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Our accurate forecasts help clients successfully manage worldwide political and violent risk.

AFRICA

Multiple Regions

Our Forecast: 7 May 2007 - 'Electricity blackouts are likely to increase in frequency in Southern Africa at least until 2011.'

Result: 22 January 2008 - 'South Africa's neighbouring countries are feeling the pinch of Eskom's problems as they are plunged into darkness and face power crises of their own...'

Our Forecast: 19 July 2007 - 'The risk of armed groups increasingly targeting foreigners for political or enrichment purposes is rising in Niger, Ethiopia, Sudan and DRC.'

Result: 25 October 2007 - The JEM said it had captured 2 foreign oil workers at the Defra oil field, and ordered Chinese oil firms to leave within a week.

Algeria

Our Forecast: October 2006 - 'We are likely to see increased targeting of government officials and buildings, security forces and economic assets in order to damage the government's reputation.'

Result: 11 April 2007 - In Algiers, two bomb explosions, one at a government building and the other at a police station, left 24 dead and 222 injured.

Burkina Faso

Our Forecast: 6 December 2007 - 'Protests over food and Army pay are likely to meet violent police response, resulting in business disruption and property damage in the next year.'

Result: 22 February 2008 - 'More than 100 people have been arrested in Burkina Faso's second city after a protest against rising living costs ended in violent clashes... roads and services stations were trashed...'

Ethiopia

Our Forecast: January 2007 - 'Ethiopian intervention in Somalia is likely to increase the risk of internal attacks by separatist opposition in Ogaden, Addis Ababa and the North.......covert attacks, especially on energy infrastructure and oil- exploration sites, will become more likely.'

Result: 24 April 2007 - In Abole, ONLF rebels attacked a Zhongyuan Petroleum Exploration Bureau oil facility; some 74 people were killed and 7 abducted.

Sierra Leone

Our Forecast: 2 October 2007 - ' Mining concessions are at increased risk of renegotiation and cancellation in the next year.'

Result: 31 October 2007 - Sierra Leone's government will review all mining contracts in the West African state to try to clean up corruption and cheating and maximise benefits for the nation, Minister of Mines Alhaji Abubakarr Jalloh said.

Sudan

Our Forecast: 10 Mar 07 - ‘There is a strong likelihood that the struggle for this oil-rich area could turn violent, with the Misseriya and Dinka used as proxy forces in a larger struggle for access to resources between the North and South.’

Result: 2 March 2008 - The authorities in southern Sudan say nearly 70 armed Arab nomads have been killed in clashes on the border between the north and south of the country. The clashes occurred between Misseriya tribesmen and fighters from the Sudan People's Liberation Movement (SPLM).

Our Forecast: 29 November 2006 - 'It is very likely that the North will seek to fuel insecurity in the South to push the Southern government to break the ceasefire -- undermining the peace agreement and, by extension, the 2011 referendum on independence.'

Result: 11 October 2007 -  The SPLM suspended its participation in the national government citing its failure to implement the Comprehensive Peace Agreement.

ASIA

Sri Lanka

Our Forecast: January 2007 - "Increased Air Force attacks on LTTE targets in north and east Sri Lanka raise the likelihood of LTTE attacks on air bases and airports."

Result: 25 March 2007 - The Sri Lankan Air Force's Katunayake Air Base was bombed by LTTE light aircraft, killing three soldiers and injuring 16 others.

EURASIA

Turkey

Our Forecast: May 2006 - "Turkey's ruling AKP straddles a delicate line in its pursuit of secularist and Islamist agendas; any significant deviation from the middle course will likely result in regime instability and military intervention."

Result: In April 2007 the AKP nominated Foreign Minister Abdullah Gul for the presidency. Turkey's armed forces said they were following the presidential election "with concern" and that they remained "the determined defenders of secularism." Equities, bonds and the currency fell sharply in response.

Russia

Our Forecast: 4 October 2007 - "United Russia is likely to secure upwards of 65% of the popular vote in December elections, thus retaining its constitutional majority in the Duma. Pro-Putin parties, including Zhirinovsky's LDPR as well as Just Russia, designed by the Kremlin to lure the staunch communist voters away from the Communist Party, will probably hold around 85% of all the seats."

Result: 3 Dec 2007 - With 97.8% of the ballots handled, United Russia leads with 64.1% of the vote, LDPR holding 8.2% and Fair (Just) Russia 7.8%.

LATIN AMERICA

Argentina

Our Forecast: February 2006 - "Price controls will tame inflation temporarily, but will undermine economic policy credibility, triggering unrest."

Result: 10 December 2006 - Farm workers ended a 9-day strike against the government's decision to cap beef and cereal exports to control inflation; on 20 April 2007 the government and six of the largest labour unions agreed on a 16.5% salary increase - unions had demanded above-inflation increases due to mistrust of the government's inflation reporting.

Colombia

Our Forecast: 28 November 2006 - 'Huila has a strong and long-standing presence of FARC guerrillas; the region lies on a key strategic corridor for Colombia's conflict... guerrillas are most likely to target infrastructure and energy assets although transmission and distribution networks and substations are more likely targets than major well-protected facilities in cities.'

