Western Sahara is a territory on the northwestern coast of Africa, located between Morocco and Mauritania. Its current political status is disputed. Since 1975, the United Nations has listed Western Sahara as a non-self-governing territory (NSGT). It is the only part of Africa with such a status, thereby often referred to as “Africa’s last colony.”
Morocco considers Western Sahara part of its national territory and from 1975 to 1991, it fought the local independence group, Polisario Front, to control the area. The two parties signed a ceasefire in 1991 and the UN established a mission, MINURSO, with the aim of organizing a referendum for Western Sahara’s self-determination. However, attempts to hold a plebiscite and decolonize the territory have failed and, ultimately, Western Sahara’s status has notchanged for almost 30 years.
Today, this diplomatic crisis over Western Sahara—an offspring of the Cold War and the African decolonization—reemerges, jeopardizing companies’ involvement in the region’s businesses. Legal and economic consequences of the dispute have amplified in recent years, especially following two verdicts of the Court of Justice of the European Union (EU), which stated that Western Sahara has a separate and distinct status from Morocco and that, therefore, Morocco does not have the legal personality to conclude trade agreements concerning the resources of Western Sahara.
However, at the end of his mandate, President Trump recognized Morocco’s sovereignty over the disputed Western Sahara region, in return for Morocco’s opening of diplomatic relations with Israel. While this move could foster relations between the Arab country and the Jewish state, it could also damage the security in the broader region and fuel the criminal network in the Sahel.
The U.S.’ recognition of Moroccan claims does not imply a change in the territory status according to international law. Neither the UN, which renewed its mission in the territory for another year, nor the EU backed Trump’s decision; instead, they stressed the importance of resuming negotiations to avoid escalation of violence in the region.
Several geopolitical and historical reasons determined the 45-years-long stalemate but today it revolves mainly around the exploitation of Western Sahara’s natural resources. The NSGT is indeed rich in phosphates, sand and fish and recently has become an important destination for big green-energy projects. This article outlines the main aspects of this stalemate, stressing its recent legal developments at the EU level and the business risks they pose.
Mostly a desert territory but strategic for its proximity to the Canary Islands, Western Sahara became a Spanish colony following the Berlin Congress of 1884. It was only in 1947 that Spain discovered the important phosphate reserve at the Bou Craa mine, qualified as “among the largest in the world.” 
However, in 1963, the UN declared Western Sahara a “NSGT to be decolonized,” requesting Spain to leave the territory. Yet Spain tried to maintain control over the territory , given the richness of the subsoil, its strategic importance for trade with the Canary Islands and Africa and because of pressure the army and Spaniards employed in the mines exerted on Madrid. General Franco thus proposed a statute of autonomy in 1973, for which the pro-Spanish Sahrawi assembly voted and accepted.
Meanwhile, Morocco was burdened with considerable internal instability (i.e., King Hassan II was the victim of two failed military coup-d’état in 1971 and 1972 ). In order to overcome the crisis and gain control of the territory, the monarchy decided to relaunch the “Great Morocco,” appealing enough to re-spur nationalism in the country. 
On the other side, the Saharawi founded the Frente Popular para la Liberación de Saguia el-Hamra y Río de Oro, known as Polisario Front, with the purpose of obtaining independence for Western Sahara from Spain.
While the International Court of Justice stated in 1975 that the territory belonged to neither Morocco nor Mauritania prior to Spanish colonization and that the right to self-determination had to apply, Spain, Mauritania and Morocco signed the Madrid Agreement without consulting the Saharawi or the UN. Spain agreed to cede administrative control to Morocco and Mauritania while retaining a 35 percent share of the Bou Craa mine. The Madrid Agreement did not comply with International Law  (UN GA Res. 3458A, 3458B) and a few months after, a war began between Morocco and the Polisario Front, which in the meantime had declared the Saharawi Arab Democratic Republic (SADR).
The hostilities lasted for more than a decade, until the parties signed a ceasefire in 1991, agreeing to organize a referendum of independence with the newly created MINURSO. Negotiations since 1991 have failed to reach a compromise, thus maintaining the status quo.
Flawed trade agreements
Over the last few decades, Morocco consolidated its presence in the territory, concluding trade agreements involving resources from Western Sahara. Having become the second-largest exporter of phosphates in the world, it has also undertaken numerous projects for renewable energy parks in Western Sahara. The Polisario Front has attacked these agreements in court because they do not comply with UN resolutions, the Principle of Permanent Sovereignty over Natural Resources and the Principle of Self-determination of Peoples, inter alia. The lawsuits started in Europe and have caused reputational, supply-chain and legal problems for many businesses elsewhere.
The reemergence of the conflict interrupts three decades of relative peace in a territory crucial for North African security and reopens the long-standing regional tension between Morocco and Algeria, both important allies of the EU and the U.S. in the fight against terrorism and the containment of migration flows. Moreover, it increases the level of business risk in the area.
