A2 Global Risk Executive Intelligence Brief – 26 March 2020

During this challenging period, A2 Global Risk can support you and your organisation with:

• Remote training through our Academy app, with topics including Crisis Communications and Management, and Crisis Leadership
• Intelligence analysis and threat monitoring services
• Travel risk management services through our Travel Safe 360 platform
• Evacuation planning and emergency assistance
• Business continuity and enterprise-wide pandemic planning
• Supply chain risk assessments, relocation planning and management
• Market entry/exit assessment
• New vendor due diligence and operations/logistical support
• Policy and planning, including Security, Emergency Response and Disaster Recovery

AMERICAS

Canada – Business support included as USD75bn COVID-19 relief bill becomes law

Mexico – COVID-19 prompts reports of increase in store robberies

Mexico & US – Protesters block lanes at Arizona border crossing over COVID-19

ASIA PACIFIC   

China – Government reports heightened SME business resumption

China & Australia – Bilateral trade dented due to COVID-19

India – Government allows ports to declare force majeure, delaying shipments

EUROPE & RUSSIA 

Regional –EU report warns of intensifying COVID-19 related disinformation campaign

Kosovo – Government collapse signals renewed political instability

MENA & CENTRAL ASIA

Israel – Speaker resigns, prolonging political deadlock

Tunisia – Government work suspended amid elescating concerns over COVID-19

Turkey – Economy will likely be hardest hit out of G20 countries from COVID-19 fallout

SUB-SAHA​RAN AFRICA 

Central African Republic – Growing xenophobia over COVID-19 raises security threats

Mali – Risk of civil unrest increases as main opposition leader goes missing

Somalia – Al-Shabaab claims two IED attacks, underscoring extreme terrorist threat

AMERICAS CANADA – Stability risk: Low  On Wednesday (25 March), a relief package worth CAD107 billion (USD75bn) aimed at countering the economic impact of coronavirus (COVID-19) became law. The package includes wage subsidies for small businesses, tax deferral measures, and four months of CAD2,000 (USD1,416) payments to workers who lose their jobs over COVID-19. Prime Minister Justin Trudeau has said that individuals will receive payments 10 days after they make their claim. Why it matters: The package seeks to halt the economic slowdown induced by the outbreak of COVID-19 and the restrictions on travel and assembly to contain it. Provinces across Canada have ordered the closure of non-essential businesses to halt the outbreak, including New Brunswick, Ontario, and Quebec. Further restrictions on non-essential business activities are likely to be imposed in the one-week outlook, particularly in the western provinces of British Columbia and Alberta. Companies with staff and assets in Canada should review the package and available business support measures. MEXICO – Travel risk: High  Authorities in Mexico City and several other states, including Mexico state and Quintana Roo, have said they are proactively monitoring social networks amid reports of criminals inciting the looting of stores closed due to the outbreak of coronavirus (COVID-19). On Wednesday (25 March), authorities in Mexico City reported four attempted store robberies overnight across the capital, while similar incidents have also been recorded in Mexico state and Oaxaca. Mexico City’s mayor, Claudia Sheinbaum, said that authorities in the capital are monitoring social networks for calls for looting. Why it matters: Many false reports of looting have reportedly appeared on social media, prompting would-be criminals to attempt real robberies. Particularly vulnerable are megastores, supermarkets, as well as grocery and department stores. Items reportedly stolen, however, are often not essential goods, including televisions, mobile phones, and clothes. In light of these reports, businesses with temporarily closed facilities in Mexico, particularly in Mexico City and its surrounding urban area, should review security measures and consider strengthening these with surveillance and alarm systems. MEXICO & UNITED STATES Protesters in the Mexican border city of Nogales, Sonora, staged a blockade of southbound lanes of traffic at the US-Mexico border on Wednesday (25 March) to call on Mexico’s government to impose COVID-19 screening on individuals entering the country from the US. The masked protesters, who numbered less than a dozen, used two vehicles to block two southbound lanes at the DeConcini crossing on the Mexican side of the border. This prompted a backlog of vehicles seeking to enter Mexico in Nogales, Arizona. Why it matters: Many Mexicans have criticised President Andrés Manuel López Obrador’s handling of the COVID-19 outbreak. Despite a growing number of cases domestically in the past fortnight, López Obrador has continued to tour the country, and hold events and physically greet his supporters. The response to the outbreak has largely been led by the country’s states, with several imposing restrictions on travel and assembly to counter COVID-19. Some Mexicans in border communities are concerned that individuals entering from the US, where the total number of cases has risen sharply in the past week, will import the virus. Despite a ban on non-essential crossings of the US-Mexico border, traffic continues to flow for essential journeys and cargo. There is a high likelihood that protesters will stage further demonstrations at crossings along the border in the one-week outlook if enhanced screening is not imposed. Businesses whose supply chains depend on the smooth flow of cross border traffic should monitor local updates and scenario plan for potential lengthy border delays.

