Transnational governance organizations in failed states : conflict-free mineral supply chains in the DRC

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Transnational governance

organizations in failed states

Conflict-‐free mineral supply chains in the DRC

Master Thesis

By Susi Huisman – International Relations – 5883369

University of Amsterdam 27 June 2014

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Currently the electronics industry is rapidly evolving due to an increasing demand in electronic devices such as mobile phones, laptops and tablets. These products are manufactured with the use of minerals like tin, tantalum and tungsten; the 3Ts. Because of the growing demand for certain devices, the demand for 3T minerals is rising as well. 3T minerals are mostly extracted in mineral rich countries like the Democratic Republic of Congo (DRC). One could argue that the growth in mineral demand could potentially be beneficial for mineral rich countries and their populations. However, scholars increasingly confirm that the opposite is true; being rich in minerals can actually be seen as a burden for the country, which is also referred to as the ‘resource curse’ (Billon, 2000, p. 562).

Because the mineral trade produces a large amount of money, disputes and conflicts arise about the share of the mineral profits. The DRC is a distinctive example of a country where conflicts have existed for years already, in which the mineral industry plays an important role, as the DRC is one of the most important extraction places (Emizet & Ndikumana, 2003, p. 1). Several armed rebel groups are interested in controlling mineral extraction and take a large share of the profits. Because of this, groups can finance and continue existing conflicts. Although minerals are not always necessarily the principal cause of conflicts, they play an important role in the ever-‐ continuing battles (Billon, 2000, p. 561), as is the case in the DRC, in which rebellion wars have been going on since its independence in 1960 (Prendergast & Lezhnev 2009, p. 2).

Over the years, these violent rebellion wars have caused the killing of at least five million civilians and the displacement of a similar number of people (Sutherland, 2011, p. 5-‐6). This is due to the violence with which various rebel groups attempt to get access to minerals by aggressively forcing the population to cooperate and rebel groups systematically use child soldiers and sexual violence to gain mineral profits (Sutherland, 2011, p.5-‐6). People working in the many mines under control of armed groups, work in horrific circumstances with a lack of health and safety standards and receive only a very small percentage of the total amount of money earned (Prendergast & Lezhnev 2009, p. 2).

The increasing demand for electronic devices indirectly supports and finances these rebellion wars in countries like the DRC, while the mineral trade should actually

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be beneficial for the local population through the financing of schools, health care or the implementation of properly earned jobs (Prendergast & Lezhnev 2009, p. 2). Because of the indirect involvement of western electronic brands and companies in these conflicts, they are increasingly pressured to reveal their mineral sources and are examined by civil society organizations in their use of ‘conflict minerals’. Reacting to this pressure, various corporations have developed self-‐regulatory mechanisms to solve this issue. However, scholars are critical about these regulatory means as they are not stringent enough and mostly invented to save the corporation’s reputation (Faruque, 2006, p. 55). Another form of regulation by non-‐sate actors is carried out by transnational governance organizations (TGOs). TGOs are entities willing to regulate various global supply chains and act across borders in making global production more sustainable, the mineral supply chain being one of them.

Literature about TGOs and their regulation mechanisms increasingly recognizes that TGOs should not act in a vacuum (Bartley, 2011, p. 518) but public and private regulation should be actively synergized in order to improve the regulation of global issues (Gulbrandsen, 2012; Lehr, 2010; Faruque, 2006). One idea that scholars hold is that governments should be the responsible actor to integrate the two regulation forms by actively incorporating transnational governance regulations into the public sphere or by financing and supporting regulation in such a manner that TGOs become capable actors to effectively regulate a supply chain (Schleifer, 2013, p. 1). This collaboration between public actors and TGOs is viewed as an effective governance approach to regulate global supply chains like the mineral industry.

However, this ideal state involvement of facilitating and strengthening TGOs regulation is based on the western developed states with governments having the capacity to enforce political decisions, control the means of violence (Risse and Lehmkuhl, 2006) and act in accordance with public interests (Scharpf, 1997). Often, mineral rich countries like the DRC lack these state characteristics. The DRC is even labelled a failed state as it cannot provide any of the functions a state should administer (Eizenstat, Porter & Weinstein, 2005, p. 136). Börzel (2010) and Risse and Lehmkuhl (2006) reason that TGOs could govern in two ways within failed states; with or without the failed state. However, literature does not give insights into what TGOs expect from failed states and how TGOs perceive the interaction with them in governing. This thesis therefore aims to gain some understanding in TGOs’ perception on the interaction with

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failed states that cannot facilitate TGOs’ regulations by adopting or strengthening their regulation as strong states can (Schleifer, 2013, p. 1).

