This Week in Markets and Democracy: Honduras’ Anticorruption Fight, Freedom House Report, Conflict Minerals Setback

Honduras’ New Anticorruption Fighter Takes on the President

Last summer allegations that Honduran officials stole more than $200 million dollars from the social security system led to widespread public protests and calls for President Juan Orlando Hernández’s resignation. The scandal spurred the creation of the Mission Against Corruption and Impunity in Honduras (MACCIH), an anticorruption body backed by the Organization of American States (OAS) and modeled after the International Commission Against Impunity in Guatemala (CICIG). Now active, MACCIH officials say they will investigate the case. Given MACCIH’s more limited prosecutorial autonomy and much smaller budget, many wonder if it can match the impressive results of its Guatemalan counterpart, which—working with the attorney general—brought down former president Otto Pérez Molina.

Democracy Eroding in Central Europe and Eurasia

Freedom House’s 2016 Nations in Transit report shows democratic backsliding across Central Europe, the Balkans, and Eurasia. Measuring twenty-nine post-Communist countries on electoral process, corruption, media freedom, and judicial independence, the region’s average “Democracy Score” fell for the twelfth year in a row. Hungary’s decline continued, owing to the xenophobic actions and rhetoric of Prime Minister Viktor Orbán and his nationalist Fidesz party in the wake of Europe’s refugee crisis. Eurasia’s petro states—Azerbaijan, Turkmenistan, and Uzbekistan—ranked the worst overall, their authoritarian regimes ratcheting up repression and further consolidating power as commodity prices plunged. Ukraine stood out as one of the few positives, with civil society, aided by European Union, U.S., and IMF involvement, pushing against deep-seated corruption.

Setback for Monitoring Conflict Minerals in Supply Chains

A Securities and Exchange Commission (SEC) decision throws one tool for monitoring human rights in technology and other supply chains into question. Dodd-Frank’s conflict minerals rule requires U.S. companies to disclose their use of tantalum, tungsten, tin, and gold linked to violence in the Democratic Republic of Congo (DRC). The clause pushed companies to know their practices and, if guilty, change them. In response, Intel will completely eliminate conflict minerals from its supply chain this year and Hewlett-Packard now maps all its metal suppliers—a first step toward detecting ill-gotten minerals. In 2014 a U.S. appeals court ruled that requiring a company to say whether products are conflict-mineral free violates corporate freedom of speech and forces it to “confess blood on its hands.” The SEC has chosen to revise the rule rather than challenge the decision, leaving a legal limbo that may weaken compliance.