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Iranian influence in Iraq to prolong civil unrest, political instability, economic insecurity – Iraq Special Report

This report was written by:

Shagun Nayar – MAX Security’s Levant intelligence specialist

And reviewed by:

Darren Cohen – Senior Intelligence Manager of MENA & Oded Berkowitz – Deputy Chief Intelligence Officer

Executive Summary

From October 2019, a nationwide anti-government protest movement has emerged in Iraq, much of it directly and indirectly related to Iran, which led to former Prime Minister (PM) Adil Abdul-Mahdi’s resignation in November 2019.

Tehran’s influence on the political and security situation in Iraq has played a major factor in the instability witnessed over the past months. This is likely to continue to pose a challenge to the new PM Mustafa al-Kadhimi-led government over the coming months.

Additional challenges will be presented by Iraq’s deteriorating economy, which has been exacerbated by COVID-19-imposed restrictions on travel and business operations, as well as a decline in the demand for oil. Iran’s military and political entrenchment in Iraq is liable to deter US-aligned states and private enterprises from investing in the country over the long-term.

Given the US’s continued military presence in Iraq, Iranian-backed militias will likely continue their military campaign against US interests in the country over the coming months. While a large-scale armed conflict between the US and Iran in Iraq remains unlikely at the current juncture, the Iraqi government’s efforts to maintain cordial ties with both Washington and Tehran will pose a major challenge for the new government going forward.

Overall, the manner in which the newly formed government approaches Iran and its affiliated military and political groups over the coming months is likely to constitute a significant factor in the PM al-Kadhimi administration’s functioning and ability to implement reforms.

Travelers to Iraq are advised to regularly review their emergency and contingency procedures as a basic security precaution, as the ongoing tensions between Iran on one side and the US and its regional allies on the other will likely lead to additional hostilities. For on-ground or intelligence assistance contact us at: [email protected] or +44 20-3540-043.

Background & Current Situation

Political Situation

Following weeks of unruly protests, the Iraqi Prime Minister (PM) Adel Abdul Mahdi resigned on November 29, 2019.

On February 1, President Salih appointed Mohammed Tawfiq Allawi as PM-designate. Allawi resigned on March 1 due to his inability to gain sufficient political support to form a technocratic government.

Adnan al-Zurfi was appointed as the next PM-designate candidate on March 17. However, Zurfi’s candidacy was rejected by a majority of Iraqi Shiite parties, as well as several factions within the Iran-backed Popular Mobilization Units (PMU), who called him an “American Intelligence candidate”. Zurfi withdrew his candidacy on April 9.

On April 9, Iraqi President Barham Salih nominated the Iraqi National Intelligence Service (NIS) chief, Mustafa al-Kadhimi, as PM-designate. His candidacy was welcomed by nearly all Iraqi Shiite parties as well as Iran and the US. However, PMU’s strongly pro-Iran Kata’ib Hezbollah explicitly rejected his nomination as PM.

On May 6, 255 out of 329 lawmakers in the Iraqi Parliament approved al-Kadhimi’s government program, which vows to reduce public spending, fight corruption, and “listen to the demands of the protest movement.”

On February 22, 2019 Abdel Aziz al-Muhammadawi, a candidate strongly favored by Iran-backed Kata’ib Hezbollah, was appointed as the PMU Chief of Staff.

However, on the same day, four brigades, known as the Hawza militias, loyal to prominent Iraqi Shiite religious cleric, Ayatollah Sayyid Ali al-Sistani, issued a statement condemning al-Muhammadawi’s appointment. Sistani has publicly criticized Iran’s growing interference in Iraq’s affairs. On April 22, 2020 the Hawza militias split from the PMU.

Economic Situation

The US has extended sanction waivers to Iraq on Iranian energy imports a total of nine times since November 2018. Iranian natural gas imports reportedly account for approximately 40 percent of Iraq’s energy consumption. The latest such waiver was granted on May 6.

On April 20, Iraq reportedly announced that it had reduced Iranian energy imports by 75 percent due to near full sufficiency in domestic energy production.

However, on April 29, Iraq’s Minister of Electricity reportedly announced that replacing Iranian energy imports entirely cannot be realized immediately and that Iranian gas remains the “cheapest and easiest to transfer”. He further announced that the alternatives to replace Iranian oil are currently on hold due to domestic circumstances.

On April 12, the Organization of the Petroleum Exporting Countries (OPEC) Plus, of which Iraq is a member state, agreed to cut oil production by 9.7 million barrels per day (mbpd) to raise the global price of oil due to a fall in demand amid COVID-19 restrictions.

According to April 16 reports, Iraq shut down oil production at state-owned oil facilities in Basra. Even prior to the agreement, Iraq reduced its production by 100,00 barrels per day (bpd) from February to March. Iraq’s oil revenue reportedly fell by 28 percent in the first quarter of 2020. In April, Iraq’s oil revenue dropped to its lowest level in a decade, at 1.423 billion USD, with oil production averaging 3.854 mbpd.

At the current oil prices per barrel, Iraq’s budget deficit is projected at a negative 19 percent of the entire GDP by the end of 2020. Iraq’s projected real GDP growth rate for 2020 is negatively valued at approximately 4.7 percent, compared to a positive 3.9 percent in 2019.

The economy’s projected current account balance is negatively valued at approximately 21.7 percent, compared to a negative 1.2 percent in 2019. 

US presence in Iraq

The US-led Coalition forces have partnered with Iraq’s security forces since 2014 to combat the threat of IS, which the Coalition states was “at the request of the Iraqi government”.

On December 27, 2019 a US civilian contractor was killed in a rocket attack targeting the K1 military base in Kirkuk. In retaliation, the US conducted airstrikes targeting several Kata’ib Hezbollah positions in Iraq on December 29.  

On January 3, the US conducted airstrikes that killed the Islamic Revolutionary Guard Corps (IRGC)-Quds Force (QF) commander, Qassem Soleimani, and the Popular Mobilization Units (PMU) Deputy, and leader of the PMU’s Iran-backed Kata’ib Hezbollah, Abu Mehdi al-Muhandis, in Baghdad. 

On January 5, with 170 Shiite votes, the Iraqi Parliament passed a non-binding resolution calling for the removal of all foreign troops from Iraq.

On January 8, Iran’s IRGC launched at least 22 ballistic missiles targeting the Ain al-Assad base in Anbar Province and US-linked targets in Erbil. Both locales are known to house US-led Coalition troops.

On January 10, the Spokesperson of the US State Department announced “we are committed to protecting Americans, Iraqis, and our coalition partners…any delegation sent to Iraq would be to not to discuss troop withdrawal, but our…force posture in the Middle East”.

Between March 17 and April 4, US-led “Operation Inherent Resolve” (OIR) Coalition troops, who support the Iraqi Security Forces (ISF), withdrew from several bases across Iraq. 

The OIR Coalition announced its decision on April 16 to “maintain maximum pressure on the Islamic State (IS) despite…the COVID-19 pandemic”. 

On April 6, three rockets landed near a facility operated by a US-based oil company in Basra’s Burjesia. 

The joint civil-military Baghdad International Airport was targeted with rockets during the overnight hours of May 5-6. The facility is known to house US troops. 

Civil Unrest

Between July and December 2018, anti-government protesters held persistent unruly demonstrations across Basra Province. Later, on October 1, 2019, an ongoing nationwide anti-government protest movement emerged. 

Both movements mobilized around issues such as lack of employment and access to public services, as well as demanded an end to alleged endemic corruption. 

They also denounced Iran’s alleged interference in Iraq’s domestic affairs, as evidenced by the torching of the Iranian consulate in Basra on September 7, 2018 and in Najaf and Karbala on November 27, 2019 and November 3, 2019, respectively. 

Several protests were held in recent months to denounce the US military presence in Iraq, the most notable of which was the torching of the outer walls of the US Embassy by Iran-linked protesters on December 31, 2019. 

As a result of the outbreak of the COVID-19 pandemic in Iraq and the ongoing nationwide curfew to mitigate its spread, the anti-government protest movement has remained largely suspended.

Following Kadhimi’s election as PM, on May 6 and 7, protesters marched in Baghdad to express their dissatisfaction with the newly formed government. A further protest was recorded in Baghdad on May 10 under the banner “the revolution has not ended”. On the same day, clashes between protesters and security forces were recorded in Basra city, and Nasiriyah Province.

Prior to this, on May 9, protesters burnt the headquarters of the Iranian-backed Badr and Al-Sadiqoun parties in Wasit Province. Al-Sadiqoun is the political wing of Asa’ib Ahl al-Haq (AAH).

On May 11, PM Kadhimi ordered the arrest of five Iran-linked “Thar Allah” militiamen for reportedly killing a protester and wounding several others in Basra city on May 10.