Since the mineral industry is a global supply chain in which several TGOs are active and operate within the DRC, a failed state, this research takes the mineral industry in the DRC as a case study. Within this thesis western TGOs are the main focus, which are mostly funded by western countries, corporations or other stakeholders to develop conflict free mineral supply chains. Compared to the capacity failed states have, these Western TGOs could be seen as powerful actors. Therefore it is important to understand what role TGOs, as powerful actors, expect towards failed states and how TGOs perceive the interaction with this form of state. The following research question will therefore be asked: ‘How do TGOs interact with failed states in developing conflict-‐

free mineral supply chains?’

In order to answer this research question it is essential to uncover the process of interaction. Therefore the problem definition of conflict minerals that TGOs hold is crucial to understand as this might influence the expectations TGOs have towards the failed state (Haufler, 2010, p. 55). Secondly, it is meaningful to identify the ideas TGOs have about the role of the state. The problem definition and ideas of TGOs will reveal what TGOs expect from the DRC state in governing mineral supply chains and it will show what ideas and norms are used as a guidance for failed state behaviour. This is important as Finnemore and Sikkink (2001, p. 398) argue that ideas and norms of powerful actors could be diffused to other actors through interaction. Lastly, the actual interaction that TGOs had with the failed state is important to study as well. It will illustrate to what extent TGOs perceive that the failed state is changing their behaviour based on guidance of TGOs on how it should ideally behave in regulating the mineral supply chains. This demonstrates if TGOs are able to contribute to the state structure and behaviour of failed states.

Because this study develops more insights in the expectations of TGOs towards the failed state and how they actually interact with them based on these expectations and their ideas, it enhances the knowledge on public and private interactions in the context of a failed state. Moreover it shows that failed states should be taken into account and if TGOs perceive that the failed state indeed adapts the right behaviour. These insights could enhance theories on public private interactions but related to a context of failed states instead of solely focussing on western developed states.

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To answer this research question, concepts of transnational governance organizations and failed states will firstly be clarified. Accordingly, relevant theories will be discussed on the cooperation between public and private regulation, the diffusion of ideas and norms of TGOs about state behaviour and literature on possible interactions between TGOs and failed states. In the methodology section an overview will be given of the unit of analyses, the way valuable data is collected and furthermore how the analyses were executed. Before the results are reviewed, a background chapter on the DRC and its mineral industry provides an understanding of the context of this research. Thereafter, the results are demonstrated and analysed in the analyses chapter whereafter a conclusion will be given on the answer of the main research question, which is followed by a discussion chapter that reveals limitations of this study and future research recommendations.

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2. Theoretical framework 2.1 Concepts

Considering that the main focus within this research lies on transnational governance organizations (TGOs) and failed states, it is important to firstly understand what meaning is given to these concepts within this thesis before further useful theories will be discussed within this section.

2.1.1 Transnational governance organizations

TGO is a concept that may have various names with slightly different meanings; multi-‐ stakeholder governance, global public policy networks, private regulation, transnational business governance and so on (Haufler, 2012, p. 6). In this study transnational governance organizations will be the concept used as it endorses the various organizations active in developing conflict-‐free mineral supply chains. According to Gulbrandsen (2012, p. 1) TGOs emerged across policy sectors in various industries like forestry, fishery, aquaculture, cocoa and minerals. Haufler (2012, p. 3) argues that various initiatives were developed in the mineral industry caused by an international concern about the link between natural resources richness and weak governance.

