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By GRAHAM BUCK, a London-based writer covering European risk management issues

A new decade is underway, but many global hotspots with potential for escalating political and violent risk remain the same as in recent years, according to two recent analyses.

While Afghanistan and Pakistan are widely regarded as training grounds for al-Qaida terrorists, until recently Yemen had not been bracketed along with them. However, at a recent market briefing hosted by London's International Underwriting Association, experts from the specialist intelligence company Exclusive Analysis warned that the group is increasingly active in the country, particularly in the south, and is aligning itself with local tribes. American interests in the aviation and energy sectors are likely to prove prime targets in coming months, said Zaineb al-Assam, head of Middle East and North Africa forecasting for Exclusive Analysis.

Yemen is not alone. The outlook offered by Chicago-based insurance brokerage Aon in its 17th annual Political Risk Map is bleak. The map shows a total of 18 countries offering a heightened degree of risk from a year ago, with Sudan, Venezuela and Yemen joining Afghanistan, Congo DRC, Iran, Iraq, North Korea, Somalia and Zimbabwe in the "very high risk" category.

Aon also reported that the past 12 months have seen conditions also deteriorate in Algeria, Argentina, El Salvador, Equatorial Guinea, Ghana, Honduras, Kazakhstan, Latvia, Madagascar, Mauritania, Philippines, Puerto Rico, Seychelles, United Arab Emirates and Ukraine.

HOTTEST SPOTS

For Iran in particular, al-Assam anticipates another troubled year after last June's election outcome fuelled allegations of vote-rigging. State repression is likely to deprive Ahmadinejad's main opposition, the Green Movement, of real direction, while the possible removal of fuel subsidies will, if enacted, probably provoke attacks on gas stations.

More encouraging is the progress of discussions over Iran's nuclear enrichment program, which, while they continue, should stay the United Nations' hand on the imposition of sanctions-- particularly as both China and Russia oppose them. A more likely outcome is that the United States will pursue multilateral sanctions targeting gasoline exports to Iran.

The outlook for Iraq offers few glimmers of hope. The analyst al-Assam foresees a further fragmentation of politics as parties divide on intrasectarian lines, with no one bloc expected to secure a clear majority in the elections scheduled for March 7. In the south, oil companies plan to move in following the auctions in 2009 for the undeveloped fields, a possible precursor of more attacks on pipelines by local tribes.

Executive Analysis also held out the prospect of dispiriting developments in Latin America. The group's deputy head of forecasting for the region, Paul McGrath, commented that Peru is set to overtake Colombia as the world's prime producer of cocaine. Shining Path guerrillas, who faced near-annihilation in the 1990s, are on the comeback trail and latching on to drug revenues to regain their strength. While still lacking the networks it previously enjoyed, the group is stepping up its recruitment drive in universities. While the threat is largely confined to two remote areas, the run-up to elections in November 2011 could be marked by high-profile attacks.

The tide could also be turning in Colombia, which had enjoyed the benefit of U.S. aid programs instigated by Clinton. FARC guerrillas are bouncing back from setbacks in 2008, when three of the top seven commanders died, and adapting to a tougher environment. Their tactics include alliances with emerging drug gangs, and upcoming elections in March hold the threat of an upsurge in violent attacks.

McGrath anticipates no let-up of anti-U.S. rhetoric in Venezuela, where Hugo Chavez has already begun 2010 with a devaluation of the bolivar, increasing the prospect of a deepening nationalization agenda and further state control over oil ancillary services, petrochemical firms, food manufacturing and rural estates.

February 1, 2010

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