Americas: Petroperu’s pipeline resumes operations; Las Bambas blockades continue

Sectors: mining; metals; oil and gas;
Key Risks: business disruption; targeted attacks; protests

In Peru, state-owned oil company Petroperu’s pipeline in Loreto region resumed operations while disruptive action against extractive industries continues. On 1 March Petroperu announced that its Norperuano pipeline had resumed operations as repairs following a three-month rupture were completed. The pipeline transports crude from oil fields in the Amazon to Petroperu’s refinery in the Pacific coast, including some 12,000 bpd from Frontera Energy’s Block 192. Operations were halted in November 2018 after Mayuriaga community members damaged the pipeline. Previously on 25 February, Chinese MMG announced delays in copper concentrate shipments from Matarani port due to road blockades affecting transport from Las Bambas mine. The Nueva Fuerabamba community has blocked the road since 13 February. Government-mediated talks are set to resume this week. Further disruptive action against extractive industries remains likely.

Asia-Pacific: China-Canada relations at risk as extradition process for Huawei CFO begins

Sectors: all
Key Risks: sanctions; diplomatic fallout

On 1 March, Canada formally agreed to launch extradition proceedings against the CFO of Chinese telecommunications giant Huawei, Sabrina Meng Wanzhou. The first hearing on the case is scheduled for 6 March. Meng was arrested in Vancouver on the US’ request and faces charges of fraud relating to sanctions on Iran. Ties between Ottawa and Beijing have soured since Meng’s arrest. Two Canadians have since been detained in China on national security grounds. On 4 March they were formally accused of stealing state secrets. Relations between Canada and China are expected to deteriorate further over the coming weeks. The extradition process is lengthy and Beijing is likely to use various pressure tactics to coerce Ottawa into reversing the decision. This could impact Canadian investment in China and lead to further detentions of Canadian nationals.

Eurasia: Georgian bank fight turns ugly; Moldovan government at impasse

Sectors: all
Key Risks: political stability; political interference

One of the directors of TBC Bank, the second largest financial institution in Georgia, lambasted the government and central bank on 27 February over a settlement between his bank and the central bank. Mamuka Khazaradze claimed the government had forced him and co-director Badri Japaridze out of the bank, though they remain directors of its UK-registered parent. The government claimed the investigation was not political, countering Khazaradze’s claim that it was rooted in a spat over whether to build the TBC-backed Anaklia port project or to expand the old Poti port. Khazaradze claimed ex-premier and ruling party head Bidzina Ivanishvili had interests tied to Poti. Further fallout could significantly impact the business climate, long seen as the best in Eurasia. Meanwhile Moldova has yet to form a new government as its key political parties are at an impasse, raising the spectre of another election or potentially a grand coalition, though the latter would be sure to prompt major protests.

Europe: Brexit delay likely but risks remain

Sectors: all
Key Risks: political stability; trade frustration

British Prime Minister Theresa May agreed to have the government endorse a bill that would all but guarantee the following process for key votes on the Brexit process. Any changes that Attorney General Geoffrey Cox and the civil service head of Brexit, Olly Robbins, are able to secure to her EU Withdrawal Agreement will be voted for on 12 March. If at that point Parliament fails to support her deal, a vote on 13 March on whether it backs a no-deal Brexit will be held. If that too fails, which is guaranteed, on 14 March there will be a vote to request an extension of Brexit. May has however indicated she would not countenance this running past the end of June, while member states and different EU officials have given conflicting statements regarding until which date they would want Brexit extended. Major risks remain.

MENA:  Clashes re-escalate in Hudaidah; peace deal likely to fail

Sectors: all
Key Risks: political violence, war on land 

Clashes in Yemen erupted on 3 March between Saudi-backed Hadi government forces and Huthi rebels in the coastal city of Hudaidah. 12 civilians have been killed and injured in shelling south of the city. Violence restarted as the UK’s Foreign Secretary Jeremy Hunt visited Yemen, confirming that the peace process for the vital city “could be dead within weeks”. Saudi sources accuse Huthis of strategically and deliberately targeting the UN’s grain stores on the eastern outskirts of Hudaidah, a lifeline for millions in the famine-wracked country. A contentious but pivotal part of December’s UN-brokered ceasefire is troop withdrawal from the city, which was expected in January but has not occurred. Sporadic shelling has been witnessed since but this is the first concerted escalation and it will likely continue given that neither side wishes to make concessions or concede control of the city.

Sub-Saharan Africa: Sudanese President Bashir gives up party leadership

Sectors: all
Key Risks: political violence; political instability

On 1 March Sudan’s President Omar al-Bashir handed over the chairmanship of the ruling National Congress Party (NCP) to his deputy Ahmed Harun. The move is likely intended as a gesture of goodwill toward protesters who have been calling for Bashir’s resignation since 19 December. Demonstrators were undeterred by the declaration of a state of emergency on 22 February and a ban on unauthorised public gatherings, with protests continuing in several cities. The move could herald Bashir’s potential withdrawal from the top job amid signs his authority over the military and the NCP is waning. Harun has been cited as a potential successor in the presidency. However, it remains unclear whether protesters would accept an NCP cadre to succeed Bashir. Despite the leadership’s cautious steps toward de-escalation, the situation remains volatile and large-scale violence cannot entirely be ruled out.