Ones to Watch, 12 February 2018

Americas: Uncertainty over the future of ELN peace talks to persist

Sectors: all
Key Risks: terrorism; insurgency

In Colombia, uncertainty over the future of the currently suspended peace talks between the government and the ELN guerrillas is likely to persist given a spike in ELN attacks. On 10 February President Juan Manuel Santos reiterated that it would be difficult to resume the talks unless the guerrillas show coherence between their words and actions. Santos suspended formal peace negotiations that have been taking place since 7 February 2017 on 29 January in response to a wave of deadly attacks against police stations on 27-28 January. The ELN put an armed shutdown in place from 10 to 13 February to protest the suspension, targeting mostly road infrastructure. The risk of attacks against oil, energy and road infrastructure, security force personnel and assets, and of clashes between rebels and the security forces will remain high despite mounting pressure to avoid a protracted suspension of the talks.

Asia-Pacific: China and the Philippines to discuss South China Sea security

Sectors: all
Key Risks: conflict; militarisation

On 13 February senior representatives of the Philippines and China will meet in in Manila for the second Bilateral Consultation Mechanism (BCM) meeting to discuss security issues in the South China Sea. The Duterte administration has said the meeting shows his government is not going ‘soft’ on China’s militarisation of disputed South China Sea sea territories, although many Filipinos disagree. Several protests have been held outside the Chinese consulate in Manila in recent days. So far the Philippines has sent mixed signals, admitting that it has no real military means to oppose China’s activity one day, while threatening to chase off any Chinese vessel near the disputed Bentham Rise literally the next day. The Philippines’ ASEAN neighbours will be hoping that public pressure and growing frustration with China’s militarisation finally leads to a tougher line on China’s territorial encroachment.

Eurasia: Good news for Nord Stream 2, cost of Turkish Stream goes up

Sectors: gas
Key Risks:  sanctions; contract frustration

On 8 February Deputy Chairman of Russian state gas giant Gazprom Andrei Kruglov announced the Turkish Stream gas pipeline would likely cost around US$7bln, up from previous estimates of US$6bln. Kruglov noted sanctions meant Gazprom was so far unable to secure project financing and that the pipeline will be financed by Gazprom’s budget, potentially supplemented by special project bonds. There are major doubts about Gazprom’s targeted completion date of end-2019, however, and the project’s envisaged 31bcm per annum capacity could ultimately be cut in half as there have been conflicting reports in Russian and Turkish media as to whether one or both of its two main pipes is being laid. The project may become less important to Gazprom should the Nord Stream 2 pipeline proceed, which is increasingly likely following Germany’s coalition deal announced on 7 February. The Social Democrats retained the Foreign Ministry and the party has publicly backed the project despite condemnation from Poland, the Baltics, and Ukraine. Nevertheless, there will still be a risk Germany could ultimately look to curtail the process.

Europe: May plans series of Brexit speeches to turn page on negotiations

Sectors: all
Key Risks: political instability; trade frustration

British Foreign Minister Boris Johnson is expected to be the first cabinet member to give a major speech on Brexit this week, on 14 February, while Prime Minister Theresa May will speak to the Munich Security Conference three days later. Additional speeches by Brexit Minister David Davis, International Trade Secretary Liam David, Home Secretary Amber Rudd, and others, are also expected before another speech by May the following week. Downing Street is looking to push forward with Brexit negotiations over the coming two weeks and to put aside the infighting in May’s own Conservative party, which at least played a part in EU negotiator Michel Barnier claiming on 9 February that the UK’s positions on various issues remained hard to ascertain. Nevertheless, there remains a distinct risk of further such infighting and although May is expected to announce the UK will seek to remain in Europol and the European arrest warrant system, much of the content of the government’s position, including controversial issues such as the future applicability of the European Court of Justice, is still unknown at this late stage.

MENA: Tillerson visits regional allies amid Iraq reconstruction conference in Kuwait

Sectors: all
Key Risks: credit risk; political risk; political stability

The three-day Kuwait International Conference for the Reconstruction of Iraq (KICRI) opens in Kuwait City on 12 January. Iraq is seeking an estimated US$88.2bln in financial aid from multilateral and sovereign donors to fund the colossal reconstruction needed in areas formerly occupied by Islamic State. The Iraqi Ministry of Planning has highlighted housing as a particular priority and US$22bln of the funds are required immediately. The conference is the linchpin of a week-long visit to the region by US Secretary of State Rex Tillerson, which will include visits to Egypt, Jordan, Lebanon and Turkey. Tillerson’s discussions will be fraught given the increasingly tense relationships with key regional allies including Turkey and Egypt. Reports that the US government will not contribute any financial support to Iraq during KICRI will undermine its standing further, although could prompt a last-minute commitment.

Sub-Saharan Africa: South Sudan peace talks resume in Addis Ababa

Sectors: all
Key Risks: internal conflict

The government and South Sudan’s rebel groups, including the the Sudan People’s Liberation Movement – in Opposition (SPLM-IO), are no closer to reaching an agreement to end the country’s civil war after opposition groups walked out of the talks on 12 February in protest at an alleged government offensive on their positions near Nasser, Latjore State. The peace talks had already hit a stumbling block over a clause calling for punitive measures against those who attempt to sabotage the peace process. The government objected to the lack of distinction between itself and the rebels amid fears the international community is seeking to impose further sanctions on the country. Violence has so far frequently punctuated an official ceasefire, which, coupled with the underwhelming progress of peace talks, means an end to the conflict remains some way off as negotiations in Ethiopia’s capital Addis Ababa enter their second week.