NINE DRAGONS HEATING UP THE SOUTH CHINA SEA

Posted by Desmond on 11 May 2012 in China, East Asia, Military Activity, Philippines, Political Risk

Will the increase in tensions around the disputed Scarborough Shoal lead to conflict or economic compromise?

Diplomatic tensions between the Philippines and China continue to escalate this week over waterways and islets in the contested South China Sea following the April 2012, standoff between a Philippines Naval vessel and Chinese fishing vessels in the area known as the Scarborough shoal. An action which at the time resulted in both the Philippines and China reasserting claims that the area fell within their territorial waters.

On 11 May 2012, Hundreds of nationalistic Filipino activists gathered outside the Chinese Embassy in Manila, in protest at the perceived violation of Philippines sovereignty in the South China Sea. One activist was arrested, though, for burning a Chinese flag in a vociferous protest filmed by international TV crews. The protest follows an action a day earlier which featured up to 1,000 people gathering at the same site. Ahead of this first protest, several China-based tourist agencies suspend tourism operations in the Philippines, citing perceived anti-Chinese sentiment in the country and resultant safety concerns. China also issued a warning that its citizens were not safe in the Philippines and urged those in the country to stay indoors and stay away from demonstrations.

It is clear that the increased rhetoric and perceived chest beating from both Manila and Beijing over the matter is a considerable development in relations between two of the region’s biggest players and it has a wider reach as Malaysia, Vietnam and Taiwan have all hardened their positions concerning their territorial and maritime boundary claims over the disputed area. Recent joint naval drills carried out by various navy’s and the US are also making China nervous that its newly found blue naval presence could be under threat.

THE ALGERIAN ELECTIONS: DO VOTERS EVEN CARE?

Posted by Josephine on 10 May 2012 in Africa, Corruption, Elections, Political Risk

Amid the political rhetoric, the ramped up security and threats of a landslide victory from Islamist-based parties, one key factor is missing from the Algerian parliamentary elections: Algerian voter enthusiasm. Despite the so-called Green Algeria Alliance, Algeria’s main Islamist coalition, already claiming triumph, analysts and Algerians alike have long predicted a low voter turnout in a well-publicised election that will see forty-four political parties and more than 7,000 candidates vie for control of 462 seats. So will it be an Islamist sweep or will Algerians ignore religious-based parties and shudder at any reminder of a not-so-long-ago civil war? Although forecasting the election results is a tall order, it looks more likely that the sheer number of candidates will force already apathetic Algerians to become overwhelmed, leading them to simply tune the polls out all together.

STOKING THE FLAMES OF WAR: HOW SUDANESE LEADERS ARE DRIVING THEIR COUNTRIES OFF A CLIFF

Posted by Josephine on 5 May 2012 in Africa, Military Activity, Political Risk

East Africa is bracing itself for yet another large-scale conflict as leaders from Sudan and the world’s newest country, South Sudan, continue to stoke the flames of war. Whilst the international community appears defeated in its efforts to calm the rising tensions, the two Sudan’s are on the verge of further bloodshed, starvation, as well as a cessation of area’s main cash cow, oil production. Unless the rhetoric of Sudanese President Omar al-Bashir and his counterpart, South Sudan’s President Salva Kiir, can be cooled and the underlying issues between the countries resolved, the security situation is likely to deteriorate even further, leading to a full blown war.

INDONESIAN GOVERNMENT TO ‘UNDER MINE’ OWN INDUSTRY WITH EXPORT TAX

Posted by Desmond on 2 May 2012 in East Asia, Indonesia, Political Risk

NEW LEGISLATION FOR MINING SECTOR LIKELY TO HAVE REPERCUSSIONS TO OPERATORS IN INDONESIA

In a move which will likely have a huge impact on the mining sector in Indonesia, on 27 April 2012, Jakarta announced that from June 2012, coal exports would be subjected to a 25% export tax, which will be further increased to 50% from 2013. On 01 May 2012, Indonesian Energy and Mineral Resources Minister Jero Wacik announced that this export tax would not only be applied to coal exports, but would be widened to now include up to fourteen mineral commodities if sold in the form of ore, including copper, gold, silver, tin, lead, chromium, molybdenum, platinum, bauxite, iron ore, iron sand, nickel, manganese and antimony. The export tax is arguably aimed at preventing mining companies maximising their mineral recourse production, ahead of a ban on unprocessed exports in 2014, and is likely part of an effort to preserve domestic coal supplies at a time when the subject of fuel subsidies is weighing heavily on the ability for the government to manage the coffers, something which is also poised to become a potential deal breaker for voters ahead of 2013 presidential elections.