Governance organizations are designed to establish standards for social responsible production and go beyond the voluntary codes of conduct that companies frequently develop, as TGOs require independent verification of the compliance with standards (Gulbrandsen, p. 1). Furthermore, TGOs implement regulation in certain supply chains of various industries (Bartley, 2011, p. 518). According to Dingwerth (2008, p. 610), this regulation structures and gives meaning to the behaviour of different actors worldwide, like companies. Besides, TGOs are often involved in supply chains that are spread out globally and therefore involve actors across borders. This shows the importance of the transnational characteristic of TGOs. They often originate from western states but are active in non-‐western countries in various parts of the world. Accordingly, TGOs are not bound to nations as their regulatory focus concerns supply chains that particularly operate across borders (Dingwerth, 2008, p. 611).

TGOs, however, do vary in their constitution. Some TGOs are funded by western states, whereas others are initiatives of corporations within the industry or are constituted by non-‐governmental organizations (NGOs) (Dingwerth, 2008, p. 610). An additional distinction can be made in the various stakeholders that influence the

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decision-‐making of TGOs. A multilateral organization involves various actors, a bilateral organization consists of two stakeholders and a unilateral TGO only contains one stakeholder that actively influences TGO decision-‐making (Dingwerth, 2008, p. 610). Additionally, not only the number of stakeholders but the kind of stakeholders that influences TGO’s decision making can vary as well as well. Companies differ in their interests compared to civil society organizations that could have an effect on the decision-‐making of TGOs.

So, although their transnational character and regulatory focus on global supply chains characterizes each TGO within this thesis, they do differ in the way they are constituted and the influence various stakeholders have on TGOs’ decision-‐making.

2.1.2 Failed states

An ideal state, according to Weber, should obtain statehood. Statehood refers to the ability of the state to steer hierarchy and have the legitimacy and power to control the means of violence within its country (Börzel, 2012, p. 7). Rotberg (2002, p. 127) distinguishes various stages of statehood that result in different types of states. High forms of statehood constitute strong states followed by countries with a decreasing degree of statehood that creates the following types of states; weak states, failing states, failed states and collapsed states. Eizenstat, et al. (2005, p. 136) further elaborates on these state categories and argue that although a country may be poor, it cannot automatically be called a weak or failed state and conversely. A strong and stable state is namely formed by three essential functions: security, the provision of basic services, and the protection of essential civil freedoms (Eizenstat et al., 2005, p. 136). In case a state can only comply with one or two of these functions, it can be called a weak state. If it cannot realize any of these essential functions, it is a failed state according to Eizenstat et al. (2005 p. 136).

This thesis focuses on the Democratic Republic of Congo. According to Eizenstat et al (2005, p. 136) the DRC cannot provide security, basic services and the protection of civil freedoms. Consequently it could be called a failed state. They argue that especially the security provision is extremely weak within the DRC, which causes a decline in their sovereignty over their territory that subsequently leads to a violent exploitation of this ‘security gap’ by rebellious armed groups (Eizenstat et. al., 2005, p. 136). Kraxberger (2007, p. 1057-‐1058) also claims that the DRC is a failed state, which can only provide a

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few tasks like the security of the President and its elites but lacks essential functions that states should provide to their citizens. The Fund For Peace, who started an annual failed state index, likewise shows that the DRC is a failed state according to their index because it cannot provide the essential functions that are linked to statehood and strong states (“[Website Failed State index],” 2013).

This thesis thus refers to a state as ‘failed’, in case it does not have the authority to steer decision-‐making, lacks the legitimacy and power to control the means of violence (Börzel, 2012, p. 7), cannot provide security and basic services and lacks the protection of civil freedoms (Eizenstat et. al., 2005, p. 136). After clarifying these two main concepts, the next section will elaborate on relevant theories on public private interactions.

2.2 Theoretical discussion

After revealing the meaning of the two concepts, this section will explore relevant theories. To answer the research question, theories on interactions between TGOs and failed states will be reviewed in order to develop an idea on how interaction arises out of certain expectations and roles TGOs give to the failed state in regulating mineral supply chains in the DRC. This section firstly elaborates on general theories about public and private interactions. Secondly, literature on the role of the state will be discussed followed by a review of literature on ideas and norms that can be diffused by TGOs. Lastly, a discussion of potential interaction possibilities will be conducted after which several propositions are developed. Overall, this theoretical framework functions as a basis in understanding the process of interaction and it develops sub-‐questions and propositions that will be researched.