Assessment & Forecast

Entrenchment of pro-Iran elements in Iraq’s political, security spheres to prolong instability

Iran, through a three-part strategy, has maintained significant influence in Iraq’s political process over the past years. First, it provided financial support and protection to Shiite parties in Iraq, particularly following Saddam Hussein’s ouster in 2003, thereby enabling such parties to enter Iraq’s political system. Second, it took advantage of the partial power vacuum to back several Iraqi Shiite militias, which gradually either joined or formed their own Shiite political parties. Third, it utilized IS’s targeting of Iraq’s Shiite population to project itself as the protector of Shiite interests in the country. In this context, it capitalized on the militant group’s resurgence in 2014 to establish a military presence in predominantly Sunni and Kurdish-held territories of northern Iraq, thereby expanding its influence pan Iraq.

The political crisis that has materialized in Iraq since November 2019 can be partially attributed to the deeply ethnic and sectarian-based political quota system, also known as the “Muhassasa”, within which Iran exercises significant influence. Within the broad Shiite political bloc, this has also been characterized by discord within the PMU, which can be attributed to disagreements with respect to the PMU’s scope in Iraq. Pro-Iraq nationalist factions favor integration into the ISF, while pro-Iran factions favor autonomy from the ISF and the Iraqi PM, which allows these elements to conduct activities in accordance with Iranian policy, particularly the regional strategies of the Iranian Islamic Revolutionary Guard Corps (IRGC).

This has manifested in the reported formation of the “Islamic Front for Resistance”, made of explicitly pro-Iran armed factions, including Kata’ib Hezbollah, the Badr Organization, and Asaib Ahl al-Haq (AAH), which reportedly answer directly to the IRGC and have pledged allegiance to Tehran. It currently remains unknown whether the broader PMU leadership backs the front. Regardless, the reported formation of a more hardline alliance of Iran-backed Shiite militias either within or separate to the PMU highlights Tehran’s divisive role among Shiite political and military groups, who harbor significant power and influence in the political landscape and among the majority Shiite population.

While such internal discord has persisted since the PMU’s formation in 2014, the strong coordination between the IRGC’s Qassem Solemani and the PMU’s Muhandis prevented such issues from escalating. However, following the US-perpetrated killing of both leaders, such disagreements have reemerged, as evidenced by the defection of four pro-Iraqi nationalist Sistanti-led factions from the PMU on April 22, reportedly due to the February 22, 2019 appointment of Abdel Aziz al-Muhammadawi, known to be a strongly pro-Iran Kata’ib Hezbollah-backed candidate, as the PMU Chief of Staff.

This overall lack of cohesion partially contributed to the political vacuum in Iraq, characterized by the fact that the country functioned under a caretaker PM-led government from November 29, 2019 to May 6, 2020 due to the inability of two former PM-designate candidates to form a government amid a lack of support. This was chiefly due to a lack of political backing by Iraq’s Shiite coalitions, particularly the PMU’s political arm, the Fatah Alliance, which perceived such candidates as disadvantageous or indifferent to Iranian interests in Iraq. Overall, this highlights Iran’s direct and indirect role in prolonging political instability in Iraq due to its significant influence among prominent Shiite political and militia groups.

Iran’s influence within Iraqi political system to continue to present significant challenges for al-Kadhimi government

Given Iran’s long-standing position within Iraq’s political system, al-Kadhimi is unlikely to introduce major reforms that undermine the current status quo enjoyed by Tehran in Iraq. This is because such reforms would likely prompt the influential second-largest parliamentary bloc, the pro-Iran Fatah Alliance with 48 seats, and the pro-Iran “State of Law Coalition” with 25 seats, to pull support for the current administration. This, in turn, would likely trigger a political crisis that may lead to the potential dissolution of the al-Kadhimi-led government.

Thus, in order to avoid losing power and prevent a return to the political vacuum akin to that which was witnessed during the period between November 2019 and April 2020, al-Kadhimi will likely seek to broadly maintain the existing power structure. That said, the influence of Iran-backed militias may be slightly diminished due to the ongoing discord within the PMU. This is evidenced by the fact that the PMU overall supported al-Kadhimi’s candidacy despite Kata’ib Hezbollah’s explicit rejection. This indicates that some PMU factions, including those who are generally affiliated with Iran, are willing to apply pragmatism when necessary. This can likely be attributed to these elements’ fear that the complete disintegration and non-functioning of the political system may also pose a threat to Iran’s current influential role.

Meanwhile, al-Kadhimi has forged strong relations with officials from both Iran and the US in the capacity of his former position as NIS chief since 2016. It is very likely that in this position al-Kadhimi cooperated with both Iran and the US, the latter particularly in the context of the campaign against IS. FORECAST: The new PM will thus seek to leverage these ties that have been built up over recent years, which likely led to both Tehran’s and Washington’s broad approval of his candidacy, in order to strike the fragile balance between the parties’ competing interests.

FORECAST: However, Tehran’s influence within Iraq’s deeply sectarian and ethnic-based political quota system, and the competing claims of prominent Shiite factions in the government and policy-formation process, will continue to present challenges for the new al-Kadhimi-led government over the coming months. The administration will be compelled to satisfy multiple competing interests. In this specific context, alongside Iraq’s multitude of other security, political and economic challenges, the “Iran question” poses a specific set of dilemmas for al-Kadhimi. This includes the presence of the US-led Coalition on Iraqi soil following the January 5 parliamentary resolution to oust these forces, the level of political, military, and economic integration with Iran, and the ability of al-Kadhimi to rein in potentially rogue hardline Iran-backed elements within the PMU that refuse to comply with the Iraqi government’s orders.

Iranian attacks against US-linked interests, losses in oil revenue to exacerbate Iraqi economic situation

The periodic US-mandated sanction waiver extensions on Iranian energy imports have facilitated a largely uninterrupted supply of Iranian energy sources to fuel Iraq’s electricity needs. This is despite Washington’s global “maximum pressure campaign”, which has manifested in the form of economic sanctions on Iran and Iran-linked individuals and entities. These extensions are aimed at preventing a further deterioration of Iraq’s security environment, given that grievances over basic services, including electricity, have fueled violent anti-government demonstrations. Overall, and as evidenced by the US’s recent May 6 granting of a renewed 120-day waiver on electricity imports, these measures underscore Washington’s interest in stabilizing the country, even at the expense of making minor economic concessions to Iran. The particularly lengthy recent waiver, in comparison with prior waiver extensions, is indicative of the US’s effort to ensure a period of stabilization for the new government as short-term waivers can hinder the government’s ability to implement reforms against the background of energy uncertainty.

However, while the US government has demonstrated its willingness to actively prevent the collapse of the Iraqi economy, Iran-linked groups are likely to jeopardise the potential investment of US-based and US-affiliated private sector companies, which is vital for economic growth. The April 6 rocket attack targeting a US-based oil company facility in Basra and June 19, 2019 attack targeting the headquarters of major global oil companies in Basra illustrate the risks posed to US-linked facilities in Iraq, especially in the Shiite-majority areas of Basra Province where Iran is particularly influential. While no group claimed responsibility for either of these attacks, given that Iran-backed factions within the PMU have explicitly rejected the US’s presence in Iraq, and have conducted attacks against US interests in the past, their involvement remains highly likely. Although these incidents remain rare, they are likely to deter Western enterprises from investing or operating in Iraq over the coming months, particularly in the potentially lucrative oil sector. This is exacerbated by the fact that Iraq’s economic stability is largely contingent on the oil sector, which accounts for over 90 percent of its national budget and constitutes approximately 80 percent of Iraq’s total foreign exchange reserves.

Against this backdrop, there has been a significant drop in both oil production and oil prices, as evidenced by the 28 percent drop in oil-based export revenue in Q1 2020, and the decade-low oil revenue at 1.423 billion USD in April. Going forward, ensuring foreign investment in Iraq’s oil sector therefore remains paramount to the country’s economic prosperity. This is because while Iraq has significant oil reserves, a majority remain underdeveloped due to the lack of investment and technical expertise required to make such gas and oil reserves functional. Continued foreign investment in Iraq’s oil sector would therefore boost economic growth in Iraq, as well as making the country less dependent on Iran for energy imports, which remains a core US interest.

The ability of major foreign oil companies to operate in Iraq largely depends on the stabilization of Iraq’s security environment, which is currently undermined due to military actions by Iranian-backed militias, as well as IS. This has led to a decline in oil companies’ willingness to invest in the country’s oil sector, as evidenced by reports that only one Western company submitted an (unsuccessful) offer in Iraq’s April 2018 gas exploration auction. This event occurred after Iraq’s territorial defeat of IS in December 2017, which was anticipated to herald a new era of relatively increased stability in Iraq, and also predated the current period in which frequent attacks against US-linked interests occur. FORECAST: Thus, it remains even less likely that US and European-based oil companies will seek to invest in Iraq over the coming months, largely due to Iranian-backed militias’ and IS’s continued role in destabilizing the security environment of the country. This is further exacerbated by other considerations, including the currently diminished demands for oil, and added restrictions on travel and business operations both regionally and globally due to the COVID-19 pandemic. This is likely to further diminish Iraq’s domestic and foreign exchanges reserves, thereby further prolonging the economic crisis in the country.

