| International political and security risks: Control Risks looks ahead
The number of countries rated as extreme risk, always a small minority, has barely changed from 2 (Burundi and Somalia) to 3 (Burundi, Somalia and Liberia) for the year ahead. This will have minimum impact on business however; these countries are too politically unstable for the vast majority of businesses to risk investing there. However, more significantly, the number of countries that have risen from a low to a medium political risk rating has increased 23 percent from 2003-2004. The majority of these countries are home to substantial foreign business activity and investment, without preparation to properly manage these increased risks the security of their people, assets and intellectual property will be seriously undermined. Andreas Carleton-Smith, president and CEO, North America said: "US foreign policy will be the single most important factor affecting the development of global risk in 2004. Terrorism as a global phenomenon will continue to threaten Western interests and business operations. Businesses and individuals can respond by assessing their profile and ensuring that security management and contingency planning is reviewed constantly, particularly in high risk countries like Iraq, Saudi Arabia, Yemen, Algeria and Brazil." Key developments for the year ahead as highlighted by RiskMap 2004 include: MIDDLE EAST * The core al-Qaida leadership has been dispersed and weakened since the US invasion of Afghanistan in 2001, but variously loosely affiliated regional networks remain highly active and more elusive than before. There will be a latent threat in countries such as Morocco, Tunisia, Egypt, Jordan and the smaller Gulf States. * Iraq will continue to remain insecure. There is also a persistent threat of anti-Western terrorist attacks in Saudi Arabia and Yemen. There will be a latent threat in countries such as Morocco, Tunisia, Egypt, Jordan and the smaller Gulf States. * There is little prospect of large scale US military intervention in Iran and Syria in 2004. * Iran's nuclear programme has risen to the top of the agenda around which the US hopes to gather wider support for a policy of isolation. Tehran's support for regional terrorism will also remain a key issue. Although US-led actions have had an impact, the underlying threats to long-term stability and security come from political repression, economic stagnation and rapid demographic growth. AMERICAS * Faced with the US's continuing drive for hemispheric free trade, Latin American governments will face important choices on trade policy in 2004. * US Latin American foreign policy will remain focused geographically on Colombia, ideologically on Cuba and thematically on terrorism and security-related issues. * Common crime will remain a significant business risk in urban areas of Brazil, Central America and on the larger Caribbean islands such as Jamaica and Trinidad. * Venezuela's deep political crisis will spur sporadic acts of terrorism by both militant pro- and anti- government activists. 2004 will be a difficult year for investors. EUROPE * The threat of Islamic extremist terrorism in Western Europe will continue, in particular in high profile European cities. * The involvement of two British Islamic extremists in a suicide-bombing mission in Israel in March 2003 indicates that there are militant extremists among the citizens of western European countries. This supports an assessment by London police chiefs in July 2003 that a suicide bomb attack will eventually occur in the UK. * Russian President Vladimir Putin will achieve an easy victory in elections in March 2004. While the shadow of large and indiscriminate attacks hangs over major Western cities, business should continue doing business in Europe with confidence. AFRICA * The elections in 2004 in established emerging investment hotspots such as Ghana, South Africa, Botswana, Mozambique and Cameroon are all likely to pass off largely without incident. * UN demarcation of the Ethiopian/Eritrean border in 2004 will continue to provoke tensions and isolated skirmishes in the border region will continue to pose a security threat. * Cote d'Ivoire, a former investment haven, totters even more precariously on the edge of anarchy, with prospects for ethnic and social reconciliation seemingly even more distant. * The HIV/AIDS pandemic is poised to enter its 'mass mortality' phase, with a cataclysmic impact on workplace health, education and family cohesion across large swathes of the continent, despite growing government awareness and mobilisation. Aware of their marginal position within an increasingly competitive global environment for attracting investment - a perception not helped by the region's sporadic crisis-points - ever more African governments will be prompted to implement business-friendly economic and institutional reforms. ASIA * Tensions between new US allies Pakistan and India can be expected to rise again in the spring with the thawing of the Kashmir snows. This could severely test both countries' bilateral relations with the US and China. * Elections in Indonesia and India could have an important impact on political stability. With no presidential candidate likely to win a simple majority in the July elections in Indonesia, political uncertainty will persist until a second round in September. India's ruling Bharatiya Janata Party (BJP) may consider that it would benefit politically from an upsurge in communal violence between Hindus and Muslims in the run-up to the election, which would have significant security implications for foreign businesses and personnel. * A return to civil war between the government and Maoist guerrillas is increasingly likely in Nepal; any peace talks would be likely to collapse. However, provided that peace talks continue between the Sri Lankan government and the rebel Liberation Tigers of Tamil Eelam (LTTE), the country's operating environment should improve in 2004. Asia will not be a destination for the faint-hearted investor in 2004. RiskMap is available to purchase at a price of $225.
•Date:
11th November 2003 •Region: Various •Type:
Article •Topic: BC
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