2.2.1 Public and private interactions

Non-‐state actors are increasingly involved in regulating processes of global supply chains in the forestry, fishery, coffee, cocoa and mineral industry. In some instances this is due to a lack of international agreement on how industries should be governed or it is caused by the perception that exclusively public regulation is not sufficient to effective and successfully govern global supply chains (Reed, 2009, p. 4). Non-‐state actors like corporations are seen as actors who could potentially fill this gap, left open by public regulation (Reed, 2009, p. 4). Corporations could develop self-‐regulatory mechanisms

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like internal codes of conduct. However, scholars are critical about these means of regulation as well. Firstly, these regulation mechanisms do not have any legal obligations and often lack sanctions for non-‐compliance (Faruque, 2006, p. 49). Secondly, critics argue that corporations only use these mechanisms to avoid reputational damage and do therefore not effectively solve pressing issues (Faruque, 2006, p. 55). Finally, codes of corporations are not stringent enough to overcome regulatory problems (Faruque, 2006, p. 57). Therefore, other non-‐state actors like TGOs can be viewed as additional actors involved in contributing to strengthening regulation of global supply chains in a sustainable manner.

The increasing involvement of private actors mentioned above might appear to be purely based on governance activities of non-‐state actors, however, this is not the case. Literature refers to the significant role of governments and public regulation in governance processes (Gulbrandsen, 2012; Lehr, 2010; Faruque, 2006). Scholars even acknowledge that the most efficient way of governing global matters is by a combination of public and private regulation (Gulbrandsen, 2012, p. 17). Gulbrandsen (2012) revealed that the rise of efficient policies in the fishery and forestry sector is not only achieved by activities of TGOs, rather, interactions between public and private actors like TGOs played a meaningful role in the creation of effective governance.

Reed (2009, p. 21) takes it one step further by arguing that private regulation initiatives like TGOs might be a first step in improved governance of supply chains, yet it is important that this first step be taken further to the second phase by embedding private standards into public policy and official law making. Schleifer (2013, p. 1) agrees with this perspective and states that governing global supply chains should be done within a hybrid regime in which public and private approaches are closely intertwined. He believes that states should harness the capacities and competences of private governance actors like TGOs (Schleifer, 2013, p. 1). This can be achieved through ‘orchestration’, in which private governance is integrated into public regulation, strengthing the international regulatory regime and helping to reach sustainability goals (Schleifer, 2013, p. 2). The integration of private regulation into the public framework should be realized by the use of government authority (Schleifer, 2013 p. 3). According to Schleifer (2013, p. 3) this can be achieved by a directive manner of orchestration in which regulation is formally incorporated, or by facilitating orchestration where states give financial support and technical assistance to make private regulation effective.

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Bartley (2011, p. 518) similarly argues that non-‐state regulation mechanisms cannot be viewed separately from the public regulation in which it is embedded. Private regulation is an additional layer of rules above the already existing regulation and legal frameworks in a country. Transnational governance does not make the state irrelevant as TGOs always act within a specific context that might influence TGOs (Bartley, 2011; 2014,). Therefore, Bartley (2011; 2014) reasons that the context in which TGOs operate should be taken into account as well. It is therefore important to zoom into the local contexts and narrow down the focus of this research to assure that these local characteristics are taken into account. Because this research studies the regulation of TGOs within failed states, the failed state itself is an important contextual factor that should be taken into consideration.

However, literature dealt with above is mostly conducted in a context of developed western buying countries with governments having adequate capacity to support TGOs and stimulate cooperation in various ways. Producing countries however, are not always ruled by governments that have sufficient capacity or a willingness to support TGOs (Risse & Lehmkuhl, 2006, p. 1). Many TGOs operate in producing countries with weak or failed states. Compared to the ideal situation of western strong states that support TGOs, the failed state characteristic of producer countries is an important contextual factor that could potentially change the way TGOs interact with failed governments and the role of states within this interaction.

