Geopolitical Weekly - The business impact

Analytical Insight provides a weekly overview of global geopolitical events and the potential impacts these events may have on business operations.

Saudi Arabia - Increasing Terrorism Risk

Key Points The terrorism threat to businesses in Saudi Arabia has increased in recent weeks. The threat has escalated to a severity that has caused the US embassy to suspend its missions for two days. Contributing factors to the threat include Saudi Arabia's involvement with the US airstrikes against Islamic State, porous Saudi borders and an increase in Islamic State's capability to infiltrate Saudi through Iraq.

• Analytical Insight has increased Saudi Arabia's terrorism threat level toHIGH for the short-term

• Security – The threat to personnel in Saudi Arabia has increased and security mitigation should be implemented to rectify this increased threat. The threat is highest to Western oil workers and Western personnel in oil-producing areas. The threat to travellers to Saudi Arabia from collateral damage has also increased. Travellers should implement additional security controls in the forthcoming weeks

• Business Continuity – Business Continuity for businesses in Saudi Arabia would likely only briefly be affected in the event of a terrorist attack

• Business Risk – A single terrorist attack is unlikely to severely affect the business environment in Saudi Arabia. However, in the event of a prolong sustained campaign of small-scale attacks, investor confidence, foreign direct investment and domestic investment is likely to reduce

Background

The US embassy in Riyadh has suspended US missions in Riyadh, Jeddah and Dhahran for two days in response to a specific threat from terrorism. The US embassy has also warned that militants within Saudi Arabia may target Western oil workers in the Eastern Provinces. While the current nature of this threat is unknown, the overall threat to Saudi Arabia from terrorism has been increasing due to the Saudi’s involvement in the US-led strikes against Islamic State. Saudi Arabia has managed to suppress the threat from domestic terrorism in the country for nearly a decade after a spout of deadly home-grown terrorist attacks targeted businesses and expatriates from 2003 to 2006.However, the involvement of the Kingdom in the current US-led airstrikes against Islamic State has rendered Saudi Arabia on IS’s target list. IS have the capability to launch a one-off attack in Saudi Arabia, especially in areas close to the Iraq border. The recent arrests in Saudi Arabia of militants affiliated with IS and al ’Qaeda in the Arab Peninsula (AQAP) indicates the penetration of the group through Saudis porous, albeit well policed- borders.

Business Impact The business impact from a terrorist attack in Saudi Arabia can be separated into direct impact and indirect impact The Direct Impact For Western businesses operating in Saudi Arabia, especially in the oil sector, the direct impact is likely to be substantial if a business is directly targeted. Businesses should ensure their security precautions mitigate the risk from a terrorist attack. Personnel in Saudi should be protected from kidnap too and businesses should ensure all personnel are adequately protected. The Indirect Impact The indirect impact from a terrorist attack is likely to be more significant than the direct impact and affect more sectors and businesses. Indirect impacts can include a reduction in investor confidence, reduced FDI, reduce GDP and diversion of government spending away from needed reforms and projects. For more information on the indirect impact to your business from terrorism click here. To view our Saudi Arabia Country Risk Assessment - click here

Quarterly Election Forecast

Key Dates An overview of the key political dates in the forthcoming quarter: 28th March - Nigeria presidential and local elections 29th March - Uzbekistan presidential elections 13th April - Sudan parliamentary and presidential elections 15th April - Togo presidential elections 26th April - Kazakhstan snap presidential elections 24th May - Ethiopia parliamentary Elections 26th May - Burundi legislative elections 26th June - Burundi presidential elections

Business Impact 28th March - Nigeria presidential and local elections The Nigerian presidential elections present a lose/lose situation of businesses in Nigeria. In the event that Jonathan retains his presidential power, there will likely be;

• violent unrest in the north of Nigeria

• an advance south by Boko Haram

• political stalemate

• contract risk for foreign businesses.

In the event the newly formed coalition All Progressive Congress wins the election, there will likely be:

• rise of insurgency in the Niger Delta

• corruption probes

• contract invalidity

• political stalemate

For a detailed overview of the impacts to business in the aftermath of the Nigerian elections - click here 29th March Uzbekistan presidential elections It is highly likely that President Islam Karimov will win the March election. However, due to Karimov's age, it is uncertain who will succeed him in the event he is unable to fulfil his full term. In the event Karimov dies before completing his elected term, there would likely be a fight for power between ruling factions. A power vacuum or a period of political instability in Uzbekistan may hamper political reforms, and reduce investor confidence within the country. 13th April - Sudan parliamentary and presidential elections Although President Omar al-Bashir has declared he will not run in the 2015 election, he is likely to change his stance nearer to the date. In the event of his continued succession, it is likely that political stability will stabilize in the medium term. Bashir's main focus areas will be to increase the currently weak economy and stabilize the security situation. Businesses will likely face further tax increases, weak legal protection and trade restrictions as the government attempts to stabilize the economy. 15th April - Togo presidential elections The current president, Faure Gnassingbé, is likely to re-win the election. However his victory is likely to lead to widespread violent unrest from opposition supporters. Further civil unrest after the election is also likely as the elected government will unlikely be able to meet workers’ demands. National development and increased free trade will likely be affected by inability of ruling party and opposition to agree on a National Development plan. 26th April - Kazakhstan snap presidential elections President Nazarbayev will likely win the upcoming snap election. However, due to his age there is a possible risk of him being unable to complete the term. In the eventuality that this occurs there will likely be political instability as key political figures fight for control. This would significantly increase the risk of expropriation of assets and contract cancellation. 24th May - Ethiopia parliamentary elections The ruling Ethiopian People's Revolutionary Democratic Front (EPRDF) is likely to maintain power in the parliamentary election. After the election, ongoing corruption probes are likely to focus on foreign and private businesses and non-state institutions. State owned enterprises and businesses affiliated with the ruling party will continue to dominate the economic landscape in Ethiopia. 26th May - Burundi legislative elections and 26th June - Burundi presidential elections President Pierre Nkurunziza will likely seek a third term in the 2015 elections despite a two-term constitutional limit. Should Nkurunziza push ahead, the risk of a military coup will increase. A move to change the constitution may lead to further international fallout.

#terrorism #saudiarabia #Nigeria #Elections #IslamicState