Responsible Business in Occupied Territories:
Case Study: Western Sahara
A map of the Western Sahara – photo courtesy of Human Rights Watch
A map of the Western Sahara – photo courtesy of Human Rights Watch
In 1963, the United Nations General Assembly classified Western Sahara, then a Spanish colony, as a non-self-governing territory. Morocco asserts pre-colonial sovereignty over the territory, but the International Court of Justice rejected this claim in an advisory opinion in October 1975. Shortly afterward, the Moroccan army entered Western Sahara and, on November 14, 1975, Spain signed an agreement transferring administrative control over most of the territory to Morocco. The area of Western Sahara under Moroccan control has been under occupation ever since, giving the Sahrawi population living there the protections of international humanitarian law in addition to those governing non-self-governing territories.
Morocco strenuously contests the territory’s status, claiming sovereignty and applying Moroccan laws there. The United Nations has not formally referred to it as occupied since a General Assembly resolution in 1979, apparently for political reasons. (In March, UN Secretary-General Ban Ki-moon referred to Western Sahara as “occupied” during a visit to a refugee camp, but following Morocco’s protest, his spokesperson explained it as a “spontaneous, personal reaction,” not a formal position.) In any case, the United Nations has long recognized Western Sahara as a non-self-governing territory. Its former legal counsel has set out that this affords the population of such territories rights with respect to natural resources, which are similar to those that apply in occupied territories.
The main Western Sahara industries are natural resource based: fisheries, phosphate mining, and agriculture. Morocco is also trying to exploit the region’s energy potential and has invited foreign investment. There is little reliable, independent data on the Western Sahara economy. But a 2013 report by the Economic, Social, and Environmental Council (CESE), a Moroccan government-appointed body, provided some details on the “Southern Provinces,” which include Western Sahara and the Moroccan governorate of Guelmim. It says international investors make up 10 to 15 percent of investment in the region, which Morocco offers local and national tax exemptions to attract. Fisheries constitute 31 percent of all jobs and 17 percent of the GDP. Morocco exports around 2.5 million cubic meters of phosphate from the Bou Craa mine in Western Sahara, generating 2,150 jobs. The report does not include information on revenue from phosphate export, but, according to Western Sahara Resource Watch, an international pro-Sahrawi activist group, the estimated value in 2013 was US$330 million. Morocco has issued oil exploration licenses to a number of companies, although they have yet to find oil or gas in commercially viable quantities. It is also investing in alternative energy, with the construction of two solar plants and a wind farm under way, and others planned.
Under international law applicable to both occupied and non-self-governing territories, the economic benefits from these activities should derive to the Sahrawi population of Western Sahara. In 2002, the UN legal counsel, Hans Corell, considered the legality of oil exploration and exploitation in Western Sahara. Based on article 73 of the UN charter, which covers non-self-governing territories, as well as numerous United Nations Security Council and General Assembly resolutions, International Court of Justice decisions, and state practice, Corell concluded that administering powers of non-self-governing territories may not exploit natural resources “in disregard of the needs, interests and benefits of the people of that Territory.” He found that while the two oil exploration contracts he examined were not illegal because they did not involve production and removal of oil for sale and “no benefits have as of yet accrued,” further exploration or exploitation would be illegal if “against the interests and wishes of the people of Western Sahara.” This finding appears to make consent an additional requirement, placing natural resources in such territories under even more stringent limitations than in occupied territories. Parameters for obtaining consent have been fleshed out in other contexts, such as indigenous peoples’ rights, and generally require the consent of legitimate representatives answerable to the population.
Morocco insists that the exploitation does benefit Sahrawis, given the state investment in developing the region and the jobs created. For example, the CESE report, which lays out a “new development model” for “the Southern Provinces” and which the Moroccan parliament unanimously adopted, promises that “government revenues from the exploitation of these resources will be mostly reallocated to the development of the Southern Provinces.” Elsewhere, the report says that 70 percent of the 11.5 billion Moroccan dirhams (US$1.2 billion) generated from natural resources goes to the region. It also identifies specific sectors where government investment exceeds revenue, claiming for example, that Morocco invested over US$2 billion in the Bou Craa mine, which operated at a loss until 2008, and that “locals” hold more than half of the jobs in the industry.
Companies may not solely rely on Morocco’s claims and commitment in the CESE report or elsewhere to ensure that the local population benefits from revenues they provide to the Moroccan government. Such an arrangement lacks the transparency and accountability to allow the company to make such payments while respecting Sahrawi rights. Morocco retains full control and discretion over revenues generated from Western Sahara resources, and there is no way of monitoring or verifying its claims of revenue and expenditures, or holding Morocco accountable for failure to match expenditure with revenue. An additional problem is that Morocco does not recognize Western Sahara as a distinct territorial entity, making it unclear what amount of revenue would benefit Sahrawi residents. Moreover, the economic integration of the territory into Morocco and inclusion of Guelmim in the “Southern territories” undermines the territory’s distinct and temporary legal status.
The court held that the agreement was fatally flawed because it does not “guarantee an exploitation of the natural resources of Western Sahara that is beneficial to its inhabitants.”
The inadequacy of relying on Morocco to disburse these revenues in accordance with its international law requirements forms the basis of a recent European General Court decision annulling the application of the EU-Morocco trade agreement on agricultural and fishery products insofar as it applied to Western Sahara. In response to a suit by the Polisario Front, the Western Sahara liberation movement, the court held that the agreement was fatally flawed because it does not “guarantee an exploitation of the natural resources of Western Sahara that is beneficial to its inhabitants.” The European Union defended the agreement, saying it would not economically harm Sahrawis and that nothing prevented Morocco from reserving revenues for them. But the court was not persuaded. It found the European Union had to ensure the benefits of its economic activities were reserved for Sahrawis and not merely rely on Morocco to do so. The European Union has appealed the decision. Nevertheless, the court’s findings are in line with a growing body of law on natural resources in occupied and non-self-governing territories.
To comply with their responsibilities under the UN Guiding Principles, fishing and other companies paying royalties to the Moroccan government may not rely solely on the Moroccan government to disburse these payments in accordance with international law. They must ensure that any funds they pay are transparently collected, independently audited, and fully used for the benefit of Sahrawi residents of Western Sahara.