Ones to Watch, 6 November 2017

Americas: Extractive industries to continue to face risk of disruptive unrest across Peru

Sectors: extractive industries
Key Risks: disruptive blockades; violent unrest; business interruption  

In Peru, the extractive industries sector remains exposed to the risk of disruptive unrest. This risk is unlikely to significantly decrease over the coming months despite government efforts to strike a balance between the need to lure investment and to attend to local communities’ concerns and opposition to large-scale projects. On 3 November Peruvian miner Buenaventura announced that protests over land rights had forced its Uchucchacua silver mine to halt operations since 31 October. The company stated that the Oyon community had taken a ‘more aggressive negotiating position’ on land rights in the facility, without giving details of how operations had been affected. The government is expected to intervene in the dispute, as it has recently done in other similar incidents in both the oil and mining sectors, which will continue to face the risk of further disruption.

Asia-Pacific: Trump looks out of step on visit to increasingly-integrated Asia

Sectors: all
Key Risks: investment

United States President Donald Trump first state visit to Asia continues this week with a stop in Vietnam between 10-12 November. Trump will attend the Asia-Pacific Economic Cooperation (APEC) summit and visit Hanoi. He will then visit the Philippines from 12 to 14 November, and has extended his trip to attend the East Asia Summit. The White House has said that Trump will present a vision of US leadership promoting ‘a free and open Indo-Pacific region’. For American regional partners, however, a free Asia-Pacific is tied up with free trade. The 11 countries still negotiating the terms of a revived Trans-Pacific Partnership (TPP) after the US withdrew in January have seen renewed momentum ahead of their meeting at APEC. Trump’s protectionism and rejection of multilateral free-trade deals increasingly risks isolating the US as various Asia-Pacific countries look to integrate their markets.

Eurasia: Canada sanctions Russian officials, Kyrgyz election doubt

Sectors: all
Key Risks: sanctions; political stability

Canada issued its first round of sanctions under its ‘Magnitsky Act’ on 3 November, primarily targeting Russian officials. Thirty of the 52 blacklisted were Russians, although the list did not include major government officials or oligarchs connected to the Putin regime. Moscow said it planned to blacklist Canadian officials from travelling to Russia in response, but did not specify who would be targeted. Meanwhile in Kyrgyzstan, a number of revelations by local media outlet Kloop cast doubt on the outcome of the 15 October presidential election, won by Sooronbai Jeenbekov, the protege of outgoing president Almazbek Atambayev. Jeenbekov officially won 54 per cent of votes, avoiding a runoff with runner-up Omurbek Babanov. The report could prompt protests as well as strain social and ethnic tensions, although the government is likely to seek to downplay the issue.

Europe: ‘Paradise Papers’ pose risks for Glencore and commodities sector in Switzerland

Sectors: commodities
Key Risks: enhanced scrutiny; compliance; regulation

Revelations from the ‘Paradise Papers,’ a leak of documents from law firm Appleby, prompted significant negative revelations regarding Switzerland-based commodities multinational Glencore. Glencore allegedly hid its ownership stake in SwissMarine Corporation during merger talks with Xstrata in 2013. SwissMarine’s second-largest shareholder was facing trial at the time and the company reportedly provided shipping services to Iran while under sanctions. The company was also apparently paying numerous bribes in the Democratic Republic of Congo. Glencore’s actions there have previously resulted in a backlash in Swiss public opinion and the latest revelations could prompt calls for additional scrutiny and regulation of the  sector. However, Glencore remains firmly integrated into political and economic life in its home canton, Zug, where it retains significant influence. Other traders likewise also play an outsized role in political and economic life in other parts of Switzerland.

MENA: Mass arrests of senior officials and royals consolidates

Sectors: energy; finance; defence; banking; construction
Key Risks: non-payment; contract frustration; frustration of process

On 4 November in Saudi Arabia, 11 senior Al Saud princes, four serving ministers and multiple former ministers were arrested under suspicion of corruption on the orders of the newly-appointed Supreme Anti-Corruption Committee. The committee’s establishment was announced the same day from the Royal Court, and is headed by Crown Prince Muhammad bin Salman. Prominent businessmen, including Prince al-Walid bin Talal and the head of Bin Ladin Group, Bakr Bin Ladin, are among those being held. All branches of the country’s security services are reportedly to be centralised after Minister of the National Guard, Prince Mutib bin Abdullah, was replaced and arrested. The Ministry of Information announced liquid and property assets of the accused would be confiscated by the state and used to address issues such as the kingdom’s housing crisis. The arrests consolidate further the crown prince’s power. The implementation of new government policies, including against corruption, is likely to be inconsistent.

Sub-Saharan Africa: Heightened tension in Juba as Malong saga takes a turn

Sectors: all
Key Risks: rebellion

On 4 November, South Sudanese soldiers encircled former army chief Paul Malong’s Juba residence, raising fears of another violent episode in the capital. A few days earlier, on 30 October, soldiers were reportedly instructed to disarm and arrest Malong’s bodyguards, some of whom refused to comply. The incident underscores growing fractures in President Salva Kiir’s regime, with Malong loyalist Chan Garang Lual’s defection last week pointing to the growing divide between Dinkas from Northern Bahr al Ghazal and those from Warrap. Malong still retains significant influence over members of the military who herald from his hometown, of which there are a disproportionate amount, and preventing the emergence of another group opposed to the government, particularly a Dinka-based one, will be of paramount importance for Kiir. Fortunately for the president, the myriad rebel groups opposed to him have also been affected by quite literal infighting and appear no more capable of governing the world’s youngest country.