FORECAST:The ongoing COVID-19 pandemic and resultant economic crisis are likely to have a short and medium term impact on Iraq’s gradual ability to reduce its dependence on Iranian energy sources. In this context, on April 20, Iraq reportedly announced that it had reduced Iranian energy imports by 75 percent due to near full sufficiency in domestic energy production. However, in light of Iraq’s Minister of Electricity’s statement that stated that “alternatives to replace Iranian oil are currently on hold due to domestic [COVID-19-related] circumstances”, Iran’s continued influence in Iraq’s energy sector will sustain over the coming months. Regardless, over the coming years, the reduction of Iraq’s energy dependence on Iran will create a vacuum in Iraq’s energy sector, which may facilitate a renewed role for Washington in exerting additional influence in Iraq.

US likely to retain military presence in Iraq despite rhetoric, military attacks by Iran-backed groups

The US troops’ training and financing of Iraq’s coalition of anti-IS forces, known as the ISF, which include the Counter-Terrorism Service (CTS), Iraqi federal police, the Iraqi Armed Forces, and the Iraqi border guard forces, have significantly contributed to mitigating the jihadist group’s threat in the country. This includes training Iraq’s security personnel in shooting, urban combat, and subterranean warfare techniques, undergoing courses. Furthermore, the US-backed ISF conducted 1,007 anti-IS operations between January and April, even amid a partial scale-down of such operations amid the COVID-19 pandemic.

However, despite this, the withdrawal of the US military has remained a long-standing goal of Shiite elements in Iraq. The January 3 assassination of Qassem Soleimani and Abu Muhandis drastically elevated existing anti-US sentiments in the country, including among segments of the non-Shiite populace. This is because the US’s military action in Iraq that killed two prominent military leaders without the prior approval of the Iraqi government, was perceived to be a violation of Iraq’s territorial integrity and national sovereignty. The assaasination of the IRGC-QF leader and Iran-backed PMU commander in Baghdad also resulted in a rare direct military confrontation between Iran and the US in Iraq, namely the IRGC’s January 8 ballistic missile attack targeting Anbar and Erbil provinces. This highlighted the potential for the US-Iran tensions to translate into armed conflict in Iraq, where the two states continue to fight over influence. Such incidents have prompted Iraqi nationalist-leaning groups and leaders to oppose Iraq becoming a battle ground between Washington and Iran and thus to oppose all foreign intervention in the state’s affairs. FORECAST: Iran is unlikely to engage in direct military confrontation with the US in Iraq in the foreseeable future and is likely to instead target US interests in Iraq through its backed militias. This is because it currently does not remain in the interest of Tehran to elevate hostilities with Washington given the latter’s imposition of economic sanctions against the former over the past years. Such sanctions have led to significant economic challenges in Iran, thereby decreasing the likelihood of Iran engaging in a full-blown armed conflict with the US in Iraq.

This also has an impact on the political arena. The US’s military presence has been consistently explicitly rejected by almost all Shiite parties and militias in Iraq over recent months, including those who prioritize Iraqi nationalism over a strong allegiance to Tehran. This is evidenced by the January 5 non-binding resolution wherein 170 Shiite votes called for the removal of “all foreign troops from Iraqi soil”. While it is notable that both Sunni and Kurdish parties boycotted the vote, illustrating the polarization in Iraq’s sectarian politics, the rare display of cohesion among the Shiite bloc demonstrated a notable consensus among these parties vis-a-vis the expulsion of US troops from Iraq. Meanwhile, in the ensuing period, on April 4, eight PMU factions published a statement “vowing” to “defend” Iraq against the US’s “occupation” and demanded that US troops depart from Iraq in line with the January 5 resolution. On March 16, a Shiite, likely Iranian-backed militia group “Usbat al-Thairen” claimed two attacks targeting the Basmaya and Taji camps and advised US troops to leave “vertically before we force them to leave horizontally”.

These developments illustrate the ongoing opposition among pro-Iran Shiite groups regarding Washington’s military presence in Iraq, albeit for differing motivations. The influential Shiite cleric Muqtada al-Sadr-led Sairoon Alliance opposes all foreign intervention in Iraqi domestic affairs for the aforementioned reasons, while the Iran-affiliated Fatah Alliance and Badr Organization seek closer ideological ties to Iran and the expulsion of US military forces. FORECAST: However, these developments were also a direct reaction to the US’s killing of Soleimani and direct US-Iran tensions inside Iraq have since slightly subsided and will likely continue to fade in the absence of new developments. Moreover, as illustrated by their boycott of the vote Kurdish and Sunni elements, as well as some Shiites, likely recognize the aforementioned role of the US in the anti-IS campaign and will be reluctant to allow the jihadist group to significantly reemerge.

FORECAST: Despite the persistent rocket attacks targeting US interests in Iraq, the existing anti-US sentiment among a considerable section of the Iraqi populace, as well as coronavirus-related health concerns regarding its military personnel in Iraq, the US remains unlikely to fully withdraw its troops from Iraq over the coming months. This is supported by the January 10 statement published by the US Department of State that stated “any delegation sent to Iraq would be to not to discuss troop withdrawal” as well as the April 16 decision by OIR that announced its decision to “maintain maximum pressure on IS despite…the COVID-19 pandemic”. Given this, Iranian-backed militias will continue their military action against US personnel and infrastructure in Iraq over the coming months, thereby prolonging the existing heightened tensions between Washington and Tehran in Iraq. This will lead to a further deteriorating of regional stability in the Middle East region.

FORECAST: The future of the US presence in Iraq will be based on a trade-off between political, economic and security considerations, and is slated to be discussed at the upcoming June “strategic dialogue” between Iraq and the US. While all Shiite parties and militias have continued to reject the US military presence, the new government will be compelled to strike a balance between Iraq’s multiple interests and ethnic groups. al-Kadhimi’s official position in his government program states that Iraq will promote the principle of “not allowing its territory to be used as a base for launching aggression against any of its neighbors and will not become a battlefield for regional and international conflicts”. This however has fallen short of advocating for the expulsion of the US forces’ presence in Iraq, which has reportedly triggered some pro-Iran groups to accuse al-Kadhimi of being too vague with respect to the issue. Given his recent rhetoric, while the new PM will likely seek to disentangle Iraq from becoming a battle ground between the US and Iran, he is unlikely to push for a broad withdrawal of US-led Coalition forces that would significantly harm Iraq’s anti-IS campaign. Al-Kadhimi will be cognizant of the US’s contribution from his experience as an intelligence chief. FORECAST: This assessment is bolstered by Iraq’s increasingly precarious economic situation. In order to maintain the aforementioned US-granted sanctions waivers over the coming months, the al-Kadhimi-led government will aim to balance political, security, and economic considerations in a way that does not run the risk of US-imposed economic sanctions against Baghdad which would harm the economy and thus aggravate existing severe socio-economic issues among Iraq’s anti-government protest movement.

Protesters to continue to mobilize around issue of Iranian involvement in Iraqi affairs, Iran-linked groups to employ violence at protests 

A significant portion of unruly anti-government demonstrations has mobilized around the issue of Iran’s alleged interference in Iraq’s domestic affairs, as evidenced by the torching of the Iranian consulate in Najaf and Karbala on November 27 and November 3, 2019, respectively. Unidentified gunmen reportedly shot several unarmed protesters during the aforementioned demonstrations. While the details surrounding these shootings have not been officially disclosed, given the timing, location, and target, it remains likely that the shootings were conducted by members or supporters of Iranian-backed militias. Meanwhile on December 31,2019, PMU members and supporters torched the outer walls of the US Embassy in Baghdad, following the US-perpetrated December 29 airstrikes targeting Kata’ib Hezbollah positions in Iraq. Taken together, these incidents underscore Tehran’s destabilizing role in sustaining civil unrest in the country, either by indirectly encouraging anti-US protests, or due to the fact that the presence of Iran-linked institutions triggers demonstrations by anti-Iran locals, who are violently dispersed by Iran-backed forces.

FORECAST: The anti-government protest movement however will likely sustain over the coming months. This is because a portion of the populace perceives the new government to entrench what many protesters perceive to be an illegitimate sectarian-based, corrupt political system. This is evidenced by multiple protests in Baghdad denouncing al-Kadhimi’s newly formed government since it was sworn in on May 6, some of which were held under the banner “the revolution has not ended”. This is despite the new PM’s measures on May 9 to appease the protesters, such as the release of detained protesters and appointment of Lieutant General Abdul Wahab al-Saadi as commander of Iraq’s Counter-Terrorism Service (CTS).