Börzel (2010), Risse and Lehmkuhl (2006) are scholars focussing on governance in failed states. They developed important insights into weak governments and private actors contributing to this thesis. However, whereas they focus on possible ways in which TGOs can assist in governance within failed states, they do not elaborate on the expectations and demands TGOs have towards failed states in regulating global supply chains. Additionally, these scholars do not elaborate on the TGOs perception of the actual interaction with failed states in governance processes. This, however, is important to study since TGOs might expect different behaviour of failed states in comparison to expectations they have towards strong states. It is thus relevant to demonstrate how TGOs view the role of the failed state and accordingly how TGOs interact with them in regulating supply chains within a failed state context.

By revealing TGOs’ expectations and perceptions of interaction with the failed state, this study provides knowledge on the role of TGOs and how they perceive the ideal

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role of the failed state within regulating the mineral supply chain in the DRC. Theory on the ideal role of the state should therefore be analysed. Accordingly, it is important to discuss how TGOs could diffuse their ideas on how the failed state should behave, to finally discuss the interaction between TGOs and failed states.

2.2.2 The ideal role of the state

To gain understanding in the expectations and interactions TGOs have towards the failed state, it is firstly important to understand the ideal responsibility of a state as recognized in relevant literature. Scharpf (1997) reasons that states require statehood, which is an institutionalized relationship of domination, subordination and hierarchy. Börzel (2010; 2012) and Risse and Lehmkuhl (2006) agree with this and follow Max Weber, who argues that statehood is a central authority structure in which the state has a legitimate monopoly over the means of violence and is able to enforce political decisions within a country. This enforcement should be used for the provision of common goods and states should accordingly act in the interest of the public (Scharpf, 1997). Besides, states are problem-‐oriented (Börzel & Risse, 2010) and seek to increase or maintain their problem-‐solving capacity in policy processes. In the modern OECD world, states are sovereign entities that construct a shadow of hierarchy in which states explicitly or implicitly are capable of imposing binding rules to other actors (Börzel & Risse, 2010, p. 5). In the shadow of hierarchy the state is the most important actor with a final say in binding rules. Thus, states are sovereign and have the authority and capability to make decisions and solve problems.

Failed states, however, may not act in the shadow of hierarchy, as they do not have the capacity to enforce decisions and solve problems. Furthermore, the control over the means of violence and the provision of common goods that Weber and Scharpf (1997) identify as statehood may be missing in failed states too. This lack of core tasks a state should endorse, causes a situation in which TGOs act within failed states without a broader facilitator which is capable of solving problems, enforce decisions, has the authority over the entire country and acts in public interest.

These missing core tasks have consequences for regulation processes of TGOs within failed states. Risse and Lehmkuhl (2006, p. 8) point to three possible modes of regulation TGOs can decide upon; governance by governments, governance with governments and governance without governments. This thesis focuses on the latter

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two since the first option refers to cases in which TGOs do not decide to even regulate in failed states and leave the supply chain regulation to the failed governments. This option is not studied as this research focuses on TGOs that do aim to regulate in failed states. The remaining options of TGO regulation are either to regulate with or without governments.

However, Börzel (2010, p. 5) argues that governance without governments is likely to be more effective when a form of hierarchy supports it. As is already mentioned, failed states often lack this hierarchy and are not capable to govern effectively. This makes the need for governance by TGOs more pressing, as poor regulation in supply chains is probably present in failed states. However, literature on public private interaction reveals as well, that effective governance should be developed by the authority and support of states, that are able to harness the capacities and competences of TGOs (Schleifer, 2013 p. 3). This creates a dilemma; in circumstances of weak governance and a lack of core state tasks, TGOs are desired to implement effective regulation (Börzel, 2010, p. 5). However, theories point out that TGOs become effective with the help and support of strong governments (Schleifer, 2013 p. 3), which is lacking in failed states. This created dilemma is summarized in the figure below.

Figure 1. The shadow of hierarchy and diverse incentives for cooperation for governments and non-‐state actors. (Börzel & Risse 2010, p. 117)

Börzel and Risse (2010, p. 2), however, argue that International Organizations (IOs) and the norms and ideas they incorporate can be seen as an equivalent for the support of governments that failed states lack. It is therefore interesting to see if the norms and ideas TGOs hold could as well be seen as an equivalent to strong state support as the

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norms and ideas of TGOs about the role of the failed state could potentially be diffused to failed states. Finnemore and Sikkink (2001, p. 398) as well argue that powerful actors are able to diffuse ideas and norms to other actors. This would mean that the ideas and norms of TGOs could possibly support proper governance in a failed state context instead of seeing this as a core governmental task as the dilemma of Börzel and Risse (2010, p. 117) showed. This will be elaborated in the next section.

