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Tracing Conflict Minerals – Blockchain Beyond Cryptocurrencies

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by Andrew Scanlon

Photo credit: Unsplash

The use of minerals to fund conflict presents one of the clearest cases of the vast complexities of globalisation. Materials extracted in one region will be sent to a second region to be used in production of goods which will then be sold in a third region. In some cases, this cycle fuels and prolongs conflicts near the origin points of the metal. Tracking these supply chains is crucial in cutting off the flow of funds which arms groups use for conflict. Blockchain technology is the most promising means of doing so. Blockchain is both inherently decentralised and integrated. No one person can control the entire chain of data, but all actors with permission can see the entire ledger. The peer-to-peer decentralized ledger within blockchain provides a credible and verifiable real-time tracing tool that provides clarity as to the origins of each product and trace inconsistencies to a specific point in the supply chain. 

Armed groups often attempt to control and profit from natural resources that fund and extended conflicts. Cases range the spectrum of minerals and regions including Myanmar, Afghanistan, Angola, and Peru. Amongst the various minerals that can fall into the classification of conflict minerals. One of the most famous examples are conflict diamonds. However, in recent years more attention has been paid to gold and the three Ts – tungsten, tin, and tantalum. These minerals have been the target of EU and US regulation. In 2010, the Dodd-Frank Act required restrictions on these materials as a result of their use in funding conflict in the Democratic Republic of the Congo. On January 1, 2021 new EU import rules regarding minerals took effect. The regulations impose some new due diligence measures on importers and require them to determine if their import volumes exceed mandated thresholds, conduct audits of their supply chains and third-party contractors, and assess risk management strategies. This is a positive initiative and a step in the right direction, but it will ultimately fall short of what is needed to stem the flow of conflict minerals and the income they create if they do not incorporate emerging technologies.

The mineral industry can be incredibly important to local economies. Although armed groups may control a mine whose proceeds contributes to conflict, it must be noted that not all mining in the area is used to fund all conflicts. Previous efforts at regulating conflict minerals have imposed restrictions on locals who rely on the industry for a living while not sufficiently solving the problem of minerals funding conflict groups. These efforts relied on more traditional means of supply chain management and oversight that can be prone to mistakes, fraud, and bribery. Many of these issues are the result insufficient resources and the fragmented nature of supply chains. Blockchain offers a compelling new method to trace and verify goods and transactions along a supply chain. The use of distributed ledgers offers a number of advantages over traditional methods. Its core features increase transparency and reliability while reducing costs and corruption. A central component of blockchain is its immutability; once data is entered into the ledger it is not capable of being erased or overridden without a consensus approval from other nodes in the chain.

And blockchain has been noted to cut down on transaction costs along various points in the supply chain. If integrated properly it can help digitise and automate border entries. Recently, Brexit and the entry of British goods into French ports has provided a real-world lesson in the importance of efficient border crossings. Mexico, Peru, and Costa Rica have been working with the Inter-American Development Bank to develop CADENA, which uses blockchain to modernize their customs operations and mutual recognition agreements. These cuts in transit costs offer miners, importers, and manufacturers incentive to integrate the technology into their supply chains. 

The technology has already been utilised in efforts to increase sustainable supply chains management and strengthen fair trade practices in commodities such as coffee. The idea to introduce blockchain into the sphere of conflict minerals is not completely novel, Usman W. Chohan wrote on its applicability to the case of the mineral cobalt. Its interoperability is an asset that allows for various jurisdictions to combat a globalized problem more efficiently. 

However, blockchain, as with any emerging technology, does present a few challenges. First and foremost, the governance of blockchain is still in need of work as it continues to grow and mature. The same interoperability which makes the technology an asset also presents the challenge of coordinating policies across jurisdictions and enforcement bodies. Procedures for issuing certificates, verification of authorised actors, and end-station protocols would have to be agreed upon before it could successfully be implemented. 