In this context, the reinstatement of al-Saadi is particularly notable given that the nationwide protests that commenced in October 2019 were primarily triggered to denounce his ousting from the same role and provides some indication of the new al-Kadhimi-led government’s direction. Reports indicate that his demotion was motivated by Iranian considerations, as Tehran sought to gain influence with the CST, which is known to cooperate with the US, which reportedly founded and trained its forces. His return to the position may be indicative of a desire by the new PM to project his willingness to confront Iran-backed political interests, especially in the realm of security, given al-Saadi’s widespread popularity due to his role in the campaign against IS. Al-Kadhimi’s willingness to confront Iran-backed groups was also bolstered by his May 11 order to arrest five Iran-linked “Thar Allah” militiamen for killing and wounding protesters in Basra Province on May 10, which was very notable due to its rarity and illustrates he seeks to hold these groups to account. However, such decisions are likely to strain the new PM’s relationship with Iran-backed elements in Iraq that will undermine his legitimacy.

The mobilizing of protesters around the issue of Iran’s role in Iraqi affairs is likely to continue to be a focus of the anti-government protest movement. This is highlighted by the reported torching of the Iran-linked Badr Organization in Wasit Province on May 10. Such unruly demonstrations are part of broader anti-government protests and will add to the movement’s momentum in Baghdad and parts of southern Iraq. This, in turn, highlights how Iran-linked elements will present as an obstacle in the government’s efforts to introduce systemic reforms to address the protesters’ long-standing demands, either as a target of protest itself, or potentially, as a catalyst for additional unrest due to violence employed at demonstrations.

Moreover, as part of his government program, the new PM has pledged to establish a committee to investigate the violence at all protests since October 2019, which aims to compensate the families of those killed and individuals wounded in the demonstrations. However, many of those responsible were known to be Iran-backed militias and their supporters who al-Kadhimi relies on for support, which complicates the likelihood of an independent and thorough enquiry. This underscores Tehran’s significance in Iraq’s political and administrative apparatus. FORECAST: Given these political constraints, legal proceedings against such Iran-backed elements will unlikely comprehensively materialize, which may increase anti-government sentiment.

FORECAST: Overall, given Iran’s continued destabilizing role in Iraq’s political system, through its supported Shiite parties, the new al-Kadhimi-led government will likely avoid introducing any reforms that stand to systematically disrupt the current influence Iran enjoys. The broader challenges in enacting systematic government reforms, as well as the country’s deteriorating economic condition amid COVID-19 restrictions, will further exacerbate the populace’s existing anti-government sentiments, thereby prolonging civil unrest in the country. Such a scenario will be further compounded by the US’s refusal to completely withdraw its troops from Iraq over the coming months, potentially with the consent of the Iraqi government. This will both emolden Iranian-backed militias to conduct additional rocket attacks targeting US interests and increase the discord among the fragile Iraqi political landscape over those in favor and those against a US military presence in the country. All of these factors are liable to trigger unrest over the coming weeks and months.

Recommendations

It is advised to avoid all nonessential travel to Baghdad and Basra at this time due to the ongoing threat of militancy in these locales, violence in areas surrounding the cities, and the risk of a broad deterioration of security conditions.

For those conducting essential operations in Baghdad, it is advised to restrict travel to the Green Zone and ensure that contingency and emergency evacuation plans are updated. Contact us for itinerary and contingency support options.

Travel to Anbar, Nineveh, Salahuddin, Kirkuk, and Diyala Provinces should be avoided at this time due to ongoing counter-militancy operations and militant attacks. Those operating in these regions are advised to contact us for itinerary and contingency support measures, including evacuation options, given the deterioration in the security situation.

Those operating natural gas or oil facilities are advised to obtain security consultation for facilities in outlying areas, specific to the nationalities and operational needs of their employees.

As a general precaution, it is advised that any travel, particularly in outlying areas, be conducted in armored vehicles, with proper security escorts and coordination with authorities.

Foreigners, particularly Westerners, continuing to operate in Iraq are additionally advised to maintain a low profile, exercise heightened vigilance, and avoid locales frequented by foreign, particularly Western nationals. To mitigate the risk of attacks or abductions, ensure that places of stay are equipped with sufficient perimeter security details, alter travel routes, and avoid disclosing sensitive itinerary information to unknown individuals. As a general security precaution, avoid revealing to strangers your position or affiliation with foreign-based firms, as your response could attract a negative reaction from locals.

Global Forecast – COVID 19

This report was released on April 1 and all information is updated as of that date.

Introduction

At the start of April, the COVID-19 pandemic has reached nearly every country and territory, exceeding 870,000 cases worldwide and more than 43,000 deaths. Many countries have enacted travel bans, border closures, and lockdown restrictions in an effort to curb the spread of the virus as it grows exponentially.

While this is foremost a health and humanitarian crisis, the pandemic and global response has a cascading effect on economic and political stability, creating a range of security risks. These include civil unrest, anti-foreigner violence, opportunistic and financially motivated crime, and cyber attacks, among others. Many of these risks are exacerbated by the proliferation of misinformation and fake news. The slowdown of the global economy and the disruptions to supply chains and movement of goods is expected to have long-lasting ramifications that will prolong many of these challenges.

These challenges will vary by region and country and will require prompt and tailored action in order to mitigate the risks to safety and business continuity in the weeks and months ahead.

Civil Unrest

In the immediate term, a decline in large-scale protests and mass movements is expected amid the proliferation of COVID-19 cases globally.

Smaller, localized protests are liable to develop due to shortages of essential goods or unpopular government measures, with the risk of low-level clashes with police.

Anti-foreigner sentiment, particularly targeting individuals of East Asian extraction, raises the risk of violent or verbally abusive confrontations. Individuals from countries with major outbreaks also stand to be targeted.

Fake news and hoaxes circulated online could serve as triggers for unrest.

Hotspots for civil unrest doe to covid-19 pandemic

Impact on protest movements

A significant global outcome of the COVID-19 pandemic in the coming weeks and months will be the overall decline in mass protest movements. This is due to the restrictions imposed by governments on gatherings and efforts by the local population to implement social distancing. Global activist groups such as Extinction Rebellion, for instance, have canceled all upcoming protest events in light of these concerns.

Recent prominent anti-state protest movements in particular have been significantly hit. For instance, students who have been at the forefront of the year-long anti-government protest movement in Algeria voluntarily canceled all nationwide demonstrations following the outbreak of coronavirus, even before the government issued a ban on demonstrations on March 18, while intermittent unrest in Sudan has continued, with protesters accusing the authorities of taking advantage of the pandemic to suppress the movement. Furthermore, since the outbreak of the virus, ongoing large-scale anti-government protest movements in Lebanon, and Iraq have lost momentum, while smaller protests over more localized issues have been in decline in Morocco, Tunisia, Egypt, Israel and the Palestinian Territories, Jordan, and Turkey.

In India, demonstrations against the Citizenship (Amendment) Act, 2019 (CAA), which saw millions of protesters in cities like Delhi, Mumbai, Kolkata, Chennai, Pune since December 2019, will largely diminish over the coming weeks, following the nationwide lockdown that went into effect on March 25 for 21 days. That said, anti-government sentiment is liable to simmer even after the COVID-19 crisis abates. Protests against the legislation, along with other related concerns, may pick back up in some form, however, turnout is unlikely to return to its pre-pandemic numbers.

In Europe, Yellow Vests and pension protests in France that were previously well-attended and witnessed violent unrest on a weekly basis are no longer taking place on that same magnitude amid the pandemic. While Yellow Vests protests still occur, attendance and violent unrest has reduced significantly given that France is one of the countries hit hardest by COVID-19 and their strict mobility restrictions in response.

Clashes, riots, and unrest between authorities and migrants that were widely recorded on the borders of Greece have diminished significantly, yet, are still taking place as of writing. Given that neither Turkey nor Greece has claimed responsibility for the migrants on the border, these individuals remain in place and continue to protest. Violent unrest was recorded in Cyprus as well, as dozens of protesters attempted to break through barricades in an attempt to keep people from entering the country.

Response to state measures

Discontent over quarantine measures could manifest in violent incidents. To illustrate, Chadian students who recently returned from Cameroon demonstrated to denounce the conditions of their quarantine. The protest was met with a strong-handed security response involving the use of tear gas. Similarly, when citizens were repatriated to Ukraine, violent unrest was recorded outside clinics and hospitals by concerned locals afraid of contracting the virus. Individuals burned tires outside medical facilities and threw items at buses carrying repatriated citizens. These sentiments have since subsided, as repatriation of citizens has become largely routine regionwide. Quarantine and medical facilities will continue to be the focal point of localized unrest, as witnessed thus far in the New Territories in Hong Kong as well as in Indonesia, Pakistan, and Thailand.

A prominent factor that may influence such pushback will include the manner in which such measures are implemented. The issue of alleged police excesses during the implementation of lockdowns will arise, particularly in countries with a precedent of poor law enforcement. In India, for instance, the deaths of at least two individuals due to alleged police action is liable to sustain the latent risk of mob violence targeting police patrols in certain areas. Kenyan and Ivorian police have reportedly been engaging in acts of “extreme violence” to enforce the curfew instituted by the government. Their actions have been strongly denounced by civil organizations and may result in protests which carry a high potential of snowballing into larger unrest when the security forces respond to the unauthorized gathering.

