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Social, security, and economic reforms implemented as transition continues, country further opens to investment – Sudan Analysis

Executive Summary

The government signed an agreement with the SPLM-N al-Hilu rebel group that notably established a shift toward a secular government. Major social reforms have enabled progress in the peace process but have also triggered pushback from conservative elements of society.
Efforts to incorporate all rebel groups in the peace process into a joint force with the Sudanese security apparatus is likely to be difficult and delayed, with the situation to remain volatile in Darfur.
The military’s willingness to divest from the economy in some sectors will bolster the government’s efforts to open the country’s markets to private and foreign investment. However, military elites will likely remain heavily involved in newly privatized industries.
Economic reforms including the removal of subsidies, devaluation of the Sudanese Pound, and allowing non-Islamic banking will likely have positive effects in terms of economic growth and enabling foreign investment.
The government is expected to struggle in persuading the public that the reforms will take time to take effect and the subsidy cuts in particular will be unpopular. Protests over the economic situation are thus expected to persist over the coming months.

Current Situation

On March 26, the World Bank stated that the Sudanese government had cleared its arrears and would now be able to secure financing from the World Bank Group and other multilateral institutions under the Heavily Indebted Poor Countries (HPIC) initiative. This was made possible by a 1.15 billion USD bridge loan from the US government on January 6 that was specifically intended to help clear Sudan’s debts.
Sudan’s inflation rate rose to 341 percent in March according to the Central Bureau of Statistics, despite the implementation of subsidy cuts and currency devolution. These measures and the rising cost of living has led to recurrent protests in Khartoum and other cities.
On March 29, the government and the Sudan People’s Liberation Movement – North (SPLM-N) faction led by Abdelaziz al-Hilu signed a Declaration of Principles (DOP) in Juba, South Sudan.
- The parties agreed that: “No religion shall be imposed on anyone and the State shall not adopt any official religion.” The state will also “guarantee freedom of religion” and “these principles shall be enshrined in the Constitution”.
- The DOP also stated that the government will sanctify human rights, including for women and children, and take adequate measures to accede to international and African human rights charters that are currently unratified.
- In addition, the SPLM-N al-Hilu and the government agreed to the formation of a “single apolitical professional army” beginning with the gradual integration of rebel forces.
The Sudan Liberation Movement led by Abdelwahid al-Nur (SLM-AW) had a leadership figure meet with the government in Khartoum on April 3. However, the rebel group released a statement on April 29 stating that it is not interested in negotiating with the current authorities or cooperating with the South Sudanese mediation team.
Sudan’s Security and Defense Council said on April 10 that it is seeking to form a joint force of 20,000 government troops and rebel fighters drawn from peace agreement signatories to deploy in Darfur. This was decided upon after large-scale intercommunal clashes in El Geneina, West Darfur State on April 3-6 resulted in hundreds of casualties.

Assessments & Forecast

Agreement to separate state & religion regarded as landmark advance of transition, peace process

The signing of the declaration of principles between the Sudanese government and SPLM-N al-Hilu is a historic step and significantly advances the political transition and peace process. This follows the signing of a comprehensive peace deal with the Sudanese Revolutionary Front (SRF) in August 2020 and signifies continued positive momentum in bringing rebel groups into the mainstream. Coming to an agreement with the SPLM-N al-Hilu is important as the group controls substantial tracts of land in the Nuba Mountains and Blue Nile State, and this will help stabilize the region. A major stumbling block had long been that al-Hilu consistently maintained that a secular Sudanese state is required as many of the population in the group’s territory is Christian and animist, unlike the majority of Sudan. The Sovereign Council’s decision to accede to this demand is highly notable given the country’s long Islamist identity.
The Sovereign Council likely also decided to agree to a separation of religion and state as a means to garner favor with the international community, who have largely welcomed the agreement as a sign of Sudan’s intent to accelerate democratization and instill liberal values. This would also further sideline the National Congress Party (NCP), which was the ruling party under former President Omar al-Bashir and had enshrined religious principles and the use of Sharia law in state jurisprudence. This comes as a broader shift toward secular governance during the transition. This was best exemplified by the repeal of the “Public Order Law” in November 2019 that had allowed for harsh penalties, including death, for women whom authorities deemed to be violating social norms. The government’s notably decisive actions to institute social changes, particularly for women, have also met international favor. The commitment to these changes was underscored by the transfer of the Khartoum police chief to a minor political post on March 28 after he called for the reinstatement of the Public Order Law, with the government releasing a statement rejecting his call.