Additionally, blockchain’s success in tracing conflict goods is dependent on its implementation at the origin point of the supply chain. If a percentage of miners are not willing to implement the system and tag their minerals at the source, then that same percentage of minerals may not be accurately labelled as conflict-free. At a certain point the percentage would negate the usefulness of the remaining supply chain. Ensuring that all legitimate miners are included in the blockchain is essential to the success of the overall project. 

However, as long as armed groups seize control of natural resources and use the profits to fund conflict, we will need to scrutinise supply chains. Traditional methods have left gaps open, challenged locals who rely on the industry for their livelihood and allowed bad actors to continue profiting. There are issues to any disruptive technologies, but the benefits outweigh the challenges. Blockchain offers the most innovative and efficient way to manage supply chains, cut the flow of conflict minerals, and ultimately help slow the conflicts they perpetuate.

Andrew Scanlon is an MSc student in International Relations at the University of Edinburgh and an external representative for Strife. His research interests focus on the Indo-Pacific region and the use of emerging technologies in international regimes.

The Overextension of Sovereignty: How states have dampened opposition to annexation

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Kremlin Dome of Senate. Photo Credit: iStockPhoto.

In the twenty-first century the calculation that war is too costly to pursue in the conventional manner has kept large scale inter-state conflict from occurring. States are no longer willing to send tanks rolling across borders to invade neighboring countries. The military, economic, and political cost/benefit analyses simply do not justify those actions in the present state of international relations. Yet, this does not cure a state’s appetite to expand its control in favor of pursuing its national interest. However, it does shift the strategy used to expand its presence. The use of proxies to engage on behalf of a state has been documented in conflicts such as the ongoing war in Yemen. A number of states utilize this strategy to pursue plausible deniability. An alternative method to mollify the international community over aggressive actions has been increasing in prevalence – extending sovereignty over peoples or structures outside of their present jurisdiction in order to more forcefully justify the aggressor’s presence. By over-extending their claim of sovereignty, these states attempt to shift the perception of their actions from aggressors to defenders and dampen any possibility of a united front willing to confront their activities. We have seen this strategy play out in Crimea and eastern Ukraine under President Vladimir Putin in 2014, and more recently in the South China Sea and the Himalayas by President Xi Jinping.

The Russian case in Ukraine

The Russian Black Sea Fleet’s continued access to naval bases in warm-water ports in Crimea and Russia’s support for the fiercely pro-Russian Ukrainian President Viktor Yanukovych were national interests, but a traditional military incursion into Ukraine would have triggered costly consequences. Instead, Vladimir Putin began using rhetoric related to the protection of ethnic Russians in Crimea and eastern Ukraine. Following violence in Kiev, Putin declared that “We understand what worries the citizens of Ukraine, both Russian and Ukrainian, and the Russian-speaking population in the eastern and southern regions of Ukraine… we retain the right to use all available means to protect those people. We believe this would be absolutely legitimate.” After mass protests in Kiev and the formation of pro-Russian separatist militias in Ukraine, Putin used the doctrine of Protecting Nationals Abroad (PNA) as justification for sending military supplies to separatists and deploying “little green men” into Crimea and eastern Ukraine. But many of these people Putin claimed to protect were not citizens, but merely ethnic Russians or Russian-speaking peoples. Whether the doctrine of PNA is lawful or simply tolerated, its traditional application has been to citizens, not foreign nationals with ancestry to the state utilizing the doctrine. Nevertheless, in 2019, Putin issued a decree allowing close to 3.5 million people living in the eastern Ukrainian regions of Donbass and Luhansk to obtain Russian passports and brings Putin’s actions closer to those previously allowed by the international community.

