Financial Crime World

Western Sahara Conflict Escalates, Threatening Global Businesses

A long-standing dispute over the status of Western Sahara is heating up, posing significant risks to global businesses operating in the region. The conflict between Morocco and the Polisario Front has been ongoing since 1991, with no resolution in sight.

Background

The Moroccan government has consolidated its presence in Western Sahara through trade agreements, exploiting the territory’s natural resources, including phosphates and renewable energy. However, these agreements have been challenged by the Polisario Front, citing violations of UN resolutions, international law, and human rights.

  • The European Union has several trade agreements with Morocco, but the EU’s highest court, the European Court of Justice (ECJ), has ruled that these agreements cannot include Western Sahara in their scope.
  • The ECJ has also ordered companies operating in Western Sahara to obtain the consent of the territory’s people before exploiting its resources.
  • This poses significant legal and trade implications for businesses operating in the region. Companies involved in trade with Morocco or Western Sahara risk facing legal action, reputational damage, and supply-chain disruptions.

Operational Risks

  • The escalating conflict poses operational risks for businesses operating in Western Sahara. The territory is a key location for renewable energy projects, with companies such as Siemens and Enel involved in large-scale green-energy initiatives.
  • Increased hostilities could disrupt operations and create uncertainties about doing business in the region.

Sanctions Risks

  • There is also a risk of sanctions being imposed on Morocco or businesses operating in Western Sahara. Several Norwegian NGOs have called on their government to act on the matter at the UN Security Council, while other organizations are pushing for institutions to impose sanctions on Morocco for violating human rights in the territory.
  • To navigate the complex threats posed by the Western Sahara conflict, businesses need sound information and robust risk management strategies.
  • This includes monitoring the situation through media and corporate communications, conducting enhanced due diligence (EDD), and using adverse media screening (AMS) services to identify potential risks.

Expertise from Dow Jones Risk & Compliance

  • Dow Jones Risk & Compliance provides businesses with reliable information and risk assessment tools to help them navigate these complex threats.
  • With a team of expert researchers covering Italian, French, Spanish, and English-language sources, Dow Jones can provide clients with accurate and timely information to support their business decisions.

About the Author

Davide Contini is a researcher for the adverse media entities unit of Dow Jones Risk & Compliance. He has extensive knowledge of the political environments of North and Francophone Africa and has worked as a lobbyist for Western Sahara Resource Watch, a Brussels-based NGO.