FORECAST: Given the wide-ranging social impact of these reformist policies, there will continue to be pushback from conservative segments of society and government. In addition, the youth and women who led the 2019 revolution and turned away from Bashir’s Islamist policies often tied those policies to the widespread corruption in the government. If the transitional government is able to provide basic services to its citizens and tackle corruption, the move away from Islamic jurisprudence is likely to be accepted more optimistically by the population. However, if the government is unable to deal with these systemic issues, a new set of religious leaders may galvanize a movement toward reinstating Islamic law as a means to achieve these social objectives. In that sense, the popularity of social reforms is tied heavily to the overall perception of the government’s progress.
In addition, Islamist elements within the country who are supportive of a return to Sharia-based governance such as the Muslim Brotherhood and the disbanded NCP would likewise aim to support any move to roll back social reforms. FORECAST: This support is likely to be in the form of protests against the transitional government, which would be suppressed by local authorities that have consistently prioritized maintaining public order. Conservative leaders are likely to use Islamist sympathizers within the bureaucracy and security agencies, such as the former Khartoum police chief, to push for a return to more religious social norms. Such practices are likely to be the biggest challenge facing the government in its attempts to secularize governance in the coming months and could raise tensions over what is considered acceptable conduct in public spaces.

Efforts to launch unified joint force in Darfur likely to be difficult, delayed

With the new agreement with the SPLM-N al-Hilu, nearly all major rebel groups have been officially demobilized and slated to integrate into the new security structure, with the exception of the SLM-AW operating from Jebel Marra. Regardless, in the wake of large-scale intercommunal violence in El Geneina in early April, the Security and Defense Council announced plans to create a new joint force composed of the Sudanese Armed Forces (SAF) and fighters of signatory rebel groups that will be capable of “rapid intervention” across Darfur. This has been a long-awaited step in fulfilling the August 2020 peace accords, which would be crucial to stabilizing Darfur and ensuring the success of the transition in the periphery. FORECAST: However, it will likely face significant challenges in implementation and authorities have yet to release any clear timeline for the plan or indication that funding has been allocated to this project.
The work of unifying the force will be difficult given longstanding intercommunal hostilities. While a force with representation from Arab and non-Arab tribes will be promoted as a mechanism to build public confidence in the security forces and increase inter-ethnic cooperation, it will also likely be fraught with tensions, internal divisions, and disputes over organization and leadership. The prime example of this may be the role of the government’s Rapid Support Forces (RSF) paramilitary, whose origins are in Arab militias implicated in atrocities in Darfur. These militias fought the war against the rebel groups that will now integrate into the joint force and there is likely to be significant mistrust that could jeopardize cooperation. This will likely demand intensive reconciliation and confidence-building measures, and it is unclear if the government has the capabilities to do this.
The need for increased security deployments in Darfur has particularly been emphasized since the December 2020 withdrawal of the UN – African Union Hybrid Operation in Darfur (UNAMID) peacekeepers. Although the RSF has launched its own “Peace Shield Forces” initiative to fill the security vacuum, this has been controversial in areas that have been victimized by RSF militias in the past. RSF operations without the SAF or rebel fighters risk stoking further intercommunal violence, and this can cast further doubt on the eventual ability of all of these parties to eventually integrate.
FORECAST: With the joint force in its infancy, the SAF is expected to continue to enforce state of emergency measures in conflict zones across Darfur and mitigate further large-scale intercommunal violence. With this, local civil society groups and professional organizations are likely to continue sit-in protests in El Geneina, El Fasher, Nyala, and other cities across Darfur to demand improved security and government accountability for military misconduct. Although the government has made some progress in responding to public demands by removing soldiers’ immunity and promising that troops involved in human rights abuses will face prosecution, tensions between Darfuri communities and existing security apparatuses are likely to persist. Consequently, the risk of further small and large-scale intercommunal clashes remains high.