ASIA-PACIFIC CHINA – Political risk: Medium  The Ministry of Industry and Information Technology (MIIT) on 25 March announced that, as of 24 March, 71.7 per cent of small and medium-sized enterprises (SMEs) – including many in Hunan and Sichuan provinces – have resumed operations through the use of cloud-based platforms. Work resumption of many SMEs had been impeded due to difficulties in complying with novel coronavirus (COVID-19) control and prevention measures such as the provision of face masks to staff. Why it matters: The announcement indicates a hastened resumption of SMEs’ business activities in China despite concerns over a possible second wave of infections. Such resumption is vital in the mitigation of COVID-19-inflicted damage to the Chinese economy, as SMEs comprise a majority of firms in the country and employ the most people. China is under particular pressure to avert protracted economic harm from COVID-19 due to previous denting of the economy from the US-China trade war and slowing economic growth. The MIIT’s announcement contrasts with a American Chamber of Commerce in China survey which on 25 March revealed that over one-fifth of US companies – which are greatly dependent on Chinese SMEs – in the country have resumed operations. CHINA & AUSTRALIA Australian winemaker Penfolds is reporting reduced demand from Chinese buyers, in part due to event cancellations prompted by novel coronavirus (COVID-19) containment measures. Australia-based retailers selling products including vitamins such as AuMake and Mediland Pharm – which rely on Chinese customers – have also shut down outlets since the outbreak, though some, including Sydney-based Homart report increased online sales. Why it matters: The developments underscore the adverse impacts of COVID-19 on bilateral trade between Australia and China, which has hit the wine sector particularly hard. The wine industry has already been under pressure due to the US-China trade war and the destruction of crops from wildfires and droughts. China is a crucial market for Australian winemakers, accounting for AUD1.25 billion (USD748 million) in exports in the year to September 2019 or 43 per cent of total wine shipments in the same period, according to industry organisation Wine Australia. Other sectors whose revenues have been dented by COVID-19 include housing, education, retail, and tourism. As China is Australia’s largest trading partner, the broader economic impact is likely to be acute. INDIA – Political risk: Elevated  India’s shipping minister on Wednesday (25 March) reportedly gave permission for the country’s ports to declare force majeure as part of the government’s efforts to contain the coronavirus (COVID-19) pandemic. Adani Ports & SEZ Ltd have declared force majeure at three ports, Mundra and Tuna in northwest India’s Gujarat state and Dhamra the eastern state of Odisha. Sources quoted by the Reuters news agency also said coking coal imports are being affected as berthing and unloading has been halted at Gangavaram and Kakinada in Andhra Pradesh and Mormugao in Goa. Why it matters: It should be assumed that many other ports will follow those listed during the country’s 21-day period of domestic self-isolation and curtailed economic activity that began on Tuesday. While demand for non-essential imports and exports will clearly decline rapidly in the Indian market and those countries receiving local exports, any prolonged delays to such commodities as crude oil, natural gas and coal could affect energy supplies. This would have an impact on foreign companies and their staff now under ‘lockdown,’ with managers and individuals assessing how they may be able to mediate the threat of potentially extended power cuts and other fuel conservation measures.

