Financial Crime World

Western Sahara Conflict Re-Emerges: Businesses Face Increased Risk

The Western Sahara conflict has reignited tensions between Morocco and the Polisario Front, threatening to disrupt business operations and supply chains. This three-decade-old conflict has significant implications for companies involved in trade with Morocco or importing products from Western Sahara.

Background

Morocco has consolidated its presence in Western Sahara by concluding trade agreements involving resources from the territory. However, these agreements have been challenged by the Polisario Front in court, citing violations of UN resolutions, the Principle of Permanent Sovereignty over Natural Resources, and the Principle of Self-Determination of Peoples.

Companies involved in trade with Morocco or importing products from Western Sahara are at risk of legal and reputational issues. Some examples include:

  • In 2017, a South African court seized a vessel carrying phosphate rock from Western Sahara, citing illegal occupation.
  • The Danish Ultra Innovation was detained in May 2017 for transporting phosphate rock to Canada.

Key Takeaways

  • European Court of Justice (ECJ) judgments have created legal precedents affecting businesses operating in the region.
  • Companies involved in trade with Morocco or importing products from Western Sahara are at risk of legal and reputational issues.
  • The conflict poses risks of sanctions being imposed on Morocco for alleged human rights violations.

Operational Risks

Increased hostilities mean increased uncertainty about doing business in Western Sahara. Companies involved in large-scale energy projects, such as Siemens and Enel, are at risk of legal and moral consequences if they fail to comply with international law.

Key Takeaways

  • The conflict poses operational risks for companies involved in the region.
  • Large-scale energy projects may be affected by the conflict.
  • Compliance with international law is essential to avoid legal and moral consequences.

Sanctions Risks

The conflict also poses the risk of sanctions being imposed on Morocco for its alleged human rights violations in Western Sahara. Recently, 53 Norwegian NGOs called on their government to act on the matter at the UN Security Council.

Key Takeaways

  • The conflict poses sanctions risks for companies involved in trade with Morocco.
  • Alleged human rights violations may lead to sanctions being imposed on Morocco.
  • Compliance with international law and human rights standards is essential.

To mitigate risks, companies need sound information and enhanced due diligence. Adverse media screening services and due diligence reports can provide a robust defense against regulatory violations and reputational issues.

Key Takeaways

  • Companies must navigate complex threats in the Western Sahara conflict.
  • Sound information and enhanced due diligence are essential to avoid regulatory violations and reputational issues.
  • Dow Jones Risk & Compliance offers reliable information and risk assessment tools to help businesses navigate these threats.

About the Author

Davide Contini is a researcher for Dow Jones Risk & Compliance, covering Italian and Francophone sources. He has expertise in English, French, Spanish, and Italian-language research and holds a master’s degree in international relations and diplomatic affairs from the University of Bologna.