2.2.3. TGOs diffusion of ideas and norms

Before an explanation is given of how TGOs might act as a facilitator for failed state governance, it is important to know why TGOs matter and why their ideas are important. According to Perks (2012) the power of non-‐state actors in regulation processes, and the regulation of mineral supply chains especially, is increasing compared to the power of failed governments. Therefore, it is valuable to analyse how these increasingly powerful actors like TGOs interact with failed states in regulation practices.

Finnemore and Sikkink (2001, p. 398) claim that powerful actors have a privileged role in processes of social construction as they can influence and shape other actors according to their own ideas. They continue by stating that entities like IOs frame issues, set agendas and mobilize public actors to solve the problem framed according to their own ideas (Finnemore and Sikkink, 2001, p. 398). Haufler (2010, p. 55) similarly argues that the problem definition of TGOs might have consequences for their solutions. As TGOs are powerful actors compared to failed states, it might be that their way of framing issues and setting agenda’s could be meaningful to public actors as well. It is therefore important to analyse the way TGOs frame an issue as this could affect their interaction preferences in governing within failed states. Concretely, it might be the case that TGOs’ way of framing a problem could shape expectations they have towards the role of the failed state. In order to reveal if TGOs are able to influence and shape other actors similarly as IOs are able to (Finnemore and Sikkink, 2001, p. 398), it thus is firstly important to reveal the way TGOs frame a problem and especially what role the state plays within this as this can be viewed as a first step in constructing expectations towards the failed state. The following sub-‐question will therefore be asked:

Sub-‐question 1: How do TGOs identify the problem of conflict minerals and what is the role of failed states?

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Besides the influence of the problem framing of TGOs, ideas and norms TGOs obtain about the ideal role of the state are important as well. These ideas and norms could influence policy solutions of TGOs and shape their expectations. The ideas and norms TGOs reveal in their expectations might create a normative structure (Börzel & Risse, 2010, p. 8). Börzel and Risse (2010, p. 8) argue that a normative structure can function as an alternative framework or guideline for states that lack proper governance. As this thesis focuses on the way TGOs interact with failed governments, it is important to understand the ideas TGOs hold towards the role of the failed state within governing supply chains. These ideas and norms could shape the expectations of TGOs towards the failed states that could function as a guideline for failed states to follow (Börzel & Risse, 2010, p. 8). This guidance might be translated into clear expectations about the behaviour that failed states should follow in order to improve governance of supply chains (Börzel & Risse, 2010, p. 8).

As a powerful actor compared to failed states, TGOs potentially aim to diffuse their ideas and norms about the ideal way of regulation to failed states (Finnemore & Sikkink, 2001, p. 398), in order to make the state comply with their normative framework and expectations. Haufler (2010) obtains a similar view as Finnermore and Sikkink (2001) on the role of TGO’s ideas in interacting with failed states. Policies of TGOs can be constructed by particular ideas TGOs embrace as important (Haufler, 2010, p. 55). Failed states might not only learn and adopt these important ideas because TGOs are more powerful (Finnermoe & Sikkink, 2001, p. 398), the ideas are meaningful to failed states as well since they are generally in line with ideas which the global normative environment obtains. These include ideas about corporate social responsibility but also about government’s behaviour to act responsibly and in a sustainable manner (Haufler, 2010, p. 56).

Several ideas on governance possibilities might be embraced by TGOs. They could reason that the failed state is too weak to govern, which could result in a situation in which TGOs aim to be directly involved in the political steering and regulation and accordingly adopt the function of governments, which is referred to as a ‘private authority’ (Risse & Lehmkuhl, 2006, p. 8). Secondly, TGOs might embrace the idea that the failed state should essentially be seen in the light of the ideal state, which should be able to provide ideal state functions. In this case, TGOs prefer to see themselves as additional governance bodies that aim to cooperate with the failed state. Börzel (2012,

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p. 10) takes it one step further by arguing that TGOs who aim at complementing states, actually aim at strengthening the enforcement capacity of state actors, thereby hoping that failed states finally become capable of providing core state tasks.