EUROPE & RUSSIA REGIONAL Pro-Russia media channels have initiated a ‘significant disinformation campaign’ aimed at spreading confusion and spurring criticism at Western government responses, according to an internal EU report dated 16 March. The campaign aims to undermine trust in national healthcare systems, and the EU has detected nearly 80 cases of disinformation efforts related to COVID-19 since 22 January. The Russian government has denied the accusations. Why it matters: Disinformation campaigns are designed to fuel uncertainty, suspicion and confusion at times of heightened public sensitivity. A feature of COVID-19-related disinformation has been the dissemination of conspiracy theories, some of which attribute the origin of the outbreak to the West and call into doubt official accounts of infections. As online users are increasingly turning to social media to obtain updates on the pandemic, there is a large audience that could be susceptible to reading false reports sometimes disseminated by fake profiles. In some cases, the campaign appears to be targeting specific EU and NATO member states; in Lithuania there were fake reports that a US soldier with COVID-19 was being treated at hospital. For groups engaged in spreading disinformation, successful campaigns allow them to gain favour with the Kremlin while enabling official authorities to maintain an element of deniability. The claims will amplify political and regulatory pressure on social media platforms to take a bolder stance towards shutting down fake profiles and limit the spread of disinformation. KOSOVO – Political risk: Elevated  On Wednesday (25 March), the government collapsed after the Self-Determination Movement (VV) party lost a no-confidence motion in parliament launched by the co-ruling Democratic League of Kosovo (LDK) party. This followed a row between the two parties over the lifting of tariffs on goods from Serbia and lack of consensus over a joint response to the ongoing coronavirus (COVID-19) outbreak. Why it matters: The government’s short rule of just 51 days comes amid an increasingly challenging context as the country copes with the devastating impact of COVID-19. LDK had pulled its support for the coalition ostensibly due to the dismissal of interior minister and party member Agim Veliu by Prime Minister Albin Kurti on 18 March. As we pointed out on 19 March, a likely government collapse threatens to hamper Kosovo’s response to COVID-19. In the aftermath of the vote, another early election is highly likely in the event that Kurti is unable to form a new government within two weeks. The return of heightened political instability in Kosovo also bears implications on recently improved relations with neighbouring Serbia. In practice, this will also signal the delay of the withdrawal of costly tariffs on Serbian goods, a key obstacle towards normalizing relations.

MENA & CENTRAL ASIA ISRAEL – Political risk: High  The speaker of the Knesset, Yuli Edelstein, resigned on 25 March. This follows widespread criticism over his refusal to re-open parliament and postpone voting for a replacement speaker on 19 March. Edelstein cited COVID-19 and the ongoing political deadlock as the reasons behind his decision. Why it matters: The resignation will allow opposition lawmakers to effectively take control of the legislative process, a development that marks a significant blow to Prime Minister Netenyahu’s increasingly weakened grip on power. Edelstein’s resignation subverted a Supreme Court ruling that had ordered a successor be voted in by the Knesset. This will likely now result in further delays, inhibiting the opposition Blue and White party’s ability to progress with their negotiations in forming a government. The party was formally asked by President Reuven Rivlin to form a government on 17 March. It has until the end of April to do so; however, as of 25 March this is increasingly unlikely given the additional delays caused by Edelstein’s resignation. Further compounding this is the breakdown in negotiations between the Blue and White Party and the Joint List, a political alliance of the main Arab-majority political parties in Israel. Without their support, the ability for Blue and White to form a minority government would no longer be possible. This further raises the risk of a political deadlock that could result in yet another election in the one year outlook. TUNISIA – Health risk: Elevated #ff9900 The Minister of Public Service Mohamed Abbou, announced on 24 March that all work at public and state institutions would be suspended until 4 April amid efforts to curb the spread of COVID-19 in the country. Why it matters: As of 26 March, there have been 179 cases of COVID-19; this number accounts for a 50 per cent rise in infections between 24 and 25 March. A nationwide curfew between 0600 and 1800 was imposed by President Kais Saied on 18 March and is currently being enforced by the armed forces. Political parties including the largest opposition party, Heart of Tunisia, have suspended operations until the health crisis eases; this could likely result in the suspension of political activities for at least another 3 months. The freeze on all public sector work will likely result in the delay of infrastructural projects throughout the country. Businesses with operations in the region should monitor developments and anticipate cancellations or delays of contracts in the short-medium term outlook. TURKEY – Stability risk: Elevated  International credit ratings agency, Moody’s, stated on 24 March that the Turkish economy would likely be the hardest hit in comparison to any other G20 country set for long-term economic consequences caused by COVID-19. The agency forecasted that Turkey’s growth would experience a cumulative contraction of 7 per cent in the second and third quarters of 2020. Why it matters: The statement marks a notable revision to Turkey’s growth forecast; in November 2019 Moody’s indicated that the economy would experience 3 per cent growth in 2020 citing the country’s strong economic recovery in 2019. This further underlines the significant impact that COVID-19 will likely have in reversing Turkey’s shift out of recession in the medium-long term. While the government announced an economic stimulus package of USD15 billion to curb the financial impact of COVID-19 on 17 March, the measures included have effectively failed to acknowledge the possibility that the virus will likely cause a long term economic slowdown. The consequences have already been indicated in a currency depreciation of around 10 per cent against USD – levels that have not been seen since the currency crises in 2018. The Turkish lira has regained some of its losses, likely due in part to the US Congress’ approval of a USD2 trillion economic stimulus package. However, given the existing instability in Turkey, there is a high chance that the lira will further depreciate in the short-term outlook.