EU-Morocco deals in question
The EU holds several trade agreements with Morocco, currently the EU’s main commercial partner in the Maghreb region. But during the 2000s, the Polisario Front, together with various NGOs, assumed the question of territorial resources as the major weapon of political and legal opposition to the consolidation of the Moroccan occupation of Western Sahara.
To date, the European Court of Justice has issued judgments on the Polisario Front’s case regarding the EU-Morocco Agriculture Agreement (Case C-104/16 P in 2016) and on behalf of the Western Sahara Campaign U.K., an NGO that started a lawsuit in the U.K. that was later referred to the ECJ, on the Fisheries Agreement (Case 266/16 in 2018), indicating that the EU agreements with Morocco cannot include in their scope of application the territory of Western Sahara, as this would not comply with EU and international law.
Both rulings have the same legal basis: the principle of self-determination, the principle of permanent sovereignty over natural resources (UN Chart) and the relative effect of a treaty (Vienna Convention). According to these binding principles of international law, any agreement involving Western Sahara’s resources must obtain the consent of the people of the territory and Morocco does not have the legal personality to conclude an agreement on behalf of Western Sahara’s people (since the territory has a separate and distinct status from Morocco). Other rulings are still pending before the court.
Important business considerations
This long-standing political and diplomatic crisis is complex and can produce increased supply-chain, compliance, security and business risks for companies, third parties and individuals operating in the territory or trading its resources.
Legal and trade implications: The cases brought before the ECJ created considerable legal precedents in trade relations with Morocco that already have affected several businesses in recent years. For example:
- In May 2017, the High Court of South Africa detained the OCP-owned vessel NM Cherry Blossom and seized its phosphate rock cargo. In February 2018, the South African High Court (referring to the ECJ rulings) declared that “ownership in the phosphate has never lawfully vested in the Fifth [OCP] and/or Sixth [Phosphates De Boucraa] defendants, and they were, and are, not entitled to sell the phosphate to the Fourth Defendant [Ballance Agri-Nutrients Limited].”
- The Danish Ultra Innovation, another vessel delivering phosphate rock from Western Sahara to Agrium’s Redwater Fertilizer plant in Canada, was detained in May 2017 and later released by Panamanian authorities.
- The legal flaws affecting the agreements between the EU and Morocco caused lawsuits to agricultural and airline companies operating in the Sahara or importing into Europe Western Sahara’s product. In October 2018, the Polisario Front denounced six major companies (BNP Paribas, Société générale, Crédit Agricole, Axa Assurances, Transavia, UCPA) before French courts, accusing them of colonization crimes (classified as war crimes under French law).
Operational risks: Increased hostilities mean increased uncertainties about doing business in Western Sahara. For example, on Nov. 13, 2020, 19 MEPs urged the EU to “warn European companies such as Siemens or Enel of the heavy legal and moral risks of doing business with an illegal occupier.” These companies are involved currently in large-scale green-energy projects in the NSGT.
Also, a war in the territory could bring more problems related to the vacuum that organized crime would fill. As in Libya and elsewhere in MENA, traffickers and terror groups may exploit the anarchy.
Sanctions risks: Given the moral uncertainty about trade agreements in the region, there’s also the risk of sanctions being imposed. Recently, 53 Norwegian NGOs called on their government to act on the matter at the UN Security Council, while other organizations are calling for institutions to impose sanctions on Morocco for the violation of human rights in the territory, like the Pan African Parliament did in 2011.
Reliable information for complex decisions
To navigate the complex threats that the conflict in Western Sahara’s presents, companies need sound information. Firstly, it is important to understand the apparent risks and to be aware of the political situation, thus designing business continuity plans and emergency protocols. Businesses are advised to keep abreast of developments by monitoring the situation through media, corporate and institutional communications and enhanced due diligence (EDD).
Adverse media screening (AMS) services and due diligence reports can be costly but they could guarantee a robust defense and prevention measure to avoid regulatory violations and reputational issues. Dow Jones provides businesses around the world with reliable information in more than 26 languages and can help assess and prevent risks through its risk & compliance database, due diligence reports and advanced adverse media screening.
 Note du MAE pour la Direction des affaires économiques et financières, 3 février 1969 Paris, AN 19899566/65. Pierrefitte-sur-Seine. Paris.
 Baroudi, A. (1979) Le complot «saharien» contre l’armée et le peuple marocains (première partie). Les Temps Modernes. 394. (5). Pp.1805-1842; Vermeren, P. (2010) Histoire du Maroc depuis l’indépendance. 3ème Ed. Paris : La Découverte.
 Barbier, M. (1982) Le conflit du Sahara Occidental. Paris : L’Harmattan;
 Firstly, because none of the signatory states had a legal personality such as to be able to decide on the status of a Non-Self-Governing territory; secondly, because it is not possible to conclude agreements regarding territorial resources without questioning the people of that territory; thirdly, because the self-determination of people is a rule of ius cogens and is, therefore, a cause of invalidity of any treaty that does not respect it.
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