Result: 26 February 2008 - Near Neiva, Huila, a FARC bomb against a police patrol damaged an electricity substation, leading to power supply disruption.

Mexico

Our Forecast: February 2007 – President Calderon is likely to tackle monopolies gradually, with telecoms and broadcasting being opened to competition.

Result: On 30 May the Mexican Supreme Court invalidated various articles of the controversial Federal Radio and Television law in an 8-1 vote, removing barriers of entry to a market until now cornered by Mexico's media giants Televisa and TV Azteca.

FINANCE

Our Forecast: November 2006 (within Foresight 2007, our annual publication) - "Financial regulators are likely to scrutinise more sophisticated services and products than they have previously (e.g. hedge funds and derivatives), and industry bodies are likely to agree to voluntary codes of conduct. Hedge funds are likely to see voluntary regulation as pre-emptory of regulation and litigation risk in the event of a financial collapse. Self-regulation would also increase barriers to entry in the fast-growing hedge fund market."

Result: 10 October 2007 - A working group of Europe's top hedge funds released a best-practice code for hedge funds advocating voluntary disclosure of information about investments and risks, intended to prevent imposed regulation.

Analysis

DR Congo (26 April 2007)

On 27 March 2007, the government announced it was suspending negotiations on future mining deals until a mechanism to review existing contracts was created.

However, other risks are emerging, fostered by the government's urgent need for increased revenue. Donors provide over half the government's budget but corruption concerns have led to the suspension of new IMF and World Bank loans, and many bilateral donors are channelling their aid through NGOs and UN agencies.

On 3 March, the governor of Katanga province suspended mineral exports until local processing rules were met. He closed the border with Zambia through which the bulk of the region's vast copper and cobalt reserves transit to Zambian smelters; the border was re-opened after a month. In mid-April, mineral exports from the Kivu provinces (cassiterite, coltan and wolfomite) were also suspended. Similar initiatives are likely as the regional economies struggle to benefit from their resources. Therefore, the risk of disrupted exports from mineral rich areas, as well as delays across the border at Zambian processing plants, will be significant through 2007 and into 2008.

Vietnam (26 April 2007)

Since 1998 Vietnam's central provinces have received just 9% of total foreign direct investment into the country. The majority has thus far been channelled into Vietnam's industrial zones, mostly located in the north near Hanoi or in the south near Ho Chih Minh City (HCMC).

In 2002 the government dissolved the Dung Quat joint venture with Russia's Zarubezhneft and reimbursed the company's $235 million investment. Dung Quat is located more than 1,000km away from the southern Bac Ho oil fields but without an oil pipeline in between. The deep sea port at Dung Quat is not equipped with the appropriate cargo facilities to handle oil shipments.

These factors are deterring foreign investment in the central provinces.

Russia (19 April 2007)

Liberalisation of the domestic energy market, involving privatising electricity-generating plants and gradually lifting price controls, has been on the Kremlin's agenda since 2002. However, the struggle among business elites to profit from privatising power plants, combined with the political sensitivity of easing price controls, has slowed progress.

The current proposal is to complete privatisation of these assets by early 2009. In reality, the process will probably stretch well over three years (440 thermal and hydropower plants are up for privatisation) and the liberalisation plan currently being considered is likely to go through at least minor adjustments.

However, it is unlikely that tariffs will be fully liberalised in line with current projections given the electorate's sensitivity to energy price hikes. Energy prices are, however, likely to go up substantially over the next 3-5 years, thus making energy generation considerably more profitable. The government hopes to invest $112 billion in upgrading energy generation and transportation facilities by 2015; the funds for this initiative are to come from the privatisations. Foreign investors are likely to be able to participate in the privatisation of UES' assets as minor partners to state-controlled firms and Kremlin-friendly oligarchs.

Ecuador (5 April 2007)

A three-week protest at Block 18, an oil field operated by Brazilian firm Petrobras in Orellana province, led Ecuadorean state oil firm Petroecuador to declare force majeure in late March as it was unable to fulfil oil export commitments.

Protests against multinationals have become increasingly frequent in the Amazonian provinces of Orellana, Sucumbios, Napo and Pastaza. In mid-2005 the government declared a state of emergency and deployed the Army in Orellana and Sucumbios after waves of protests severely disrupted the oil industry. Protests against Petrobras in the region saw the company abandon plans to build a road through the Yasuní National park. They have delayed plans for its development of Block 31, and President Correa warned in early February that the block would be taken back from Petrobras if studies showed it was damaging the park.

Despite being politically indebted to a plethora social movements, President Correa issued an unusually strong admonition against local leaders around Block 18, accusing them of 'promoting anarchy' and hurting their own interests by tolerating demonstrations that crippled oil production. By issuing this statement, Correa may also have been trying to score points against followers of his political rival, ex-President Lucio Gutierrez, who are particularly strong in the region.

If, as has often happened, promises of new investment do not materialise, Petrobras' Ecuadorian operations will face further disruption. Correa has vowed to renegotiate oil contracts, but his weak political position is likely to result in measures falling short of those demanded by the more radical protest movements, thus exacerbating disruptive unrest in the Amazonian provinces even more during 2007.