SUB-SAHARAN AFRICA CENTRAL AFRICAN REPUBLIC – Security risk: Extreme  Amid CAR’s confirmation of its fifth case of imported COVID-19 infection, there is growing hostility towards the foreign community, who local residents accuse of bringing the virus. According to a well-placed source, UN night-time curfew hours have been tightened to 2000 local time, from 2200 previously, and non-essential staff have been evacuated, underscoring growing concerns by international actors on the ground. Why it matters: CAR’s public healthcare system is virtually nonexistent due to severe under-development. There are currently about 500 COVID-19 testing kits for the entire country and only one hospital in the capital Bangui which is certain to be overwhelmed by a surge in COVID-19 infections. Although there are currently only imported cases confirmed in the country, local transmission is very likely due to the lack of water needed to ensure cleanliness, and because local residents live closely with each other, increasing the risk of the virus spreading further. It is probable that growing levels of xenophobia is being orchestrated by local stakeholders opposed to the presence of foreign actors, including the international aid and peacekeeping communities as well as private companies. Security managers of staff in-country should take immediate steps to assess their exposure to the threat, and prepare temporary evacuation measures to be implemented at short notice, should the threat level increase further. MALI – Travel risk: Extreme  Soumaïla Cissé, the leader of the opposition Union for the Republic and Democracy (URD) party, and 11 of his campaign staff have gone missing since about 1530 local time on 25 March, according to statements by the government and his party. At the time of their disappearance, the group was canvassing ahead of the 29 March legislative elections in Niafunké town, located in the southern part of the northern Timbuktu region. Why it matters: Several Islamist militant groups which commonly abduct political stakeholders and foreigners for ransom are present in central and northern Mali. Such groups include al-Qaeda in the Islamic Maghreb Sahel, Ansar Dine, al-Mourbitoun, and Katiba Macina. It is probable that Cissé’s abduction was carried out on behalf of one of those groups. With elections looming, his abduction is likely to fuel growing levels of civil unrest. The incident comes at a particularly challenging moment for the country, where the government announced a nationwide lockdown on 25 March after confirming a first case of COVID-19. The timing of the disappearance, with only three days left to go for the polls, is also likely to fuel suspicion among Cissé’s supporters, who could accuse the government of lax responses or collusion, potentially to limit his chances of victory. SOMALIA – Terrorism risk: Extreme  On 25 March, an unidentified terrorist walked into a teashop and detonated his suicide person-borne IED, killing three people and injuring seven more. The attack took place near the busy Saydika junction in Mogadishu, which is about 150m from the national parliament. Also on 25 March, a suicide vehicle-borne IED struck the vehicle of the commissioner of the southern Ras Kamboni district in the Lower Juba region, killing all five passengers onboard. Al-Qaeda-affiliated militant group al-Shabaab claimed responsibility for both attacks. Why it matters: The two incidents underscore Somalia’s extreme terrorist threat, which is acute in the south where al-Shabaab has an established presence. Further attacks are likely in the one-month outlook, despite probable curfews and restrictions to domestic movements which the authorities are likely to impose to slow the spread of COVID-19. Security managers of in-country staff should prepare enacting evacuation measures for all staff; as the outbreak spreads in the country, Somalia’s dilapidated public healthcare system is unlikely to be able to cope with a growing number of infected people.

Source: A2 Global Risk