A general view shows the Lafarge Cement Syria cement plant in Jalabiya in northern Syria, in February 2018. (DELIL SOULEIMAN/AFP via Getty Images)
Analysis

Businesses in the MENA region: What Role in Human Rights?

Human rights activists and civil society actors advocating for human rights throughout the Middle East typically do so by engaging governments, international organizations, and policymakers. The private sector, however, is a key actor that is often overlooked in these conversations about human rights. Businesses and business-related actors play substantial roles, both in violating human rights and in ensuring compliance with human rights norms. A recent report by the UN Working Group on Business and Human Rights outlines these contrasting roles that private sector actors can and do play across the region. 

One of the most universal business and human rights-related factors at play throughout the MENA region—and one that allows other business-related abuses of human rights to continue—is the business environment itself. Business and human rights practitioners, as well as anti-corruption activists, have noted that business-related human rights abuses have persisted, because of the environments in which they take place—ones in which compliance with human rights standards is not a priority. This environment is a product of a number of aspects. Primarily, many businesses in the Middle East operate within weak economies where businesses seek to prioritize their own survival over compliance with international human rights norms. Businesses that do choose to adhere to such standards are put at a disadvantage, because putting more resources towards improving human rights standards means putting fewer resources toward economic competition and business development. 

The lack of compliance among banks in the Middle East with the UN Guiding Principles (UNGPs) highlights this issue. A study conducted by ImpAct International surveyed 42 banks throughout the MENA region, finding only three to have demonstrated minimum effort to implement principles in the UNGPs. Eighty percent of surveyed banks had not taken any substantive steps toward ensuring that investments do not contribute to human rights abuses, whether it be human rights due diligence (HRDD), consultation of affected populations, or impact assessments. Moreover, none of the surveyed banks had any procedures in place for when investments were found to have contributed to human rights abuses. This demonstrates the degree to which the business environment in the banking sector in the Middle East fails to account for potential human rights impacts. With corruption rampant throughout the region, banks would likely have to put extensive resources toward identifying clients involved in corruption or human rights abuses—the same measures that would see banks losing out on high-profit clients. Such efforts would put any bank at competitive disadvantage against others in the region not implementing such measures. 

Additionally, businesses in MENA operate under states that have failed to regulate business activity, tackle corruption, and prevent business-related human rights abuses. Governments in many countries have failed to regulate business activity in accordance with the UNGPs and to foster an environment that promotes business compliance with international human rights standards, with Transparency International classifying the region as “highly corrupt, with little progress made towards controlling corruption.”

A lack of regulation in many MENA countries creates space for multinational corporations to exploit lower business and labor standards, even when their home states impose more stringent obligations on them. For example, French-Swiss building company LaFargeHolcim, along with other cement companies, has worked with Lebanese politicians to charge more than three times the international rate for cement in Lebanon, while Lebanese government figures increase tariffs, preventing other foreign companies from entering the cement market in Lebanon.

Many economies in the Middle East and North Africa are built on systems of corruption and crony capitalism, meaning that businesspersons and government officials rely on privileged access to resources and opportunities based on personal and political ties as well as patronage. Those in leadership positions who control large parts of economies in the region are the ones who benefit from this system, and often access to basic social services, necessary government documents, and employment opportunities, are only available to those who have access to the right personal connections. Businesses involved in corruption contribute to abuse of human rights through limiting the availability, quality, and accessibility” of basic goods and services. Additionally, there are clear links between corruption and human rights abuses, with the former often allowing business actors to further perpetrate human rights abuses with impunity.

Moreover, corporate transparency in MENA countries is minimal. Many states in the region do not have adequate legislation requiring businesses and their shareholders to disclose financial, shareholder, and ownership information and as a result, corruption as well as corporate involvement in human rights abuses can be easily-hidden.

Since the adoption of the UN Guiding Principles on Business and Human Rights in 2011, the UN Working Group on Business and Human Rights has called upon states to develop national action plans to implement the UNGPs. While Jordan and Morocco have expressed intent to develop national action plans, no states in the region have done so. 

 The COVID-19 pandemic has highlighted some of the costs that result from MENA governments failing to impose human rights obligations on businesses. The costs of socially-distant work and the impact the pandemic has had on the economy has resulted in the failure of businesses to provide adequate protections for their employees. There have been reports of employees’ wages being reduced significantly, while others are forced to take unpaid leave. There have also been reports of employees not being paid for months since the start of the pandemic as well as reports of workers working longer hours and without proper protective measures. In Jordan, for instance, in one day, 600 Bangladeshi migrant workers at a single garment factory tested positive for the coronavirus.

Business and Conflict Spotlight: Syria and Yemen

These dynamics are further heightened in conflict settings. Although businesses may seem like neutral actors, their activities and partnerships can have lasting and significant impacts on conflict dynamics as well as on the human rights situation on the ground. The UN Guiding Principles on Business and Human Rights highlight the importance of heightened” human rights due diligence in the context of a conflict. Moreover, they highlight the ways in which businesses have been complicit in international crimes—this is true for both domestic as well as foreign and multinational businesses. 

In Syria, conflict has led to increased risk of business-related human rights abuses. While crony capitalism and related abuses predate the war in Syria, the conflict has seen the developing and funding of pro-government militia groups, the financing and supporting of Syrian government ministries, and the confiscation of displaced personsproperties by businesspersons with close ties to the Syrian government. Additionally, foreign businesses present in Syria—such as French cement company Lafarge—have faced conflict-related challenges. In 2017, French prosecutors opened an investigation against Lafarge for financing terrorism, after the company chose to remain operational in Syria until 2014, three years after the start of the conflict. Lafarge is accused of purchasing materials from various armed actors—including ISIS—to maintain its operations and of providing ISIS up to $15.5 million in financial compensation in exchange for safe passage for Lafarge employees. These alleged activities not only resulted in complicity in international crimes, but also put Lafarge employees in danger in the middle of a conflict. 