Markets likely to open to foreign, private investment, though military elites to remain heavily involved

As part of security sector reforms, the transitional government pledged to ease the military’s traditional control over state resources, including gold, food staple production, rubber, weaponry, and other resources. For decades, the security sector has controlled the majority of the economy, most notably with a monopoly over the gold mining industry. The military has also been exempt from paying taxes or being transparent about the earnings of industries under its control, all of which left the government with a small budget and lack of hard currency. Until January 2020, the Central Bank was the sole procurer and exporter of gold, which restricted the market and allowed for extensive smuggling and embezzlement of gold resources. This fact that this system benefits the military as well as RSF leader and Sovereign Council Vice President Mohammed Hamdan “Hemetti” has slowed the process of military divestment from the economy during the transitional process.
PM Abdallah Hamdok and other transitional officials recognize that military divestment from the economy and a restructure of the state budget is critical for economic growth, access to currency, and the opening of Sudanese markets to private and foreign investment. In this context, Hemetti pledged to turn over the Jebel Amer gold mines in North Darfur to the transitional government with mining and production to be regulated and eventually privatized. FORECAST: Other military-owned companies were similarly handed over in recent years, and this is likely to slowly reduce the security apparatus’s control over public sectors and make way for the development of new industries. This includes the development of civil industries, which could become taxable, shareholding companies. However, given that top RSF and military officials remain heavily involved in various industries, including private mining companies, with Hemetti serving on the board of directors of a company tied to Jebel Amer mines, means that these military elites will continue to directly benefit from revenues, including black market revenue streams.
FORECAST: Although military elites will likely remain involved behind the scenes in private mining company operations and other industries, the fact that the military and RSF have agreed to rescind control in some sectors is likely to bolster the government’s efforts to open the country’s markets to private and foreign investment in the coming months. With a properly regulated gold market, investment opportunities are likely to increase and thereby attract interest for the development of other industries once monopolized by the military. That being said, given that the military has yet to dissociate from the mining sector altogether, and that it continues to benefit financially from its control over many public works programs, water, and fuel distribution, it’s unlikely that the military will allow for the complete liberalization of Sudan’s economy.

Social, security developments underpinned by public economic reforms including subsidy cuts

The changes to laws on social norms, religious identity, and the security sector would likely not have been possible without the implementation of crucial public economic reforms. Over the past six months, the Sudanese government has enjoyed an increase in political capital and an opportunity to re-engage with the wider international community. The normalization of relations with Israel and removal of Sudan from the US “State Sponsors of Terrorism” list have been crucial steps. The delisting allowed Khartoum to bypass a barrier in accessing funds from international financial institutions, bolstered by US assistance to help the government clear its arrears. However, these warmer relationships have been weighed against Sudan’s pledges to cut subsidies on major commodities such as fuel, wheat, and electricity, which is controversial among a public in which many people rely on the subsidies for basic goods and services.
Subsidies were said to account for 40 percent of the national budget, which the former Bashir government was unable to borrow money to cover due to sanctions. Instead, the Bashir administration printed money, resulting in rampant inflation. The subsidy system under Bashir kept some commodity prices down for a period, but also led to periodic shortages of key items, as supply chain actors smuggled subsidised goods out of Sudan for sale at higher market prices in neighboring countries. In this context, the transitional government partially cut fuel subsidies in October 2020 in efforts to remedy the situation despite inflation continuing to climb, which was welcomed by the international community as a necessary austerity measure. The government attempted to ameliorate the effects of this by announcing a system of money transfers to people below the poverty line, though 65 percent of the population lives below the poverty line. Nonetheless, there have been recurrent protests since January 2021 in many states over the high costs of fuel, bread, and electricity.

Given these conditions, despite new economic policies, the government will likely struggle to persuade the public that the reforms will take time to take full effect. This will be further exacerbated by the doubts over the effectiveness of the cash transfer system due to endemic levels of corruption within the government. FORECAST: As the cash transfers are supported by the World Bank and other donors, it is possible that the COVID-19 pandemic could result in a shortfall in international aid as donor countries focus on improving their own economies in a post-pandemic scenario. It remains likely that periodic protests over the economic situation will persist in the coming months. While security forces have been relatively lenient regarding protests held by smaller groups in Khartoum, any attempts to organize a larger-scale protest movement against the government will likely result in a security clampdown.
FORECAST: Ultimately, the reform process in terms of the removal of subsidies and the devaluation of the Sudanese Pound is likely to have positive effects on economic growth over the coming months. Reforms such as the decision to allow for non-Islamic banking will further encourage foreign investment in the country, with these investors now more able to benefit from projects in Sudan given the opening up of credit avenues and issual of credit cards for the first time. However, the business environment is likely to remain enmeshed in the interests of traditional elites, including the military. While these elites have signaled a willingness to adapt to economic reforms, these power brokers will remain a prominent part of the economy in the coming years.

