October 15th, 2011
BRIC countries (Brazil, Russia, India and China) are among the highest risk regions to have armed conflicts based on the third annual Conflict Intensity Index, an annual study evaluating the intensity of armed conflict across 197 nations, released by risk analysis company Maplecroft.
Follow up:On the country level, the study rates 12 countries as 'extreme risk':
Region-wise, three years data from Maplecroft show MENA (Middle East and North Africa), Central Africa, Indian subcontinent most at risk. BRIC countries are also at ‘high’ and ‘extreme risk’. Nevertheless, significant opportunities could also exist for businesses, and investors, if those risks are properly managed.
|Map Source: Maplecroft|
Among the four BRIC countries, India is ranked 11 and ‘extreme risk’ for conflict intensity, while Russia (13) and China (29) are both rated ‘high risk.’ Maplecroft noted that protracted insurgencies and terrorist threats within these countries continue to present challenges to the business environment. Conflict, however, poses less of a risk in Brazil (60), which is rated ‘medium risk.’ According to the study:
India, the highest ranked of the BRICs countries, faces significant risks from Islamist terrorism. A particular source of concern is Lashkar-e-Taiba, a pan-Islamist terrorist group that desires the creation of a “caliphate” across the Indian subcontinent and the withdrawal of India from Kashmir. Lashkar-e-Taiba continues to launch attacks in Kashmir and India and is one of several groups suspected of the 13 July 2011 Mumbai bombings that killed at least 26. India is also enduring a 45-year-long Maoist insurgency from ‘Naxalite’ militants in the east of the country whose aim is to overthrow the current political system.
Shockwaves Of Arab Spring
The shockwaves from the Arab Spring have propelled Egypt, Libya and Syria into the most severe risk category.
Maplecroft notes that generally, North Africa has witnessed an increase in its risk profile over the past three years reflecting the Arab Spring shockwave contagion across the region. Egypt, for instance, just had the Black Sunday on Oct. 9, and the 2011 Egyptian revolution has resulted in significant loss of life with over 800 people estimated killed in the violence.
Libya is an OPEC member accounting for roughly 2% of world oil production; however, its light sweet crude is a preferred grade among many European and U.S. East Coast refiners. The riot and revolution in Libya disrupting the country's crude exports was part of the reason Brent oil shot up to $123.15 in April this year.
Other OPEC countries are spending lavishly using their oil coffer to quell potential uprisings. According to Bloomberg,
Saudi Arabia will spend $43 billion on its poorer citizens and religious institutions. Kuwaitis are getting free food for a year. Civil servants in Algeria received a 34 percent pay rise. Desert cities in the United Arab Emirates may soon enjoy uninterrupted electricity.
Maplecroft quoted Transitional National Council (TNC) of Libya that approximately 50,000 people have died in the conflict, and with a protracted armed struggle that is still ongoing, it is likely that the death toll will run into the tens of thousands, making Libya’s civil war the deadliest conflict of 2011.
In September, the UN Office for the High Commissioner for Human Rights (OHCHR) estimated that Syria approximately 2,700 people have been killed since major protests began in March.
Yemen and Tunisia both have casualties of approximately 1,000 and 200 casualties respectively, according to estimates from the UNOHCHR Meanwhile, increasing protests in Bahrain has prompted Maplecroft to upgrade the country from ‘medium’ to ‘high risk,’ with almost 30 people killed since February.
Analyst Jordan Perry at Maplecroft concludes that,
“Conflict exponentially increases the risk of doing business within a country, as operations are disrupted and employees and assets are endangered.”
“......Ongoing monitoring of political risks, such as regime stability and conflict, in turbulent areas of operation is essential for companies to ensure business continuity and the safety of key personnel.”
Will Arab Spring End Up Too Much for the World? by Elliott Morss
American Autumn vs. Arab Spring by Frank Li