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New Maplecroft analysis includes in-depth report on the political crisis in Iraq, elections in USA and Taiwan and business risks in the Congo

25/01/2012

Congo

Maplecroft's Country Risk Briefing on the Congo offers detailed analysis of the governance framework, the regulatory and business environment, political violence, human rights, the environment and climate change, plus an economic overview.

Although relatively stable by regional standards, Congo lacks institutional capacity, and the state is considered to be oppressive. Given the weak opposition, threats to the incumbent regime are mostly likely to come from within the ruling Congolese Labour Party (PCT) or the military.

Congo has made some progress towards transparency, meeting the HIPC requirements and making ‘meaningful progress’ toward the Extractive Industries Transparency Initiative (EITI) Board’s rules, but corruption is endemic throughout government, the judiciary and the security forces. Due to the low capacity of state institutions in Congo there is also a lack of implementation of environmental laws. Nevertheless, the government has demonstrated a degree of political will to improve environmental management and regulation.

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Iraq

Maplecroft’s latest in-depth Country Risk Report for Iraq analyses how the latest political crisis in Baghdad is reverberating both domestically and regionally. Special attention is paid to the impact political instability is having on the semi-autonomous Kurdistan region of Northern Iraq with a special focus on the energy sector. In addition to maps relating to infrastructure, human rights and water stress, the report also includes a detailed, bespoke map of the risks posed by cross-border Iranian and Turkish attacks into Northern Iraqi territory.  Overlays of all oil blocks in Iraqi Kurdistan are included.

Baghdad has been engulfed in the most serious political crisis since the coalition government was formed in November 2010 following the Iraqi Prime Minister’s decision to charge Vice President Tareq al-Hashimi with running ‘death squads’ and involvement in ‘terrorist’ activities.  The VP is now taking refuge in Iraqi Kurdistan to avoid prosecution in courts he claims are ‘biased’. Deputy Prime Minister Saleh al-Mutlaq also came under pressure to resign by al-Maliki following his statement that likened the Prime Minister to a ‘dictator’. The Iraqiyya bloc, in which al-Hashimi and al-Mutlaq are prominent leaders, has since boycotted parliament and cabinet meetings, causing significant disruption to proceedings. Iraqiyya’s leader, Ayad Allawi, has called for al-Maliki to be replaced and elections to be held. The fact that Iraq has seen over 200 people killed in sectarian violence since mid-December has also added a concerning security dimension to the political unrest.

However, it is increasingly apparent that Iraqiyya has overplayed its hand and has been weakened by the crisis, and al-Maliki is now consolidating his power. The Kurds, poised as the mediators between the warring factions, are looking to capitalize by seeking concessions on key political and economic areas. Nevertheless Iraqi Kurdistan still remains comparatively safe and shielded from the spike in violence seen elsewhere in Iraq . However, the continued absence of a federal oil and gas law contributes to a regulatory and business environment that exposes investors to a high level of uncertainty and risk in Iraqi Kurdistan. The entry of oil super-major ExxonMobil into the Kurdistan market is widely seen as a potential ‘game changer’, the ramifications of which are considered in the report. A full analysis of business critical risks and recent trends are included in the report.

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Taiwan

The post-election instalment of Maplecroft’s Election Monitor Taiwan offers analysis of the election results and assessments of the likely consequences for business and investors.

President Ma’s re-election is an indicator that his pro-China policy continues to have support from the electorate, particularly from the island’s business community. Under Ma’s first presidential term, cross-strait economic relations enjoyed an unprecedented improvement. The KMT election campaign has focused on the economic benefits achieved since Ma came to power in 2008, including the first ever trade agreement with China – the 2010 Economic Cooperation Framework Agreement (ECFA) – and the resumption of direct air and postal links to the mainland. Ma is expected to continue to deepen economic integration with Beijing, which will benefit businesses on both sides of the strait.

Critics have also pointed out that Ma is not doing enough to improve Taiwan’s business environment, and foreign investors continue to face obstacles. While foreign investments are encouraged, investment in some sectors is partially restricted for foreigners, including the banking and high technology sectors. Over-reliance on China may also affect Taiwan’s business environment negatively, although Ma is looking to diversify trade by signing an investment agreement with Japan and beginning talks with New Zealand and Singapore. He has also indicated Taiwan will join a proposed Trans-Pacific Partnership.

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USA

The pre-election instalment of Maplecroft’s Election Monitor USA offers analysis of the Republican primary elections and assessments of the possible consequences for business and investors should Obama be defeated by a Republican challenger in November 2012.

Pre-election monitor analyses the state of the Republican presidential primaries and future presidential election campaign concluding that either Mitt Romney or Newt Gingrich will likely face President Obama in November's presidential election.

Although Obama remains the favourite to win the election due to improving economic conditions and strong approval ratings on leadership and foreign policy, the monitor also examines implications for business if either of the Republican candidates becomes president. It focuses particularly on economic, environmental, energy and health policy, forecasting that both Romney or Gingrich would rollback regulation in these areas. This would create a more benign environment for business but also increase risks of reputational damage due to environmental harm and possible inadequate protection for lower-paid Americans.

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Country risk briefings, in-depth reports and election monitors are available for all countries and sectors. Register for trial access to see examples.