In conclusion, in order to see if the ideas and norms of TGOs indeed function as a normative framework and guideline for failed states, it is important to firstly reveal these norms and ideas that TGOs obtain about regulating within a failed state, which can be recognized in TGO’s expectations towards the failed state in governing supply chains. The second sub-‐question is therefore as follows:

Sub-‐question 2: What do TGOs expect from failed states in regulating a conflict-‐free mineral supply chain?

Thus, literature shows that it is valuable to study TGO’s problem definition and norms and ideas that they obtain about the role of the failed states as this potentially influences TGO’s expectations towards failed states. The expectations moreover, could influence the interaction between TGOs and failed states as the following section will reveal.

2.2.4. TGOs and failed state interaction

Finnemore and Sikkink (2001, p. 399) claim that interaction is an important instrument through which diffusion of ideas takes place. Consequently it is valuable to see how TGOs interact with the failed state to make them comply with their expectations according to their norms and ideas. However, these interactions could potentially vary based on the expectations of TGOs towards failed states. Dingwerth (2008, p. 610) argues similarly that the expectations of TGOs on how to regulate could give meaning to the behaviour of actor’s worldwide, possibly including failed states (2008, p. 610). Thus, TGOs’ regulatory expectations and the role of the failed state could possibly influence the way states behave. This section therefore elaborates on various interaction possibilities of TGOs and failed states, based on possible expectations of TGOs about regulating within a failed state context.

One interaction possibility is that TGOs expect to regulate without the state in a private authority (Risse & Lehmkuhl, 2006). Failed states could possibly react to this governance structure in a non-‐supportive manner as states, according to Weber and Scharpf (1997), are entities which seek to maintain or increase their problem-‐solving

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capacity. It is therefore possible to expect that TGOs perceive no support of states, as governments lose their problem-‐solving capacity to TGOs.

Secondly, the state might also react positively to the ideas of TGOs on governing without the state, as this could potentially create budget constraints for the government since TGOs take over regulation. Consequently, the state has budgets left to increase their governance and problem-‐solving capacity in other issue areas that do demand state regulation. This leads to an increase in their problem-‐solving capacity in the other issue areas, which is according to Weber and Scharpf (1997) the aim of states.

Thirdly, in case TGOs expect to regulate in a complementary fashion with failed states, states might act in accordance with the expectations of TGOs. Failed states then follow the normative structure TGOs have developed. In this situation TGOs are able to contribute to the construction of the failed state’s structure and behaviour. Moreover, it might be the case that TGOs indeed aim at building state capacity as Börzel (2012, p. 16) points out. This would mean a regaining of state capacity, which allows for an increase in their problem-‐solving competence. A case study of government reactions to the Forest Stewardship Council (FSC), a TGO that regulates supply chains in the forestry sector, could serve as an example of this potential interaction. The study revealed that the Guatemalan government initiated the implementation of the FSC as legal mandatory (Carrera, Stoian, Campos, Pinelo & Morales, 2004, p. 2). This shows that the FSC served as a first step in strengthening public regulation in the forestry sector in Guatemala. Besides, the norms and ideas the FSC has spread are perceived as a guideline since it is taken over by the Guatemalan government. This shows the potential of TGOs to shape governments behaviour and policies.

On the contrary this thesis specifically looks at failed states that mostly do not have a regulatory capacity. This means that there exists a fourth interaction possibility, in which the failed state is not able to comply with the expectations and governance guidance TGOs provide due to state’s weakness. On the other hand, a fifth interaction possibility would be that TGOs perceive that the failed state is frankly not willing to comply with their normative structure. This can be seen in the Indonesian case to which Cashore, Gale and Meidinger (2006, p. 39) refer. The normative structure and expectations of TGOs collided with the state’s ideas, which resulted in an inconsistency between the norms and ideas of TGOs and the government’s own policy preferences in

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the forestry sector exist (Elliott and Schlaepfer, 2001, p. 262). As a result the state was not willing to cooperate and TGOs could not shape the behaviour of the Indonesian state.

In order to clarify the above propositions on possible interactions, the figure below summarizes five possibilities.