Recommendations

Travel to Khartoum can continue while adhering to general security precautions regarding the threat of crime.
We advise against all travel to the Darfur region as well as South Kordofan and Blue Nile states given the volatile security situation caused by ongoing violence between the government and armed rebel groups as well as intercommunal clashes.
Maintain vigilance in remote areas of northern and eastern Sudan given the risks of crime and lower presence of security forces.
Avoid nonessential travel to the borders with Egypt and Libya due to the risk of violent crime, kidnappings, and general lawlessness.
Avoid the vicinity of all large gatherings or political demonstrations given the associated risk of violent security crackdowns.

Maoist insurgency to remain significant internal security risk in central India despite growing security offensive – India Analysis

Executive Summary:

On April 3, dozens were killed as Maoist militants ambushed a contingent of security forces in Chhattisgarh’s Bastar region in the most deadly attack since 2017, underscoring continued tactical capabilities despite leadership losses and ceding significant territory in recent years.
The latest ambush highlighted the authorities’ flawed intelligence gathering and limited operational competencies in Maoist strongholds, largely due to their lack of knowledge of the terrain, compounded by support from local tribes for Maoist elements.
Going forward, insurgent attacks are expected to recur in central India, as Maoists make a concentrated effort to portray strength and bolster recruitment amid a tightening security grid in neighboring states that have forced cadres to retreat to Chhattisgarh.
Travel to Delhi and other major Indian cities can continue, while travelers are advised to maintain general vigilance for security risks associated with potential insurgent threats targeting government buildings, security installations, and large crowded public places.

Current Situation:

On April 3, 22 soldiers were killed and 31 injured following an encounter with Maoist insurgents along the border between Sukma and Bijapur districts in Chhattisgarh’s southern Bastar region. Nearly 400 Maoists ambushed a joint contingent of forces conducting an anti-Maoist operation, leading to a three-hour encounter. Maoists in an official statement claimed that four of their members were killed in the clashes, contradicting the government’s earlier announcement that 12 Maoists were killed.
The attack came amid days of counterinsurgency operations in the region, with reports indicating that several teams of around 2,000 security personnel were deployed. Operations were ongoing following intelligence reports stating the presence of Maoist squads along with Madvi Hidma, the commander of the Maoists’ People’s Liberation Guerrilla Army (PLGA) Battalion No. 1, who has been linked to major attacks since 2010. The latest intelligence suggested his location in the forests in Bijapur, along with a large number of Maoist cadres. The April 3 attack was reportedly orchestrated by Hidma.
This incident closely followed the first major Maoist attack in nearly a year, during which five security personnel were killed and 14 injured in Chhattisgarh’s Narayanpur district, on March 23.

Background:

The left-wing extremist (LWE) movement is rooted in the violent rural community uprisings against landlords in West Bengal’s Naxalbari area in 1967. It has taken several forms over the years but gained momentum after two Maoist groups merged to establish the Communist Party of India (Maoists) [CPI (Maoists)] in 2004.
Under the banner of the CPI (Maoists), insurgents conducted violent attacks against security forces and state installations, which included low-intensity guerrilla ambushes and large-scale attacks. The violence has claimed the lives of thousands of security personnel and civilians over the years, with the insurgency being termed as the “single biggest internal-security challenge” by former Prime Minister Manmohan Singh. During its peak years, Maoists were active in more than 200 districts across more than 20 states in India.
The rebel movement has waned since 2010 due to a concentrated effort by security forces to crack down on LWE groups while simultaneously conducting on-ground development projects. As of 2020, there were 90 Maoist-affected districts in 11 states, with the 30 worst-affected districts largely concentrated in Chhattisgarh and Jharkhand, followed by Andra Pradesh, Maharashtra, Odisha, and Telangana. While incidents of violence have significantly reduced since 2004-2010, Maoists continue to carry out deadly attacks against the state apparatus, with several major ambushes recorded over the last decade.

