Ones to Watch

Ones to Watch: 10 April 2017

By 10/04/2017 No Comments

Americas: protests over Ecuadorian election continue while ELN peace talks under threat
Sectors: all
Key Risks: political instability; terrorism; civil unrest

On 7 April Ecuadorian police forces raided the headquarters of polling firm Cedatos. Cedatos’ exit poll for the 2 April presidential election, which showed a six-point advantage for losing opposition candidate Guillermo Lasso, has fuelled ongoing protests throughout the country. Government officials, including outgoing President Rafael Correa, accused the polling firm of colluding with Lasso. Further judicial scrutiny into the contentious election result is expected amid ongoing protests. However, later that day the ruling PAIS Alliance indicated it would consider a recount, although it is unlikely to change the result.  Meanwhile, in Colombia, a series of attacks on 7 and 8 April blamed on the insurgent group ELN came only a day after government and ELN negotiators formally ended the first-round of peace talks in Ecuador, threatening their initial progress.

Asia-Pacific: North Korea to celebrate duel anniversaries with shows of force
Sectors: all
Key Risks: conflict; security

Recent months have seen tensions rise on the Korean peninsula to their highest level in years after a spate of missile tests from the Kim regime and the US’s decision to send an aircraft carrier group close to Korean waters on 9 April. It is a particularly heated time for North Korea to be planning two major demonstrations of its military might. On 15 April the country will celebrate the 105th birthday of its founder, Kim-Il-Sung and shortly after, on 25 April, it will do the same for the 85th anniversary of the Democratic People’s Republic. The Kim regime tends to go big on anniversaries ending with a five, so a major show of force is highly likely. With the region on edge over recent developments, missile launches or provocative acts risk a major escalation. For regional security’s sake, it is best that the party does not get out of hand.

Eurasia: deal between Ukrainian electricity company and Moldova highlights regional risks
Sectors: electricity; transportation
Key Risks: political stability

On 3 April, Moldova announced it would buy electricity from Ukrainian energy company DTEK rather than from the Russian-backed breakaway state of Transnistria, as it has for 20 years. Four days later, Ukrainian police chief Serhii Knyazev announced a joint operation with Moldova prevented Moldovan oligarch Vlad Plahotniuc’s assassination. Plahotniuc dominates Moldova’s economy and political life, heading the Democratic Party that leads its parliamentary coalition. Knyazev indicated Russian intelligence and officials from the Russian-backed Moldovan breakaway state of Transnistria were involved. The claims could elevate tensions between Chisinau and Kiev, and Transnistria, which has demanded transfer fees for any electricity purchased from DTEK and threatened to block the deal. Russia is unlikely to intervene in Transnistria to the extent that it provokes conflict but will heavily lobby against the deal as it will increase costs for its support of the breakaway region.

Europe: Stockholm attack and Oslo bomb discovery highlight terrorism concerns
Sectors: all
Key Risks: terrorism; political violence

On 7 April, Sweden experienced its first terrorist attack in seven years when a truck attack on the Ahlens department store in Stockholm’s city centre killed four. Police also confirmed they found an apparent improvised explosive device in the truck used in the attack. A failed Uzbek asylum seeker was arrested on 8 April. A second suspect was also arrested, but his alleged connection has not been detailed. Also on 8 April, Norwegian police found an improvised explosive device in the Gronland area of central Oslo. The incident prompted Norway’s intelligence service to raise the terrorist threat level. A 17-year-old Russian national who had applied for asylum in 2010 was arrested in connection with the incident. The incidents highlight the increasing risk of Islamist-extremist terrorism across Europe, including in Scandinavia.

MENA: terrorism threat in Egypt increases ahead of Easter
Sectors: security; Christian-owned businesses and locations
Key Risks: terrorism; political violence; civil unrest; social cohesion

On 9 April, at least 44 people were killed and over 100 others injured in two suicide bomb attacks at the St. George’s Church in Tanta and St. Mark’s Cathedral in Alexandria, Egypt as worshippers gathered to celebrate one of the holiest days in Coptic Christendom, Palm Sunday. Pope Tawadros II was saying mass in St Mark’s Cathedral at the time of the explosion. Islamic State (IS) claimed responsibility for the attacks, expanding their recent campaign against Christian residents in the Sinai Peninsula. President Abdel Fattah al-Sisi declared a three-month state of emergency and removed the head of security of Gharbiyah governorate after public outrage at the incident in Tanta. There are likely to be further incidents against Egyptian Copts in the next week ahead of Easter on 16 April.

Sub-Saharan Africa: after the reshuffle…
Sectors: energy; SOEs
Key Risks: corruption; fiscal slippage; increased borrowing costs; economic recession

Following President Jacob Zuma’s midnight cabinet reshuffle on 30 March, which saw widely respected Finance Minister Pravin Gordhan and eight other ministers ousted, credit rating agencies Standard & Poor’s and Fitch downgraded South Africa’s sovereign credit rating to ‘junk status’. The downgrades come amidst concerns of ‘state capture’, unencumbered fiscal spending and political infighting, and marks the first time South Africa has carried sub-investment grade status since 2000. The rand tumbled further on the news, which is set to lead to heightened borrowing costs and make it increasingly difficult for the government to service its debt obligations. However, the credit rating downgrades have not prevented the government from going ahead with a contentious nuclear deal, with reports emerging that state-owned utility Eskom will begin the tendering process in June. Meanwhile, Zuma will face a no-confidence vote on 18 April, but the chances of him losing the vote remain slim absent a mass defection from his ANC colleagues.