Conversely, political leaders and government are also liable to face criticism for perceived suboptimal approaches to the crisis. For example, citizens protested in Colombia after President Ivan Duque decided to remove emergency measures taken by mayors and governors. These protests were conducted from home, with individuals banging pots and pans together to protest Duque’s response. Similar instances are liable to occur in Brazil as well, given President Jair Bolsonaro’s muted response to containing the epidemic. In fact, Bolsonaro participated in a pro-government rally in the midst of the global health crisis to demonstrate his lax attitude towards the pandemic.

In the UK, Prime Minister Boris Johnson’s initial comments on generating “herd immunity” to combat the virus may lead to protests as the outbreak continues given the considerable backlash that his strategy provoked. However, the UK has shifted its response to COVID-19 in recent weeks and tightened mobility restrictions significantly, making the possibility of protests less likely in the near term. In fact, such protests are liable to occur after the crisis has lessened, potentially calling on the PM to resign. Moreover, given the economic toll that the situation will take on the UK, protests towards the end of the year are likely to be recorded, surrounding various Brexit issues that will likely change according to the extreme circumstances.

Following Hungary’s declaration of a state of emergency, which gave Prime Minister Victor Orban sweeping powers for an indefinite period and was strongly condemned by the opposition, the likelihood of protests increased. This is especially the case if the state is enforced for longer than is deemed necessary and is perceived as an attempt to usurp democracy.

Meanwhile, left-wing groups in countries such as Russia are liable to raise concerns over governments using the outbreak to restrict people’s rights, particularly with regards to privacy and freedom of assembly. In some instances, authorities are liable to roll back restrictive measures to a certain degree to prevent unrest. Small-scale disruptive protests in Honduras led to the temporary suspension of containment measures to ensure access to scarce resources and money remittances for lower-economic sections of the society

Despite stringent measures, local paranoia will continue to significantly escalate, manifesting as a run on stores to stockpile essentials, causing shortages and price hikes. Concerns over shortages are liable to spur localized incidents of unrest and vandalism, as well as protests against the authorities. For instance, demonstrations took place in various cities in Mexico led by unions and human rights groups. Nurses in Mexico City protested the shortage of supplies and protective equipment. In the longer term, losses in livelihood, and the suspension of humanitarian and developmental aid in hard-hit conflict zones amid an atmosphere of intensified paranoia could further influence future protest movements.

Anti-foreigner sentiment

Anti-foreigner sentiment, which has been exacerbated by the health crisis, may manifest in crimes such as hate speech, violent confrontations, and vandalism. Racially-motivated attacks particularly against East Asian nationals or those of Asian extraction, who are perceived by locals to be responsible for the pandemic given its origins, will be a significant risk for the foreseeable future. For instance, there are reports of Chinese nationals being called “coronavirus” and being denied services in Kenya. In Indonesia, protests erupted upon the arrival of 49 Chinese foreign workers to Kendari, Southeast Sulawesi on March 15. It is important to note that the pandemic has exacerbated preexisting anti-China sentiment across the region. This has been seen in online campaigns in Japan, Indonesia, and Singapore, the spike in racism in Australia, and the services denied to Chinese tourists in countries like South Korea and Vietnam from the onset of the outbreak.

While countries, particularly those with strong trade partnerships with China, have warned against racial profiling, locals are unlikely to adhere to these advisories. Consequently, governments may be forced to take action to preserve their economic alliance. Anti-foreigner sentiment may also manifest in the virtual sphere, including social media campaigns, or hate speech towards Chinese nationals. Further, crimes such as vandalism targeting Chinese interests, businesses, or diplomatic missions, as well as localities with considerable Chinese communities, is a latent risk.

Further, while the prejudice was initially primarily confined to the Chinese, as locals are aware that most of the cases in Sub-Saharan Africa can be traced to Europe, there has been an uptick in the targeting of Westerners as well. To that point, on March 1-2, two cruise ships attempting to dock in Reunion Island were met with protests with some locals throwing stones due to fears that people on board, primarily Westerners, were infected given that the ship had previously docked in Thailand. Additionally, the US embassies in Ethiopia and Cameroon issued warnings of a rise in anti-foreign sentiment and reported instances of stone pelting, denial of services, and verbal harassment. Video footage to this effect circulated in the Ivory Coast as local residents harassed light-skinned people, accusing them of spreading coronavirus. This trend is expected to persist over the coming weeks with a heightened likelihood of foreign nationals being targeted and denied service.

Impact of fake news on unrest

Misinformation campaigns and hoax correspondence, which has become more prevalent in the last week as criminals seek to capitalize on the COVID-19 panic, has the potential to ignite protests. In Peru, a false statement circulated under the name of an official government agency regarding the prevention of the spread of COVID-19. In India, Uganda, and South Africa, a spike in fake news and online hoaxes has been reported in recent weeks. If these incidents are not clarified and corrected immediately, these types of misinformation campaigns can be extremely dangerous, as the public depends on official government statements for guidance and instruction. While authorities throughout the Americas may bolster their cyber capabilities to combat this threat, given the ease at which this crime can be committed, it is highly likely to recur.

Spontaneous unrest due to misinformation emanating primarily from far-right politicians cannot be ruled out. Italy’s former Deputy Prime Minister Matteo Salvini pushed theories that China ‘created’ COVID-19 in a lab. This combined with the extended lockdown imposed on the country, carries with it the potential to result in both attacks targeting individuals of Asian extraction and people defying government orders. This is possible in several countries where far-right politicians carry considerable influence, including Austria, Germany, Hungary, and others.

A hoax email discussing information about COVID-19, believed to originate from Russia targeting Ukraine, allowed them to spread misinformation and resulted in unrest on February 20. Misinformation campaigns have been widely reported since the onset of the pandemic. In another example, posters with the name of Extinction Rebellion surfaced in the UK, stating that COVID-19 was the cure for the human race which is the ‘disease’. The environmentalist group has denied ownership of this poster. Misinformation campaigns are expected to continue in the coming weeks with the possibility of the spread of such information leading to unrest.

Examples of phishing emails, false information using covid-19

Crime

In the short term, supply shortages, particularly of medical equipment, along with travel restriction will lead to looting and vandalism in many countries.

Over the long term, the global economic decline is liable to cause an increase in both violent and non-violent financially-motivated criminal activity across the world.

Crime of opportunity

If government restrictions on movement, particularly in the form of curfews or lockdowns, are maintained over a long period of time, there is a potential for a significant increase in criminal activity globally.

Fear over supply shortages has already led to a run on stores for the stocking up of groceries, medicines, and other essential supplies in many countries. While most countries are currently not experiencing any shortages in food supply, a shortage of health equipment, including face masks, sanitizers, and medicines has been common, which has given rise to a black market for these products.

For instance, a group of 70 individuals looted a grocery store in Mexico, and others stole disinfectants and masks to resell them for inflated prices. In Singapore, 11 individuals were recently arrested for allegedly selling fake protective masks via a popular messaging application and an e-commerce website. In Indonesia, there are reports of individuals hoarding face masks and re-selling them at marked up prices. Medical stores in parts of India have also been incriminated in selling basic supplies at higher rates and cheating customers. This has prompted governments to impose severe punitive measures on those involved in selling these products on the black market. For instance, the Iranian government recently released a statement saying that any individual found to be selling face masks on the black market could face capital punishment. Such incidents are liable to increase in frequency, especially should lockdowns be extended, leading to potential supply shortages and in turn, an increase in localized crime, particularly in the form of looting and vandalism of local stores and businesses. This is also likely to translate to a heightened risk associated with movement to and from these essential stores. The risk is especially pronounced in countries such as South Africa, Kenya, and Nigeria where crime is entrenched in urban areas.

Governing challenges

In countries where groups feel that their government has not enacted the proper response to ensure the safety of citizens amid COVID-19, there remains a possibility that criminal organizations will take this responsibility on themselves. For instance, organized crime groups in Brazil were recorded imposing curfews to contain the spread of the pandemic. Further, a surge in ammunition and weapons charges were recorded in the USA. While these measures are meant to be preventative, the potential for violent outcomes to arise from this behavior exists.

The pandemic is also likely to stress criminal justice systems and infrastructure as several countries have suspended judicial proceedings. Additionally, prisons and detention centres present a major challenge to the containment of the disease given the relatively poor hygiene and sanitation infrastructure. Prison riots and attempted escapes associated with COVID-19 have been reported in Argentina, Cameroon, Chile, Colombia, Ethiopia, Iran, Italy, Mexico, Panama, Syria, Thailand, USA, and Venezuela in the last few weeks. As the virus continues to spread with more cases and deaths reported daily, similar attempts are expected in the near term. This along with delayed judicial proceedings is likely to translate to an increased presence of criminal elements in society, elevating the risk associated with burglary, hijackings, home robberies, and violent crime.