Assessments & Forecast:

Maoists look to demonstrate continued capabilities despite operational setbacks

The Maoist attack on April 3 is highly notable given the significant number of casualties, making it the most deadly LWE encounter since the 2017 attack in Sukma. The latest plot appeared to be a calculated and well-planned ambush, with reports indicating that the insurgents carried out a “U-shaped” trap, wherein rebels lured the team of security personnel into flat land before firing at them from the surrounding high ground. These developments, coupled with the attack just weeks prior on March 23, suggest an effort by Maoists to project their continued operational capabilities.
This was likely informed by the fact that LWE activities, which have been on a declining trend in recent years, were further hit by the strict nationwide lockdown imposed at the onset of the COVID-19 pandemic. The movement restrictions that included strict controls at inter-district and inter-state borders served to constrict the Maoists’ supply chains for food, medicines, and other essential commodities, thereby, significantly hampering their capabilities. The insurgents reportedly also faced difficulties in procuring weapons from their arms factories in Chhattisgarh and Jharkhand, further impeding their capacity to conduct tactical offensives.
The latest attacks are also notable as they were timed to coincide with the annual Tactical Counter Offensive Campaign (TCOC) from March to June, the core of the Maoists’ strategy, during which insurgents carry out recruitment drives and conduct major plots to showcase their tactical proficiency. This is relevant since there was reportedly a 40 percent decline in violence during the 2020 TCOC period as compared to the year prior. The alleged use of light machine guns (LMGs), IEDs, and crude rockets during the April 3 ambush also serves to display the Maoists’ capacities.

The latest attack highlights major lapses in counterinsurgency intelligence and operations in Maoist strongholds

While the Chhattisgarh state government ruled out intelligence and operational failure as the reason behind the April 3 encounter, the details of the attack that dealt heavy casualties to security forces suggest otherwise. The information regarding the presence of Maoist commander Hidma and other cadres in the area was not incorrect but the ambush indicates that the intelligence was flawed in terms of the intention and scale of the Maoist presence in the region, resulting in security forces walking into a trap.
There are two main reasons behind the recent tactical failure. Firstly, security forces in Chhattisgarh are largely dependent on human intelligence to gather information about Maoists. This serves as a major problem in Bastar, a Maoist bastion, where the insurgents have strong support from the locals who keep them informed of security movements. This was also evidenced by the fact that Maoists allegedly vacated locals from the villages near the encounter zone days before the ambush to prevent civilian casualties. Such acts are liable to heighten goodwill towards the rebels among the villagers in Bastar, ensuring future support and possibly boosting recruitment.
Secondly, the Maoist rebels have an undisputed advantage vis-a-vis knowledge of the terrain since the cadres are largely composed of individuals from the area, including Hidma, who was reportedly born in Sukma. In this context, the deployment of 2,000 security personnel in the weeks before the attack was a major oversight in the counterinsurgency operation. The large number of troops moving in the Maoist stronghold lands was a highly overt operation , underscoring the difficulty in formulating an effective strategy in countering the insurgents in Chhattisgarh’s Bastar region.
FORECAST: Unless security forces recalibrate their strategy and intelligence gathering techniques in the stronghold of Bastar, the Maoist insurgency is expected to remain a major threat in central India. Instead of conducting large operations, smaller special operations units are more likely to succeed in infiltrating the stronghold and carrying out targeted operations against key Maoist leaders. This is especially given reports that top leaders like Hidma are reportedly protected by a multi-layered security cover, making it particularly hard to breach with direct offensives. Authorities are also seeing problems due to their inability to adequately adopt a more population-focused approach, which includes development strategies in the tribal regions, to sway local sentiment away from the Maoists.

Insurgency attacks to sustain for foreseeable future despite losing ground in recent years

The latest developments suggest that the Maoist insurgency is not in its last stages despite the steady decline in LWE-related incidents of violence since 2010. While the group has ceded significant territory and lost several leaders in recent years, the outfit remains a major security threat in central India. That said, the recent incident does not signify that the outfit is regaining dominance or expanding into lost territories; rather, it points to a concerted effort to portray strength and bolster recruitment in the Maoist bastion amid a tightening security grid in neighboring states that has forced cadres to retreat to strongholds in Chhattisgarh.
FORECAST: In this light, LWE attacks are expected to continue for the foreseeable future, especially in Maoists’ core areas where they have the capacity to conduct high-visibility attacks. This is particularly given the increasingly assertive tactics adopted under Basavaraj, the former head of the outfit’s Central Military Commission (CMC), who was appointed as chief of the CPI (Maoists) in 2018. His leadership reinvigorated violent plots by the group through large-scale IED-based attacks and multi-pronged ambushes on security forces as well as high-value targets, such as prominent politicians. Unconfirmed reports also indicate that Hidma is set to head the CMC, which oversees all guerrilla activities in India, increasing the risk of attacks in restive regions.
FORECAST: While insurgents are expected to predominantly attack security operatives and the state apparatus, civilians residing or traveling in Maoist-affected regions can be potential targets, particularly if they are suspected of being police informants or of holding links to the government. Maoists may also target infrastructure projects as well as local industries and businesses in a bid to extort money. In the near term, security forces are liable to increase the frequency and intensity of anti-Maoist operations in Chhattisgarh, as well as in other Maoist-affected regions in the “Red Corridor”, which mainly encompasses parts of Andhra Pradesh Bihar, Jharkhand, Maharashtra, Odisha, and Telangana. Such measures may include intensified combing operations and the deployment of additional security personnel, increasing the risk of clashes.

