Political violence in Syria and Libya, ongoing social unrest due to regime changes in Yemen, Libya, Egypt and Tunisia, and increasing terrorism across key growth economies such as Turkey, Nigeria, Colombia, India and Russia will be the key drivers of political risk in 2013, according to risk analysis company Maplecroft. In addition, the threat of resource nationalism is set to increase this year and Maplecroft has identified 21 countries that face an “extreme risk” of expropriation, with privately owned businesses in Guinea, the Democratic Republic of Congo, Libya and Myanmar facing the highest risk of nationalisation.
Maplecroft’s fifth annual political risk atlas, which ranks 197 countries on their performance across 49 separate political risk issues, reported that the risk of forced regime change remains high across Middle East and north Africa (Mena), with Iraq ranked as the worst affected by ongoing violence. The conflict in Syria and the low levels of human security in Libya have meant that the investment climate in these countries will be unstable this year. The proliferation of weapons across Libya’s borders will continue to feed instability in Mali, and the ‘spill-over’ of political violence in Syria will deepen sectarian divisions in Lebanon and Turkey.
Although the ‘Arab Spring’ uprisings have brought more political freedoms to citizens in some Mena countries, popular frustration over corruption and the pace of economic reform will spur more societal unrest, and this will pose companies significant challenges in their business continuity plans this year. In light of this, Maplecroft reported that investor attention will increasingly turn to countries possessing “pre-Arab awakening conditions”, such as a lack of civil and political rights, income inequalities, and relatively high levels of digital inclusion, as lower risk investment destinations.
Given persistently high commodity prices, the risk of resource nationalism is likely to grow in 2013, according to Maplecroft, and the tactics used by governments to extract value from their natural resources could become increasingly sophisticated. Citing Argentina’s decision to renationalise the energy company YPF in 2012, Maplecroft maintained that more governments will look to appease societal concerns by engaging in more expropriations. Turkmenistan, Equatorial Guinea, Venezuela and Bolivia were highlighted as key countries that are likely to experience a ‘creeping nationalisation’ in 2013.