The adverse impact of COVID-19 on the manufacturing sector will compel companies to either operate at minimum capacity or even halt production due to the overflow of supply. This, in turn, may lead to the layoff of workers in this sector. Labor in the construction sector is either hired on a contractual basis or remains unregistered in some countries and therefore the suspension of these projects does not entitle them to benefits. Those involved in the tourism industry are also likely to be significantly affected, as their wages are seasonal and dependent on the tourist cycle. Hence, the global pandemic will impact the daily disposable income of such low- income households.

Financially-motivated crime

The fall in daily disposable income combined with a hike in prices of essential goods due to supply shortages may make individuals more likely to engage in financially-motivated criminal activity. ATMs are likely to be hotspots for muggers, particularly as banks across the region remain closed and citizens become more dependent on ATMs for cash. There may also be an increase in credit card fraud, while criminals are also liable to be inventive with their modus operandi and capitalize on the paranoia and misinformation surrounding the pandemic to carry out burglaries and robberies over the coming weeks. This is exemplified by a private healthcare company in South Africa being forced to issue a notice after criminals were posing as company employees conducting home screenings to gain access to homes in several areas of Western Cape. Foreigners and expatriate workers are generally considered as soft and more lucrative targets for financially-motivated crimes, and are therefore at a higher risk of being targeted than locals.

White supremacists and other extremists

Lastly, the spread of COVID-19 has seemingly bolstered the platform of white supremacists. Far-right groups have been recorded propagating negative sentiments towards Asians, using the fact that COVID-19 originated in China to justify anti-migrant sentiments, pointing to economic losses and deaths from COVID-19 as a direct result of migration. White supremacist groups in the USA were reportedly encouraging their members to spread COVID-19 to law enforcement and Jews. Hate crimes and anti-Chinese sentiment has increased significantly in the region, particularly in the USA with President Donald Trump referring to the virus as the “China virus”. Incidents against those of Asian extraction have been recorded in Canada, USA, and other countries. The Federal Bureau of Investigation (FBI) warned that they expect a surge in crimes targeting Asian Americans amid the COVID-19 outbreak.

Given that an individual was planning to bomb a hospital in the USA and another individual was arrested after he threatened to blow up a testing facility, reiterates the potential for locations linked to the outbreak response to become targets for extremists as the global health crisis continues. A hospital director in Haiti was kidnapped and released on the same day near his residence. The doctor’s kidnapping prompted his hospital to refuse new patients in protest. While details surrounding the incident remain unconfirmed, it remains possible that kidnapping a prominent member of the medical community was somehow related to the COVID-19 crisis. In crime-ridden and unstable countries like Haiti, similar incidents are likely to recur.

Cyber Crime

Instances of fake or misguided information will continue to circulate, intended to spread malware through phishing emails, along with inflaming tensions regarding government responses to COVID-19.

Advisories have led to multiple corporations switching to a work-from-home policy, thereby increasing potential vulnerabilities and endangering company network infrastructures to cyberattacks.

Ransomware continues to be a primary method of attacks focusing on companies, with hackers expecting corporations to pay quickly in order to instantly resume already disrupted services.

Reports indicate that an increase in global cyber crime has already been witnessed as a result of the many significant changes due to the virus. Multiple coronavirus-related malicious email campaigns and downloadable files infected with malware have been uncovered. The Israeli Police issued a statement on March 19 indicating that there has been an increase in reports of “fraudulent events”, particularly cyber crimes, with over 40 complaints with regards to financially-motivated cyber crime recorded since the outbreak of coronavirus.

Furthermore, recent weeks have witnessed an increase in phishing emails with themes tied to COVID-19 to spread malware. These emails have been disguised to look as if they have been sent either by the World Health Organization (WHO) or local governments to advise on guidelines to combat COVID-19. Cyber criminals have also reportedly set up fake websites with themes tied to COVID-19 to extract sensitive information of users. For example, a software masquerading as a dynamic map produced by a US-based university to track the global spread of coronavirus was reportedly identified as malicious spyware focused on gathering personal information.

Low-level cyber crime

With COVID-19 resulting in multiple corporations instructing employees to work from home, the number of devices connecting remotely to a network will increase, thereby increasing the potential vulnerabilities to a company’s network infrastructure. The new devices connecting to the network may not be completely secure, including employee’s personal devices and home wi-fi, which may suffer from critical security flaws due to a lack of appropriate security knowledge.

risks, threats posed by working from home

Hackers are likely to employ Man In The Middle (MITM) attacks in order to gain access to sensitive data, likely compromising users through phishing campaigns disguised as links to remote meeting softwares and news about COVID-19 measures. MITM attacks intercept communications between a user and the web application or network that they are accessing without the knowledge of both parties, allowing hackers to steal and view sensitive data including passwords.

Organizations that use VPNs to tunnel all traffic through their servers may face an increased risk from hackers using freshly discovered vulnerabilities, which may have been identified and patched in the latest releases but may not have been updated on the company side. This is due to the fact that such networks largely run continuously, with scheduled maintenance potentially pushed back as a result of continuous access by employees, especially those at home.

Corporations that may temporarily forgo VPN-only access due to increased load on the system and limit the number of connections allowed are also at risk, given that their servers are being accessed directly from employee computers that may be compromised if the employee’s hardware is already infected. Companies without appropriate response plans to incidents that require a large number of employees to work-from-home are likely to face such difficulties again, with the potential for cybercriminals to research targets, choosing ones that faced the most disruptions while attempting to switch over.

High-level cyber attacks

On the other hand, the main motivation for state actors to engage in cyber crime is espionage to obtain confidential information. As countries across the region continue to impose restrictions on international travel, state actors will become more reliant on cyber espionage to access sensitive information, which may lead to a spike in state-sponsored cyber attacks. Such attacks are likely to mainly target the oil and gas sector, telecommunications, transportation, and government agencies and infrastructure.

Multiple state-sponsored groups have allegedly utilized COVID-19 concerns as part of wider geopolitical campaigns, with incidents involving China, North Korea, and Russia. In Russia, hackers from the Hades group allegedly carried out a trojan attack in Ukraine, which was hidden in documents resembling information about the virus, appearing to be from the Ministry of Health. The information reportedly led to unrest in the country, over false reports of COVID-19 cases on February 20. Chinese groups with alleged state links sent emails containing attachments designed to look like emails from the Vietnamese Prime Minister about the virus outbreak, which installed trojan malware in computers of the victims. North Korean hackers allegedly employed similar tactics, attempting to disguise malware as information about South Korea’s response to COVID-19.

Given that such cyberattacks have increased with the uncertainty and considerable media coverage surrounding the COVID-19 outbreak, driving individuals to search for information, such attacks are highly likely to recur over the coming months as the pandemic continues. As already witnessed in the Czech Republic, Ukraine, and the USA, government agencies, hospitals, and other healthcare services tasked with responding to the outbreak are liable to be targeted, especially with ransomware, in the hope that the urgency of the issue may force quick payouts. The demands are likely to be in the form of cryptocurrency, such as Bitcoin, which allows criminals to evade detection. Such attacks have been repeatedly witnessed in the UK and USA in recent years, with local UK National Health Service (NHS) trusts and US hospitals being targeted by ransomware that has disrupted services by restricting access to computer systems. Given the unprecedented nature of restrictions announced to combat COVID-19, these attacks are likely opportunistic, hoping to take advantage of relaxed cybersecurity protocols among private companies and delayed deployments of IT vulnerability fixes. Sophisticated cybercriminals are likely to be on the lookout for newly registered domains by international and government agencies, as was seen at the time of the Equifax breach where multiple fake settlement websites were made due to the company using a simple phrase for the website title, which led to impersonations.

Political Stability

The economic effects due to the lack of tourism, downtick in oil prices, and decline in foreign exchange reserves are expected to create unrest and political instability

Popular discontent with the response to the pandemic are also likely to create unrest, while opposition parties and movements will capitalize on criticism of their governments to make political gains

Geopolitical relations are expected to be strained by the crisis, in part as countries use the opportunity to double down on existing tensions

Economic effects to have adverse impact on stability

The spread of the pandemic has compelled most countries across the world to impose severe travel restrictions. These include a suspension of all international passengers flights and the closure of all land and sea ports. Many governments have also imposed curfews to limit the movement of citizens in their cities, provinces, or countries. Many countries have suspended public and private sector services, except for vital sectors like health and food, as well as limited public gatherings.