HUGO CHAVEZ’S HEALTH AND VENEZUELA’S FUTURE

Posted by Charlie on 25 Apr 2012 in Elections, Latin America, Political Risk

“REPORTS OF MY DEATH HAVE BEEN GREATLY EXAGGERATED”

On 23 April 2012, a phone call from President Hugo Chávez was broadcast live on Venezuelan State Television, putting to an end, at least temporarily, the rampant speculation which had suggested that whilst seeking treatment in Cuba, he may have succumbed to the ravages of the cancer he is currently battling. Chávez used the address to rubbish claims that his prognosis had proved fatal, describing the rumours as “part of the laboratories of psychological war, of dirty war”. In reality, the crisis was in part one of the President’s own making: given his historic verbosity, a nine day silence (barring short messages on Twitter – which could of course have been written by anybody) meant Chávez was conspicuous in his silence. However, the conjecture was also indicative of the fact that, should anything happen to Chávez, this would undoubtedly be a game-changer for Venezuela. Uncertainty over the president’s prognosis is of serious concern for those operating in Venezuela.

WHO WILL TRIUMPH IN EGYPTIAN PRESIDENTIAL ELECTIONS?

Posted by Desmond on 24 Apr 2012 in Africa, Egypt, Elections, Middle East, Political Risk

On 24 April,  Egypt’s ruling military rulers the Supreme Council of Armed Forces (SCAF) finally and begrudgingly approved a law barring top officials from Hosni Mubarak’s era running for president, following an about-turn on a policy which only three days earlier resulted in Egypt’s Constitutional Court rejecting SCAF request to rule that Mubarak officials at a cabinet level could run for the presidency; likely presenting the military with a potential ally in the form of Egypt’s new pro-military president. The move followed the Islamist-dominated parliament last week drafting legislation to ban senior figures of the former regime from running in the presidential elections due to be held on 23 May 2012, which comprises two days of voting which could yet go to a June 2012 run-off between the top two candidates. The legislation, an amendment to the law governing political rights, covers anyone who served in a list of top positions in government and the ruling party during Mubarak’s last decade in power. The list does not include the any candidate who previously held the position of MP, meaning it does not threaten former Foreign Minister Amr Moussa’s bid. However, as it looks increasingly likely to be approved it now importantly could disqualify former Prime Minister Ahmed Shafiq, who is perceived to be pro-SCAF, from competing in the contest as he was prime minister during Mubarak’s last days in February 2011.  All of this is dependent on the swiftness in which, if passed, the law could be enacted and as it is being led by the pro-Islamist parliamentary bloc it is likely to be achieved soon as Islamists and liberals alike see Shafiq’s bid as a bid by the army and former Mubarak allies to roll back gains of the uprising. This could again be a contentious issue between the Muslim Brotherhood (MB) and the SCAF in the weeks ahead.

ARCTIC OIL: THE GOLD RUSH IS ON

Posted by Spoons on 19 Apr 2012 in Eastern Europe, Political Risk

With the revelation on 18 April 2012, that US oil major ExxonMobil and Russian oil behemoth Rosneft are planning a joint offshore exploration in both the Arctic and the Black Sea, with investments which could potentially cost an eye watering US$500 billion, it appears a recent announcement by Russian President – elect Vladimir Putin that they plan to scrap the export duty to all offshore hydrocarbon projects, has had the desired effect and triggered something of a ‘gold rush’ in terms of oil exploration in the region. Although the exploration deal is yet to be finalised and a final decision on exploration investment is not expected until sometime between 2016 – 2017, following some exploratory work, it certainly appears that despite difficult and previously prohibitively expensive cost of extraction, the ‘Pandora’s Box’ of oil exploration in the Arctic is certainly open.

