year




29 April 2008              Natalie Pauwels, Policy Officer,    46
                          International Affairs Directorate,
                       European Commission DG Environment
Other consumer country actions
    US Presidential Initiative on illegal logging
          focus on capacity-building
          FTA eg. US-Peru
    Japan
          public procurement policy
    Australia, New Zealand
          initiatives under development, include public
           procurement, Pacific focus



29 April 2008               Natalie Pauwels, Policy Officer,    47
                           International Affairs Directorate,
                        European Commission DG Environment
Conclusions/lessons learned (1/4)
    DG DEV & ENV co-lead helps bring in Commission
     and MS development cooperation resources
    Limited capacity of developing country partners
     to prepare positions
    Difficult issues of forest tenure and indigenous
     people (esp Malaysia) – FLEGT opens space
    Balance participatory process vs “results”
     Independent monitoring requirement potentially
     of interest to other sectors



29 April 2008           Natalie Pauwels, Policy Officer,    48
                       International Affairs Directorate,
                    European Commission DG Environment
Conclusions/lessons learned (2/4)
 MS involvement
 Managing expectations – is it about
  improving forest governance or stopping
  illegal timber in EU market?
 Forest sector trade reflects broader
  patterns – rise of BRICs, Europe less
  influential
 Steady rise in interest in Delegations



29 April 2008       Natalie Pauwels, Policy Officer,    49
                   International Affairs Directorate,
                European Commission DG Environment
Conclusions/lessons learned (3/4)
    More work needed
          Latin America
          Financial crime and environmental crime
          China and Vietnam
          develop synergies with climate change
           “reduced deforestation” initiatives
          EU FTAs




29 April 2008              Natalie Pauwels, Policy Officer,    50
                          International Affairs Directorate,
                       European Commission DG Environment
Conclusions/lessons learned (4/4)
 Formal negotiation and trade related
  element means FLEGT taken seriously
 At same time informal in-country
  processes need time and support (civil
  society and private sector)
 Complex problem can not rely on one
  approach or instrument



29 April 2008       Natalie Pauwels, Policy Officer,    51
                   International Affairs Directorate,
                European Commission DG Environment
Common Challenges and
     Solutions
Current and future challenges
 Climate change/energy
 Biofuels, food crisis
 Role of China, other emerging ecos
 WTO Doha Round/FTAs
 Corruption




29 April 2008       Natalie Pauwels, Policy Officer,    53
                   International Affairs Directorate,
                European Commission DG Environment
Possible solutions: carrots & sticks
    UNSC agreement on a common definition of
     conflict resources
    Integration of resource conflict into security and
     development agendas
    Environmental peacemaking
    Support & capacity-building for natural resource
     management and governance
    Criminalisation of illegal resource extraction
     linked to conflict
          Indonesian resolution on "International cooperation in
           preventing and combating illicit international trafficking
           in forest products, including timber, wildlife and other
           forest biological resources" (UNCCPCJ)
29 April 2008                  Natalie Pauwels, Policy Officer,         54
                              International Affairs Directorate,
                           European Commission DG Environment
The EU contribution
    Conflict mainstreaming (watch lists; conflict
     checklists)
    Supporting good governance (Liberia, DRC,
     Indonesia…)
    Satellite monitoring (JRC), GMES (EC/ESA)
    Engaging 3rd countries (eg. China, Africa…)
    Conflict Resources Facility €2 million
          Under the Instrument for Stability
    Peace Building Partnership (civilian expertise)
          Nat. resource management & conflict cluster


29 April 2008                 Natalie Pauwels, Policy Officer,    55
                             International Affairs Directorate,
                          European Commission DG Environment
EU contribution, cont’d
 COM/Council paper on climate change and
  international security (March 2008)
 European Security Strategy revision
 Trade measures? (eg. Sust.Development
  Chapters in FTAs)
 EU-UN cooperation
 Conflict Prevention Network
 COM inter-service group on natural
  resources & conflict
29 April 2008       Natalie Pauwels, Policy Officer,    56
                   International Affairs Directorate,
                European Commission DG Environment
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