These restrictions are having a negative effect on a wide range of economic sectors. In countries that are heavily dependent on tourism such as Egypt, Tunisia, Morocco, Jordan, Turkey, Kenya, Tanzania, South Africa, Malaysia, Thailand, and Vietnam, as well as a number of countries in Southern Europe and the Caribbean, are most likely to be affected by these travel bans. These restrictions have also caused global oil prices to plummet by over 37 percent over recent weeks to below 20 USD a barrel as of the time of writing. This fall in global oil prices will have a significant negative impact on economies that are heavily dependent on the oil and gas sector, such as those of Egypt, the UAE, Qatar, Iraq, Kuwait, Angola, Equatorial Guinea, Azerbaijan, Kazakhstan, Malaysia, Russia, and Venezuela. In particular, state-controlled economies that are dependent on oil such as Algeria and Saudi Arabia will be affected in their ability to invest in other sectors of the economy, such as health, housing, and infrastructure. This may in turn aggravate the socio-economic grievances of low- and middle- income households in these countries, leading to unrest and instability.

price of oil (per barrel)

The slowdown of the world economy and the resultant decline in exports is liable to result in a decline of foreign exchange (forex) reserves. This is especially likely for countries like Nigeria who are heavily reliant on oil exports given the effect of the continuous fall in global demand, further compounded by the sharp decline in crude oil prices, while import needs continue to rise. Further, as foreign investors withdraw money in response to the ongoing uncertainty due to the pandemic, the central banks are likely to engage in interventionist measures to stabilize forex markets as India did in the week of March 20. This puts pressure on the forex reserves of the country and consequently, India’s forex reserves fell by approximately 12 billion dollars. A decline in these reserves is liable to lead to devaluation of the currency while compromising the countries’ ability to pay for imports. Countries like Zimbabwe, which have had low forex reserves over the past years and consequent shortages of food, fuel, and medicines, are at particular risk. Shortages of any of these essential commodities due to the government’s inability to pay for it is likely to heighten discontent and potentially lead to protests and unrest. Further, the decline in reserves as the governments manage the crisis is likely to have long-term ramifications for the respective countries’ economies even once the pandemic is concluded.

dow jones industrial average

Countries around the world are also hit hard by the disruptions to supply chains. Despite many countries taking measures to ensure the continued transport of cargo, there have been delays worldwide. In industries where some countries are heavily reliant on expatriate workers, travel restrictions can lead to a shortage of labor and create service disruptions. This will compel manufacturing plants to operate at minimum capacity or even altogether halt production activity, which will disrupt current infrastructure and development projects. The disruption of infrastructure and developments projects will in turn have a negative impact on other sectors of the economy. This can be seen in the Middle East mostly in the Gulf countries, while the travel bans in Sub-Saharan Africa are particularly preventing the movement of Chinese labor for Chinese development and infrastructure projects, causing large-scale delays. Further, the restriction on the internal movement of migrant workers in countries such as India, Pakistan, Bangladesh, and Myanmar to urban centers will further dampen their economic outlook in the coming months.

Poor government responses to exacerbate dissatisfaction

Iran’s handling of the crisis has been the worst in the Middle East, which has exponentially increased the risk of political instability in the country. Tehran initially downplayed the severity and extent of the outbreak, which caused the virus to spread swiftly across the country over a short period of time. According to the Iranian authorities, 41,495 confirmed cases of coronavirus have been recorded in the country as of March 30, as well as several members of parliament (MPs), including the deputy Minister of Health, as well as powerful clerics. However, it is highly likely that these statistics have also been understated in order to prevent mass panic and showcase the government as capable of handling the crisis. Anti-government sentiments have already been on the rise in Iran over recent years, manifesting in the form of periodic nationwide anti-government protest movements. In this context, the Iranian government’s mismanagement of the outbreak is likely to add to the local population’s dissatisfaction with the establishment. This, in turn, will further destabilize the current government.

Similarly, countries, such as Tunisia, Lebanon, Iraq, Turkey, Burkina Faso, Nigeria, India, Hong Kong, and Indonesia, as well countries across Latin America, where anti-government sentiments over either socio-economic grievances or government incompetence are currently high, may also witness an increase in local dissatisfaction with the authorities. This would further destabilize the current governments in these countries, which, in turn, would exacerbate the level of political instability over the coming months. This is especially in a country like Egypt, where the government has been cracking down on opposition as well as international media for criticizing the government’s insufficient response to the COVID-19 pandemic or alleging that the government is under-reporting the number of confirmed cases in the country. These measures by the authorities may be perceived by the local population as a government effort to further restrict freedom of speech and media in the country under the pretext of safety and security. This may elevate the locals’ perception of government incompetence and overreach, which would contribute to political instability.

Pre-existing anti-government sentiment in locations such as India, Indonesia, and Hong Kong is liable to be augmented by recent disaffection with the administrations’ perceived shortcomings in handling the pandemic. Despite the current drop in protests, such sentiments are liable to simmer in the long term, increasing the risk of domestic political volatility in the country once the outbreak recedes. Issues such as minority rights and alleged police excesses during the government’s imposition of the lockdown will remain flashpoints. This is particularly in countries such as India, given that inter-religious hostilities and friction between law enforcement and activist groups remain high since the recent wave of civil unrest over the Citizenship (Amendment) Act, 2019 (CAA). The unrest in Kenya over the enforcement of lockdowns and overall violent interactions between police and the populace in DRC and South Africa are liable to raise tensions and undermine authorities, particularly in areas where there is already persistent weak governance.

Political opposition, activist groups to take advantage of crisis

The stringent measures that governments are taking to contain the spread of the virus may be viewed by opposition parties and groups to be a tool of suppression. Opposition political parties across the world are liable to capitalize on this situation and attempt to subvert supporters of the ruling parties given that the response to the crisis is going to significantly impact the approval of the country executives.

In Ghana, this was evidenced by the opposition mounted by minority parliament leaders on the approval of an Imposition of Restrictions Bill brought to the floor by the government to enable the executive to control the movement of people as a response to the virus. The minority leaders raised concerns over the unlimited authority accorded to the government by the bill. Other countries are likely to see similar opposition, which may manifest as opposition activists and supporters refusing to adhere to the regulations and a consequent uptick in protests. This is particularly likely in the case of Guinea, which has seen weekly, often violent, demonstrations over an existing political crisis.

Meanwhile, in Hong Kong, pro-democracy activists have attempted to keep protests going despite an overall drop in the frequency and scale in recent months. This has involved joining protests on pandemic-related issues such as disaffection over the establishment of quarantine centers in certain neighborhoods. While such protests are relatively limited in size and localized, they carry a continued risk of clashes, given that the current restrictions will be used to justify a harsher crackdown.

COVID-19 has raised questions and concerns on the ability of the EU to effectively respond to global crises. For a significant period, the EU ruled out the possibility of closing the Schengen borders, likely due to the political implications and ramifications of doing so. This was perceived by more right-wing opposition groups as careless and was further exacerbated by the EU’s delay in a concrete economic plan to combat the impact of COVID-19. The crisis will likely open the union up to significant criticism from Eurosceptic parties, who may argue that individual nations were not quick enough to close borders and lockdown, due to the freedom-of-movement policy.

A political rift was reported in Brazil when President Jair Bolsonaro criticized his ally, Governor Joao Doria of Sao Paulo, for imposing a lockdown, as Bolsonaro believes the panic surrounding COVID-19 is “fear-mongering”. As the crisis puts pressure on every aspect of the political sphere, harsh criticism is likely to continue, with a number of politicians who are deemed to have not taken the crisis seriously seeing much of the blame. Leaders who have traditionally been more isolationist, and are deemed to have acted in kind, are liable to see significant backlash. This is visible the criticism that President Donald Trump has received for initially downplaying the virus, which is likely to have its most significant impact in the USA. This will likely strongly impact his chances for reelection in November 2020.

Political opposition parties are further likely to question the government’s handling of the pandemic in countries that are slated to go to the polls in 2020, such as Burkina Faso, Ghana, Niger, and Tanzania. With that, some upcoming elections are likely to be disrupted or postponed. Presidential elections in Bolivia have been suspended and arrangements for the presidential elections in the Dominican Republic in May are being discussed. While discussions regarding presidential elections in the USA remain premature, given the obvious disruptions to campaigning, President Donald Trump may call for special accommodations for the elections or a postponement altogether. As the global health crisis continues, political stability is likely to continue to waver regionwide.

Far-right groups have continued to peddle conspiracy theories that accuse governments of overreacting, as seen with politician Matteo Salvini in Italy attempting to garner support from the public by stating that ruling groups are impacting the economy by unnecessary placing restrictions.

Due to the anticipated decline of Iran, governments that rely on it for political power and military support, namely Iraq, Syria and Lebanon, will become more vulnerable to foreign actors that rival Iran, as well as to domestic opposition groups. The same is true for non-state actors that govern territories and rely on Iranian support, such as the Houthis in Yemen and Hamas in Gaza. This has the potential to aggravate existing conflicts or trigger new ones in these regions.

Geopolitical relations strained by pandemic

In terms of geopolitical implications, the pandemic is liable to limit any efforts by the US and China to resolve their longstanding trade conflict in the immediate term. While no action has been taken at present, certain factions of the US administration are reportedly pushing for tariffs on China in a bid to protect domestic industries that have been hit hard by the outbreak. Meanwhile, in accordance with the phase one trade deal between the two countries, China is slated to buy 200 billion USD in goods and services, but such measures are likely to be delayed, further weighing on both countries’ economies in the long term. Further, China’s recent expulsion of US-based journalists from the country is likely to raise concerns that Beijing is seeking to limit coverage of the spread and its management of the crisis.