TGOs’ expectation

Failed state reaction

Governance without government Governance with government

Not willing to support Fear of agency capture and loss of problem-‐solving capacity

Not willing

Not able to support -‐ No capacity

Support Budget constraints solving capacity with the State may gain problem-‐ help of TGOs Table 1: An overview of the interaction possibilities between TGOs and the failed state.

The theoretical framework is used as a basis out of which two sub-‐questions and these five propositions are developed:

P1a: TGOs govern without the government and TGOs perceive the failed state is not supportive.

P1b: TGOs govern without the government and TGOs perceive the failed state is supportive. P2a: TGOs govern with the government and TGOs perceive the state as not willing to comply with their expectations.

P2b: TGOs govern with the government and TGOs perceive the failed state as not able to comply with their expectations.

P2c: TGOs govern with the government and TGOs perceive the failed state as complying with their expectations.

Analysing the two sub-‐questions and propositions stemming from the theoretical framework, will allow the researcher two answer the main research question which is as follows: ‘How do TGOs interact with failed states in developing conflict-‐free mineral supply

chains?’

In order to do so, it is valuable to summarize the different mechanisms at stake that contribute to the occurrence of interaction between TGOs and failed states. Based on discussed theories the figure shows that the problem definition of TGOs as well as

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their ideas about the ideal state behaviour could potentially shape the expectations of TGOs towards failed states. One could view the expectations as a normative framework that functions as a guideline for failed states to act upon. In addition, this normative framework might be transferred to failed states through interaction (Finnemore & Sikkink, 2001). Consequently, this can result in various interaction possibilities, which are shown in the propositions mentioned previously. The following figure summarizes the interaction process as discussed in the theoretical framework.

Figure 2: The potential process of interaction between TGOs and failed sates.

This theoretical framework gave a basic understating on possible interactions of TGOs with failed states and what mechanisms could potentially shape this interaction. The analyses section will reveal to what interaction is perceived by TGOs and how this is created. Before results are discussed, it is, however, important to elaborate on methodology elements of this research.

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3. Methodology

As was pointed out in the theoretical section, literature exists on how western governments with strong states interact within transnational governance organizations in regulation. Scholars (Gulbrandsen, 2012; Faruque, 2006), however, recognize that governance in failed states is different. TGOs consequently have a different role when taking this failed state context into account (Börzel, 2010); Risse & Lehmkuhl, 2006). However, no understanding exists on the demands of TGOs towards failed states in governing supply chains or how the interaction with failed states is perceived by TGOs. This research aims to fill this gap and give more insights into how TGOs interact with failed states by answering this question: How do TGOs interact with failed states in

developing conflict-‐ free mineral supply chains?

As the focus of this study lies on TGOs’ perception of the role of and interaction with failed states, the unit of analysis are TGOs regulating in failed states. Five TGOs are analysed: The Conflict Free Tin Initiative (CFTI), Solutions for Hope (SfH), Pact, Bundesanstalt für Geowissenschaften und Rohstoffe Mineral Certification (BGR) and the ITRI Tin Supply Chain Initiative (iTSCi). The observations are TGOs perceptions of the problem definition of conflict minerals, expectations towards states and perceptions of the interaction with failed states. Because it is important to analyse the perceptions of TGOs within this, analysing policy documents and conducting interviews is the best way to discover relevant information to answer the research question.

The specific case in this study is the mineral industry in the DRC, which is chosen for several reasons. Firstly, the DRC is widely viewed as a typical example of a country with a failed state (Eizenstat et. al., 2005, p. 136; Cuvelier, 2010, p. 8). Secondly, the mineral industry is a sector in which several TGOs are active in the entire supply chain to make it conflict-‐free and sustainable. This makes it possible to analyse and compare different TGOs with each other. Lastly, the mineral industry is selected because of its political involvement due to the intertwining aspect of conflicts and mineral production. This political involvement makes it more interesting and relevant to focus on the interaction with failed states. The outcomes can possibly be generalised for other cases in which TGOs operate in failed or weak states, as the DRC is a typical case of a failed state. However, as the following background chapter will reveal, this has typical characterizations of its own as well, decreasing the generalizability of the results.

Transnational governance organizations in failed states : conflict-free mineral supply chains in the DRC