Recommendations:

Those operating or residing in Chhattisgarh over the coming months are advised to maintain heightened vigilance, particularly in rural districts, due to the risk of Maoist attacks and the threat of collateral damage from increased security operations.
Travel to Delhi and other major Indian cities can continue, while travelers are advised to maintain general vigilance for security risks associated with potential insurgent threats targeting government buildings, security installations, and large crowded public places.
We advise against all nonessential travel to rural and tribal areas of Bihar, Chhattisgarh, Jharkhand, West Bengal, and Odisha states given their restricted travel status with the government. Travel to urban areas, such as Bhubaneshwar, can continue while maintaining heightened vigilance.
It is advised to consult with India’s Bureau of Immigration for a full list of restricted areas within India which travelers must obtain special permission to visit.
Given the continued militant threat in India, maintain heightened vigilance for suspicious individuals and unattended baggage, particularly in public places including major hotels, government installations, transport hubs, markets, restaurants, entertainment venues, and places of worship.

COVID-19 to disrupt emergency preparation and response plans for 2021 North Atlantic Hurricane Season – Americas Analysis

Executive Summary

The 2021 North Atlantic Hurricane Season is expected to witness at least 10 hurricanes between June and November.
Planning for the season will be impacted by COVID-19 considerations, including restrictions on travel.
Based on the situation in 2020, the region’s uneven COVID-19 response will be disrupted by these storms, just as vaccination campaigns are set to speed up.
Given this, the 2021 Hurricane Season will have long-term impacts on the health, transport, and political infrastructure of Central and North America, and the Caribbean.
Those operating or residing in the Caribbean, Central America, and North America are advised to review and update existing hurricane preparedness protocols in consideration of COVID-19 regulations.

Please be advised

North Atlantic Hurricane Season: 2020 review and 2021 forecast

Between 2011-2020, there was an average of 17 named tropical storms, seven hurricanes, and three major hurricanes in the North Atlantic each year (17-7-3). In 2020, this ratio was 30-13-6. It was the most active hurricane season on record, with Hurricane Iota being the latest Category 5 to form in November since 1932; the fifth season in a row that a Category 5 has formed.
Within the Caribbean, Central America, and North America, over 430 deaths were recorded and over 50 billion USD in damages were caused by widespread flooding, landslides, debris falling, and disruptions to essential utilities.
Hurricane Laura (Cat 4) killed 77 [42 USA, 31 Haiti, 4 Dominican Rep] and caused over 14 billion USD worth of damages over nine days in August, fluctuating in strength, regaining enough power over the Gulf of Mexico to be the strongest hurricane to make landfall in Louisiana in over 150 years.
Hurricane Delta’s wind speeds intensified from 55 kmph (35 mph) to 215 kmph (130 mph) within 24-hours, the fastest such intensification on record. The hurricane knocked out power to over 750,000 customers in the USA as it passed along the Gulf Coast.
For 2021, as of April 18, various observers forecast between 16-18 named storms, 6-9 hurricanes, and 3-4 major hurricanes between June and November. It should be noted that at the same time in 2020, the same observers forecast similar numbers based on the decadal average, 17-7-3, while the end tally was nearly double on all counts.