Meanwhile, another indirect outcome of the recent pandemic has been the rise in frequency of North Korea’s missile tests. Such activity has likely mainly been triggered by the upcoming South Korean elections and frustrations with the US over sanctions, as well as the lack of progress on dialogue. However, the tests can also be seen, in part, as efforts to project normalcy amid concerns from the international community that Pyongyang remains in denial about COVID-19 cases in the country. The pandemic also will preclude a thawing in relations between South Korea and Japan. Despite ongoing trade talks, both countries have refrained from meaningful cooperation to handle the outbreak. Rather, COVID-19 has the potential to worsen the relationship; this was witnessed in Seoul’s reciprocal termination of visa-waivers for Japanese travelers, a day after Tokyo implemented such a measure.

Pre-existing political tensions have largely remained throughout the crisis. Russia banned the entry of eastern Ukrainian breakaway Donbas residents who do not have a Russian passport and Ukraine banned entry to unregistered individuals in the ‘uncontrolled territories’. Further, attacks in the Donbas have been reported multiple times amid COVID-19, reflecting the sustained conflict.

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Widespread unrest reflects discontent with Rouhani’s economic policies, money spent in regional conflict; protests likely to subside – Iran Analysis

Current Situation

A reported leak of President Rouhani’s proposed government budget last month has triggered a wave of nationwide unrest in Iran which erupted on December 28. The budget leak exposed parts that were generally kept secret, and Iranians discovered that billions of USD were going to the military, hardline organizations, the Islamic Revolutionary Guard Corps (IRGC), and religious foundations. At the same time, the budget proposed an end to millions in subsidized and an increase in fuel prices.

Following the leaked budget, Iranians vented their frustration against the money going to the military and clerical establishment via a popular messaging app in Iran used by an estimated half of the country’s 80 million inhabitants.

On December 28, 2017, the hardliners, led by the prominent Ahmad Alamolhoda, started a demonstration in Mashhad, where hundreds shouted slogans against the weak economy and shouted “Death to the Dictator,” and “Death to Rouhani.” Videos of the event spread and triggered protests nationwide in the days that followed, despite attempts by authorities to block access to popular social media and messaging services used to organize and publicize the protests.

On January 2, Supreme Leader Ayatollah Ali Khamenei responded to the unrest stating that the blamed “outside enemies” for the week’s events, without specifying who. President Rouhani, meanwhile, appealed for calm and maintained that the protesters “had the right to be heard.”

At the time of writing, the unrest has reportedly led to at least 450 arrests and 21 deaths.

Widespread unrest reflects discontent with Rouhani’s economic policies, money spent in regional conflict; protests likely to subside - Iran Analysis | MAX Security

 Widespread unrest reflects discontent with Rouhani’s economic policies, money spent in regional conflict; protests likely to subside - Iran Analysis | MAX Security

Assessments & Forecast

The unrest recorded over the past week comes amidst small-scale protests witnessed across Iran over the past months surrounding topics of economy and employment. These include demonstrations of hundreds of oil workers and truck drivers protesting late payment of wages, workers at a large sugar cane plantation and mill complex, bus drivers, teachers, tractor workers in Tabriz against their factory’s closure, Tehran tyre workers at bonuses being delayed, and victims of failed financial institutions across the country. In this context, the leaked budget served as a catalyst for these latest protests, and underscores the frustration and anger among large segments of the population over social-economic problems among the disaffected young people in peripheral, rural areas who have largely driven the demonstrations, in stark contrast to the protests witnessed in 2009 during the so-called “Green Revolution”, which were largely led by the urban middle class.

While the unrest began over economic grievances, it has since taken on a political dimension as demonstrators have voiced anger over corruption and the perceived authoritarian political system as a whole. This is reflected particularly in the anger over Iran’s regional policies and how it spends billions of USD to extend its influence abroad, including in Iraq, Syria, and Lebanon, despite the high unemployment and economic woes at home, as highlighted by the slogans of “Let go of Syria, think about us” and “I give my life for Iran, not Gaza, not Lebanon”. Moreover, what makes these protests exceptionally notable is the extent of the radical and sometimes slogans used, as some have called for the death of the president and even unprecedented calls of “Death to Khamenei” and calling for the Supreme Leader to step down and demanding the exit of clerics from politics.

FORECAST: We assess that it’s unlikely that the protest movement will survive in the long-term and lead to a collapse of the system for several reasons. First, the fact that it has taken on a political dimension and the use of political slogans has been exploited by the authorities as a justification to crack down on protesters as “anti-social” and violent elements. Moreover, this government approach has been aided by the support protesters have received from abroad, particularly from the US, Israel, and Saudi Arabia. The Iranian authorities already perceive, or at the very least vocalize the perception that the unrest has been manufactured and manipulated by foreign governments. That these foreign governments are openly and publicly supporting the protests will thus only further serve to strengthen this perception and allow the government to increase its crackdowns under the guise of protecting Iran’s sovereignty from the interference of foreign states. With this in mind, should the Iranian authorities decide to implement their forces fully, including the IRGC and the Basij, in repressing the protests, it’s highly likely the demonstrations will be swiftly minimized.

Second, unlike the “Green Revolution” in 2009, these latest protests lack leadership, alternative, and a shared vision. Protesters are united in what they don’t want, rather than what they want, as indicated by the often contradictory slogans. Some want democracy, yet more nostalgic ones praise the former monarchy and the Shah. Demonstrators have called for the death of moderate Rouhani, yet also called for an end to the clerical establishment. Others still are invoking nationalistic ideals and racial slogans, such as “We are Aryans, we don’t worship Arabs.” Overall, given this lack of leadership and organization, the protests are likely to either peter out over time, particularly if the government shows a willingness to make concessions and reforms or will be quelled by an increased crackdown.

That said, we assess that the heightened unrest will continue for longer in the country’s peripheral regions where both civil unrest and militancy stemming from sectarian tensions have long been an issue. These include the southeastern Sistan-Baluchistan Province, a predominantly Arab-populated southwestern Iran, including primarily Khuzestan Province, and the majority-Kurdish-populated northwestern Iranian provinces of Kordestan, West Azerbaijan, Kermanshah, and Ilam. Over the past week, we have already witnessed a higher level of unrest and arrests in these areas, as local activists and militant groups are likely seeking to exploit the nationwide discontent to further their own separatist ambitions. Furthermore, the authorities have a history of severely cracking down on these regions, thus making it more likely for escalations between security forces and locals. Over the coming weeks and months, such escalation will likely lock these regions in a vicious cycle of arrests, which subsequently provoke the locals to further unrest and militant attacks, prompting a security crackdown in return.

Recommendations

Business travel to Tehran, Esfahan and other major cities may continue at this time while remaining cognizant of ongoing protests and avoiding the vicinity of such events.

Western nationals are advised to remain cognizant to prevailing negative sentiment toward the United States and other North American and Western European countries.

We advise against all travel to outlying border areas with Pakistan, Turkmenistan, Iraq, Azerbaijan, and Armenia due to ongoing militant activity.

Those traveling to Iran should anticipate prolonged questioning by customs officials. Refrain from traveling with sophisticated cameras or other features affiliated with journalists. Cooperate with all security officials and respond to questioning in a respectable and calm manner.

Refrain from discussing the current political situation, Iran’s nuclear program, or tensions with the United States and Israel with local residents as a basic precaution. Be advised that authorities may monitor communications from hotels and other facilities frequented by foreigners, while internet access may be limited.

In the event that embassy services are required, it is advised to check the operational status of pertinent embassies and consulates. Consular services for US citizens are provided through the auspices of the Swiss Embassy in Tehran.

Bahrain’s Opposition: Business Continuity in the Crosshairs

By Max Security’s Intelligence Department

The Shia-led opposition does not aim to directly threaten foreigners doing business in the capital, they instead seek to make Manama a generally less attractive place to do business.

A protester displays his allegence to the “February 14” opposition movement. Roadblocks and tire burning are some of the tactics employed by the opposition to disrupt daily life in Bahrain.

This week, Bahrain’s Shia opposition groups are engaging in a multi-faceted campaign of civil disobedience dubbed “Week Promised To Martyrs,” in reference to activists killed in clashes with security forces which took place the previous week. On December 18, calls rang out through YouTube, twitter, and other social media networks for sympathizers to take to the streets across the small island. Their goal- disrupt day-to-day life in a non-violent manner in order to draw attention to the Shia majority’s struggle for equality.

The “Week Promised to Martyrs” employs many of the same tactics as similar demonstrations which have taken place week in and week out since the initial February uprising ended in the destruction of the iconic Pearl Square Roundabout. Mourning processions were to take place in Shia suburbs outside of Manama on December 20, while protesters were expected to block the Budaiya highway, a main traffic artery connecting the villages of the northern governorate with the capital of Manama.  In addition, calls were made to march to the former Pearl Square roundabout to stage a sit in.
Continue reading Bahrain’s Opposition: Business Continuity in the Crosshairs