Financial Crime World

Western Sahara Ceasefire Deal Stalled, Trade Agreements Under Scrutiny

Conflict Escalates as UN Resolutions are Ignored

Rabat, Morocco - The fragile ceasefire in Western Sahara has collapsed, reigniting tensions between Morocco and the Polisario Front. This stalemate has sent shockwaves through international trade circles, as several European companies face legal challenges over their involvement with Moroccan businesses operating in the disputed territory.

Background on the Conflict

The conflict began in 1991, with Morocco consolidating its presence through trade agreements and renewable energy projects. The Polisario Front, backed by Algeria, has accused Morocco of violating UN resolutions and international law by exploiting the territory’s natural resources without the consent of its people.

European Court of Justice Decisions

The European Court of Justice (ECJ) has issued two judgments against EU-Morocco trade agreements, ruling that they cannot apply to Western Sahara. These decisions have significant implications for companies operating in the region, with several businesses already facing legal and reputational risks.

  • In 2016, the ECJ ruled that the EU-Morocco Agriculture Agreement could not include Western Sahara in its scope of application, citing the principle of self-determination and permanent sovereignty over natural resources.
  • A similar judgment was issued in 2018 regarding the EU-Morocco Fisheries Agreement.

The legal challenges have already resulted in court cases against several companies operating in Western Sahara or importing products from the territory into Europe. Examples include:

  • In May 2017, a South African court seized a vessel carrying phosphate rock from Western Sahara, citing the ECJ’s ruling.
  • A Danish ship was also detained in 2017 for transporting phosphates to Canada.

Consequences for Businesses

The conflict has raised concerns about increased supply-chain and business risks for companies operating in the region. The Polisario Front has denounced six major European companies for their involvement with Moroccan businesses in Western Sahara, accusing them of “colonization crimes.”

  • Businesses operating in the region must navigate complex legal and political risks to avoid reputational damage and regulatory violations.
  • Adverse media screening services and due diligence reports can help companies assess and prevent risks, ensuring a robust defense against legal challenges.

Calls for Action

As tensions escalate, the EU is under pressure to review its trade agreements with Morocco and ensure compliance with international law. Several Norwegian NGOs have called on their government to raise the issue at the UN Security Council, while others are urging institutions to impose sanctions on Morocco for violating human rights in Western Sahara.

Conclusion

The stalemate in Western Sahara has significant implications for businesses operating in the region. Companies must be aware of the complex legal and political risks involved and take steps to mitigate these risks. By conducting thorough due diligence and adhering to international law, businesses can help prevent reputational damage and regulatory violations.

About the Author

Davide Contini is a researcher for Dow Jones Risk & Compliance’s adverse media entities unit. He covers Italian and Francophone sources and has expertise in English-, French-, Spanish- and Italian-language research.