Putin did not stop at protecting ethnic Russians. He also used historical claims to justify retaking territory. In a speech to a joint session of parliament asking for the formal annexation of Crimea, Putin professed “All these years, citizens and many public figures came back to this issue, saying that Crimea is historically Russian land and Sevastopol is a Russian city. Yes, we all knew this in our hearts and minds”. Russia’s relinquishing of Crimea to Ukraine, in the process suffering a ‘historical wronging’, and its subsequent use as a rationalization to retake territory followed the framework of previous annexations. A number of international leaders compared the move to Hitler’s annexation of Sudetenland in 1938. The UN General Assembly has adopted resolutions urging Russia to withdraw military forces from Crimea and supplies from going to eastern Ukraine. A certain amount of backlash was inevitable following the annexation of territory, but Putin would have been naïve to believe that there would have been silence after such a move. However, other than remarks by world leaders and a number of U.S. and EU economic sanctions, Putin has been relatively free to pursue his interests in Crimea and eastern Ukraine. His use of the PNA doctrine and historical sovereignty over territory allowed him to keep the conflict, and ensuing fallout, below a level of escalation consistent with traditional military invasions.

China’s Mountain and Sea Strategy

While Russia has used the PNA doctrine as justification for interference into neighboring countries, China has used infrastructure. In the South China Sea, the Nine Dash Line asserted by China encompasses vast majorities of the sea that extend far beyond the usual exclusive-economic zones given to each state as a result of the United Nation’s Convention on the Law of the Sea (UNCLOS). Chinese explanations for this broad claim are based on historical use of the sea by China dating back thousands of years. In modern times, the Chinese People’s Liberation Army’s Navy (PLAN) has been constructing artificial islands in the South China Sea since 2013, allowing them to issue claims of sovereignty over disputed territory. In April, China created two new administrative districts in the South China Sea. This month, China drafted a new law that would expand the Chinese Coast Guard’s ability to enforce its sovereignty over the islands, permitting them to destroy foreign construction on islands claimed by Beijing and fire weapons on foreign ships.

China has now duplicated this strategy on land. In recent weeks, China completed the initial construction of a new village where the borders of India, Bhutan, and China meet in the Himalayan Mountains. This came after a June border clash in the Ladakh region of the Himalayas, near Kashmir, that resulted in the deaths of 20 Indian soldiers and an unknown number of Chinese casualties. The new Chinese village is reported to be constructed within the territory of Bhutan, just south of the Doklam Plateau. Bhutan and China have been engaged in territorial disputes for nearly 35 years, much of which is focused on the western regions of Bhutan. The Doklam plateau is strategically significant for India’s continued access to its eight northeastern states, as well as their land borders with Bhutan and Myanmar. Under Chinese control, they would have the ability to block this access. The new Chinese village may only be the first in a series, much like the artificial islands, that would give China anchor points to protect the ‘sovereignty’ of Chinese territory or peoples.

These anchor points are core components to the strategy of Chinese expansion. States, including Australia, Japan, Vietnam, and Malaysia, are concerned with a resurgent China, its brazen aggression, and the potential of forceful annexation of territory. These fears present a major diplomatic challenge to China’s longer-term strategy. [[i]] Therefore, China has attached rhetoric to provocative actions in an attempt to alleviate concerns over their rise, engaging in a “rhetorical trap”. China has used rhetoric such as ‘China’s peaceful rise’ to assuage fears over actions that would otherwise seem more hostile. The rhetoric emphasizes the protection of sovereign entities, instead of engaging in military conflict on existing territory of sovereign states. This rhetoric has typically been utilized around actions in the South China Sea, but Beijing may begin using similar terminology regarding its efforts in the Himalayas.

Both the Russian and Chinese strategies are aimed at expanding territorial control without the stigma or risk of conventional conflict over existing territory, structures, or peoples. This shifts the conflict from a conventional military one to a more hybrid model that incorporates higher levels of rhetoric and international public opinion. Both the Russian and Chinese approaches try to build a framework that give them a defensive right to use force instead of an aggressive seizure of territory. While these strategies have allowed Russia and China to extend their ambitions over neighboring territories, how long will it take for their neighbors, and world leaders, to effectively respond to these enigmatic strategies… if ever?

 

[i] For more on the diplomatic challenges facing China in Asia over their renewed presence as a great power, Anisa Heritage and Pak K. Lee (2020) use an international order perspective to analyze the tension in the South China Sea, available here.