NATIONALISATION OF YPF: IS KIRCHNER THE NEW CHAVEZ?

Posted by Charlie on 18 Apr 2012 in Latin America, Political Risk

Admittedly Argentinean President Cristina Fernandez de Kirchner has never had a reputation for economic prudence, however, even by the standards of a populist who has raided the country’s pension pot, stripped the Central Bank of independence while simultaneously decimating its reserves, and pulled inflation figures out of a hat, the decision, announced on 16 April 2012, that the government would expropriate and nationalise 51% of YPF (owned by Spanish company Repsol) may charitably be described as utterly reckless. The move undermines investor confidence, fails to address the root causes of the country’s current energy crisis, jeopardises economic growth and threatens long standing bilateral relations with Argentina’s allies.

NOT IF, BUT WHEN? BUSINESSES AND CYBER SECURITY

Posted by Lou on 4 Apr 2012 in Cyber Crime, Political Risk

“It’s not a question of if or when companies will face an attack, but how they’re going to defend against it” was a key statement at this year’s RSA conference on Information Security and Cryptography, indicating that businesses now operate in an environment where digital attacks are inevitable, regardless of size or industry. Cyber security is currently a top issue for businesses and governments alike and the World Economic Forum’s 2011 Global Risks Report cites it as one of its top five risks to watch in the coming years, placing it alongside resource security and weapons of mass destruction. So are businesses heading for digital Armageddon, with data breaches the everyday cost of doing business? Or are these fears the result of a technopanic, not unlike those that predicted doom for all upon the invention of the printing press so many hundreds of years ago?

UGANDA FACES UPHILL BATTLE IN FIGHT AGAINST CHINESE-MADE COUNTERFEITS

Posted by Josephine on 2 Apr 2012 in Africa, Corruption, East Asia, Organised Crime, Political Risk

Although a lot of media attention has been centered on Joseph Kony, the leader of the Lord’s Resistance Army (LRA), a Ugandan guerrilla group which has been blamed for kidnapping children and forcing them to become soldiers, another problem has been brewing in Uganda which has the potential to severely damage its economy: the bombardment of often unsafe, mostly Chinese-made counterfeits. Although by no means as controversial or as sensationalist as the Kony saga, the onset of counterfeit products not only undermines the economic advances made by Ugandans, it has also threatened the health and safety of locals who buy substandard goods.

THE GUINEA-BISSAU ELECTIONS: BATTLE FOR CONTROL OF AFRICA’S FIRST NARCO-STATE

Posted by Josephine on 26 Mar 2012 in Africa, Corruption, Military Activity, Political Risk

As Senegalese voters patiently awaited the results of their own nerve-wracking run-off between incumbent President Abdoulaye Wade and his protégé-turned-rival Macky Sall, another heated contest brewed just south of the border in conflict-ridden Guinea Bissau. In a country where citizens are used to coups, assassination plots, and election rigging, Bissau-Guineans must have been asking themselves: if countries such as Senegal, which have for years positioned themselves as beacons of democratic stability were teetering on the edge of a political meltdown, what hope then is there for Guinea-Bissau, a country which has earned the embarrassing moniker of “Africa’s first Narco-State”? Although Senegal has since seen Wade peacefully concede election to Sall, Guinea-Bissau’s narrative appears at first glance to be far more hopeless.

A VIABLE SAUDI ROLE IN THE FUTURE OF OIL PRICES?

Posted by Desmond on 23 Mar 2012 in Middle East, Political Risk

The International Monetary Fund (IMF) Chief Christine Lagarde has this week warned that crude oil prices may spike by up to 30% if Iranian supplies were disrupted, causing “serious consequences” for the global economy. Although the standoff between Iran, the world’s second-largest supplier of oil, and the West over the Islamic Republic’s nuclear programme, is seen as a flashpoint that could sharply increase world crude prices, calculations offered by the IMF witnessing “A sudden and brutal rise in the price of oil” from Brent crude’s current levels of US$124 a barrel (on 22 March 2012), appear over exaggerated and would arguably not “have serious consequences on the global economy” as she suggests as other oil-exporting nations continue to be able to bridge the gap.