Financial Crime World

Western Sahara Conflict Reignites: Threatening Regional Stability and Business Interests

Background

A long-standing dispute over the status of Western Sahara has reignited, sparking concerns about regional stability and business interests in the region. The conflict pits Morocco against the Polisario Front, a Sahrawi nationalist movement seeking independence for the territory.

European Union Trade Agreements Under Scrutiny

The latest developments come as the European Union’s trade agreements with Morocco are facing legal challenges in the European Court of Justice (ECJ). The ECJ has issued judgments stating that EU agreements with Morocco cannot include Western Sahara’s resources without the consent of the people living there. These rulings have significant implications for businesses operating in the region, including increased supply-chain and compliance risks.

History of the Conflict

The conflict began in 1976 when Morocco annexed Western Sahara, a territory formerly under Spanish control. In 1991, Morocco agreed to organize a referendum on independence with the United Nations Mission for the Referendum in Western Sahara (MINURSO). However, negotiations have failed to reach a compromise, maintaining the status quo.

Morocco’s Consolidated Presence

Morocco has consolidated its presence in Western Sahara, concluding trade agreements involving resources from the territory. The Polisario Front has attacked these agreements in court, citing violations of UN resolutions and international law. These lawsuits have caused reputational, supply-chain, and legal problems for businesses operating in the region.

Increased Business Risks

The reemergence of the conflict increases business risk in the area, particularly for companies involved in agricultural and renewable energy projects. Morocco is a significant trading partner with the EU, and any disruptions to trade could have far-reaching consequences.

Companies Operating in Western Sahara Face Increased Risks

Companies operating in Western Sahara or trading its resources face increased risks, including:

  • Supply-chain disruptions: Delays and cancellations of shipments could impact business operations.
  • Compliance risks: Failure to comply with international law and regulations could result in reputational damage and legal liabilities.
  • Regulatory violations: Companies may be accused of violating local laws and regulations, leading to fines and penalties.

To navigate these complex threats, companies need reliable information about the political situation in Western Sahara. Adverse media screening (AMS) services and due diligence reports can provide critical insights into the risks associated with operating in the region.

About the Author

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Davide Contini is a researcher for Dow Jones Risk & Compliance’s adverse media entities unit, covering Italian and Francophone sources. He has extensive knowledge of North and Francophone Africa and serves as a board member of Western Sahara Resource Watch, a Brussels-based NGO advocating for human rights in the territory.