2020 witnessed unprecedented modern-day impact in Central America

Hurricanes Eta and Iota passed over Central Americas in November 2020 and were responsible for at least 270 of the roughly 430 deaths recorded across North and Central America during the 2020 Hurricane Season.
Roughly nine billion USD worth of damage was reportedly sustained, including five billion USD to Honduras alone during Hurricane Eta.
Landslides and flooding hit large parts of Honduras, Guatemala, El Salvador, and other countries in the region, destroying infrastructure and causing widespread homelessness.
The US Agency for International Development (USAID) estimated that roughly 3.5 million people in Central America were facing an acute food and livelihood crisis due to the two hurricanes.

Tropical Storms are retaining more power for longer

According to research undertaken by the Okinawa Institute of Science Technology Graduate University, tropical storms in the North Atlantic are losing power less quickly once they make landfall.
Tropical cyclones gain their strength from hot waters and moisture, normally losing a significant amount of their energy once they make landfall. The research claims that in the past 25 years, tropical storms are retaining close to double the amount of energy once over land compared to the previous 25 years due to climate change.
As such, rather than losing 75 percent of their intensity after 24 hours above land, this figure is now closer to 50 percent. This means that tropical cyclones will not only be more powerful as they move over land but will also last longer and potentially move deeper inland, depending on other factors.

COVID-19 Update

The USA has been one of the worst affected countries by COVID-19. Of the states most impacted, Florida, Georgia, North Carolina, and Texas are all situated within the typical impact zones for hurricanes. In several states, hospitals have been overwhelmed during parts of the pandemic, due to the sudden influx of COVID-19 patients, especially as those with severe cases need at least several weeks of treatment in ICUs.
These states, as well as Alabama, Louisiana, and South Dakota have roughly 20-30% of their populations fully vaccinated, as of April 18, with various agencies forecasting that most adults in these states will be fully vaccinated by July or August, as long as current rates are maintained. However, various groups, including ethnic minorities and those from poorer socio-economic communities, have slower rates of vaccine uptake compared to the wider population.
Outside of the USA, most of Central and North America is only just beginning vaccination campaigns. Most countries in Central America have witnessed negligible vaccination distribution, while the Caribbean’s distribution efforts are uneven. This is partially due to many relying on the WHO COVAX vaccine distribution system, which has been slow and sporadic in its delivery so far. As of March 31, it had only distributed 38 million of the 100 million doses it planned to deliver.
Authorities have raised concerns over potential evacuation plans during COVID. The recent eruption of the La Soufriere volcano on St Vincent & Grenadines has led to a spike in cases, as evacuees are forced into shelters together, with limited oversight of COVID restrictions and testing. The health situation has reportedly been exacerbated by poor infrastructure, including water and electricity supply.

Assessments & Recommendations

COVID-19 regulations to disrupt hurricane planning and response

Evacuation

In many areas that are used to responding to tropical storms, many individuals and organizations will have ‘go-to’ evacuation destinations. However, these destinations may be out of reach or require extra planning in 2021 due to the remaining restrictions.
Although many states in the USA eased domestic travel restrictions, various counties and states maintain some form of entry restrictions, whether it be for certain international travelers or testing or quarantine requirements for those entering the area. As such, even those who have designated evacuation locations will need to reconfirm their emergency itineraries.
This situation is also liable to be similar in Central America, where residents typically move inland during times of hurricanes. Given that major cities have been the hotbed of COVID-19 in these countries, there may be additional restrictions, not related to entry, that are still in place.
As demonstrated with St Vincent & Grenadines, in the Caribbean, evacuations are liable to be significantly disrupted, especially for those who typically evacuate out of the country or to another region within the country. For example, the Bahamas currently requires a negative test to travel between various regions of the islands. Inter-island travel within the Caribbean is liable to be extremely limited during such times, with testing often sparse.

Recommendations

Identify multiple potential evacuation destinations and routes in the case of a hurricane.
Remain cognizant of COVID-19-related entry requirements for destination locations, including testing and quarantine.
Remain cognizant of local COVID-19 restrictions in destinations, such as curfews, mask requirements, and which stores are allowed to open and when.
In case of the need to quarantine upon arrival, ensure that evacuation destinations are stocked with water and food per person, first aid items, medications, flashlight, batteries, radio, and other essential supplies for the duration of the stay.