Even humanitarian aid provisions have contributed to the financing of international crimes, through a lack of HRDD by humanitarian actors (particularly UN agencies), as well as through Syrian governmental diversion of humanitarian aid. While humanitarian organizations are not businesses, there is a large business element to their work. Humanitarian organizations and agencies contract local businesses to facilitate their work. As such, humanitarian organizations are required to abide by the same human rights due diligence measures and other requirements included within the UNGPs as businesses when choosing what projects to support or what businesses contract. However, although humanitarian actors operate in sensitive environments where human rights violation risks are quite high, implementation of the UNGPs in the humanitarian space has been minimal and at times nonexistent. 

Humanitarian actors operating in Syria have often granted the Syrian state control to aid out of the fear of being denied access to areas in need. Similarly, in Yemen, Houthi and other authorities have taken control of aid to divert it to partners and loyalists, rather than to those in need. There have even been reports of UN employees being complicit in diversion of humanitarian funds. This diversion of aid as well as collection of taxes by various armed actors involved in the conflict have been used to further finance the war effort. The control and diversion of humanitarian aid has resulted in war profiteering of Syrian and Yemeni businesspersons across both conflicts.

In both of these situations, the conflict heightens existing business-related concerns. In July 2020, the UN Working Group on Business and Human Rights, as part of a two-year project, released a report titled Business, human rights and conflict-affected regions: towards heightened action.” 

This report identifies “warning signs” requiring heightened action by businesses at the onset of a conflict. These includethe imposition of emergency laws or extraordinary security measures; the suspension of, or interference with, vital state institutions…increased politicization of identity; and increased inflammatory rhetoric or hate speech targeting specific groups or individuals.”

When a business identifies one of the above-listed warning signs,” it should engage in a heightened form of HRDD, which according to the UNWGs report, should include a conflict sensitivity element. Businesses should first identify the root causes of conflict and its drivers. Secondly, businesses should map the main conflict actors, their motives and capabilities, any stakeholders involved in the conflict, and the role that they play or may play in the future. Thirdly, businesses should look to their own activities and what impacts they may have on the conflict or on fostering a peaceful resolution. These activities should be ongoing throughout the businessesactivities in instances when conflict is anticipated, as the conflict is ongoing, and during a post-conflict phase. 

Conflict-sensitive HRDD will likely lead to different results for all businesses in those settings. Multinational corporations and foreign businesses operating in conflict may decide to end operations if they determine that their presence is too dangerous. On the other hand, domestic businesses do not have that option—they are required to adapt to the situation. The report refers to these as captive” businesses.  

During conflicts, it is even more important for states to regulate business activity to ensure human rights compliance and to prevent complicity in human rights abuses. In addition to state regulation, businesses are unlikely to prioritize human rights compliance without government incentives to do so. This could include tax and investment incentives as well as government support and recommendations for implementation of the UNGPs. The home states of multinational corporations should also regulate the activity of businesses abroad to ensure that they do not take advantage of weak regulation abroad. While some states have implemented regulations on business activities abroad, many courts—particularly in the United States—are still hesitant to apply business-related regulations to corporate activity abroad. 

UN peace and security initiatives rarely take into account the role that businesses could play in either stirring conflict or promoting peace. In the MENA region, humanitarian actors—particularly UN humanitarian agencies—play a large role in providing financial support to local organizations with which they contract. It is important for these humanitarian agencies to implement the UN Guiding Principles within their operations, including engaging in HRDD when contracting local businesses. Moreover, UN human rights and investigative bodies should take into account the role that businesses play in conflict as well as in abuse of human rights. Specifically, UN human rights and investigative bodies should highlight the financial elements of international crimes and human rights abuses, whether it be the sources of financing for international crimes or how corporate activity might entrenching existing crimes.

Business and human rights issues have permeated economies throughout the Middle East. Failure to implement a human rights-based approach to business activity in the region has resulted in fewer economic opportunities and greater economic exploitation of the average person. Moreover, lack of human rights consciousness within the business environment has resulted in complicity in human rights abuses and contributing financially to repressive regimes. Many of the steps outlined above are essential for private sector actors to engage in to ensure human rights are respected. In the context of conflict in particular however, each of these actorsroles are heightened to meet the heightened risk for abuse of human rights. 

However, there are a number of factors that make it difficult for private sector actors in the MENA region to do so. The business environment throughout the region is not one which prioritizes human rights and as a result, businesses are not incentivized to do so themselves. Moreover, weak economies, corruption, and crony capitalism have brought many businesses to the brink of survival, limiting the capacity that businesses have for prioritizing protection for human rights. Despite this, there are steps that private sector actors can take to alter this environment. Shareholders are beginning to play a more significant role in business, using their positions to advocate for greater human rights protections in business. Additionally, international financial institutions funding projects in the MENA region could include human rights-related requirements or conditions for funding to push for greater protections. Moreover, in the context of conflict, private sector actors, states, and UN agencies have a significant role to play in ensuring that business is human rights-conscious and conflict-sensitive. Failure to ensure adequate respect for human rights in business activities in conflict environments risks contributing to the conflict as well as to the permeation of human rights abuses.