Impact on healthcare and authorities’ response

Emergency and healthcare services across the region are already stretched thin, with resources being redirected to COVID-19 patients and oversight. This is liable to lead to a fragmented and disrupted response to tropical storms and their results. Healthcare services, in particular, are likely to witness a dual problem during hurricanes this year.
Those hospitals and medical facilities within hurricane zones are liable to witness similar rates of injuries and patients to normal years, although many have their resources limited by COVID-19, especially ICU capacity, potentially impacting their ability to treat emergency patients during hurricanes.
Additionally, in many places, those facilities that are within evacuation zones move patients to locations outside of the area. Given that most facilities at present have dedicated resources and personnel to specifically deal with COVID-19 patients, such operations will be additionally complicated, as well as the destination facilities having their resources stretched to deal with the existing COVID-19 patients and the additional influx, impacting other services.
In the case of mass evacuations, police are also liable to be overstretched, with local forces likely to be unable to enforce COVID-19 restrictions during such times. The ability of health and emergency authorities to evacuate at-risk populations en masse will be disrupted and complicated, especially regarding those who belong to communities that are less likely to have had vaccinations. The dual-task of maintaining COVID-19 restrictions and overseeing emergency response operations may reduce police efficacy in responding to criminal acts during such times.

Recommendations:

Those operating or residing within hurricane impact zones should create an emergency supply kit with three days’ worth of water and food per person, first aid items, medications, flashlight, batteries, radio, and other essential supplies in case of being unable to evacuate.
Acquire additional prescription medication ahead of time if possible.
Identify available healthcare facilities in destination locations.
Maintain vigilance for potential criminal behavior during times of evacuations.
Take additional measures to ensure asset security during such times.

Hurricanes liable to lead to COVID-19 spike in both impacted area and evacuation destinations

As witnessed in St Vincent & Grenadines, the mass movement of people due to natural hazards will likely lead to spikes in COVID-19 cases in shelters and areas receiving refugees and evacuees.
Especially outside more developed areas, there is liable to be limited recording of who is moving where and whether they have been tested, vaccinated, or quarantined. As mentioned above, police and healthcare services are unlikely to be able to effectively monitor these aspects amid mass movements of people during times of emergency. As such, destination areas, often large cities in Central America and the Caribbean, may witness an increase in COVID-19 cases in the weeks following evacuations, worsening the strain on already limited healthcare services.
On the other hand, as is often witnessed in southeastern states in the USA, poorer individuals are more likely to have to stay in affected areas, unable to evacuate due to lack of transport, family to stay with, or funds for accommodation. In such cases, many often amass at local shelters, including sports stadiums, schools, or other public sites. Governments will face significant pressure to balance ensuring that those who use such facilities are tested for COVID while making sure that no one is turned away. As such, already stretched authorities will have to make contingency plans for these scenarios, possibly having to increase capacities at facilities in order to house tested and non-tested individuals separately.
In both cases, the mass number of individuals involved makes even those locations with high vaccination rates open to spikes in COVID-19 cases following evacuations, sheltering, and returning citizens following the end of emergency situations. This may reverse recent gains made from the vaccine campaign and result in the reintroduction of certain restrictions.

2021 Hurricane Season likely to have a long-term impact on politic, healthcare, and infrastructure

As witnessed in 2020, the massive economic and infrastructural impact of Hurricanes Eta and Iota still have an effect on local populations and national politics, over six months later.
Given the confluence of a potentially record-breaking hurricane season and the COVID-19 pandemic, in Central America, a complete loss of trust in governments may ensue, with non-state actors, including regional criminal groups, becoming the go-to provider of aid and services to local communities.
Furthermore, the mass displacement of individuals during a period of economic downturn and pandemic is liable to lead to heightened criminal activity within affected regions, especially in Central America, potentially into the long term.
Politicians are liable to be judged by their response to these crises, with multiple countries in the region slated to have local or national elections in the coming year or so, including Costa Rica, Honduras, Haiti, Nicaragua, and the Bahamas. These votes are likely to be impacted by the health crisis and upcoming natural hazards.
Given the already stretched public resources, the regional response to damaged infrastructure, including transport, utilities, and communications, may be slowed, making repair works slower, with areas of significant impact potentially witnessing several months without or with a limited supply of essential supplies.

General Recommendations for Hurricane Season

Those operating or residing in the Caribbean, Central America, and North America are advised to review and update existing hurricane preparedness protocols in consideration of COVID-19 regulations.
Instruct employees on updated procedures. Inform employees of local emergency and evacuation plans.
If not in an area ordered for evacuation, stay at home, close storm shutters, and stay away from windows. Secure any loose objects outdoors.
Confirm that places where you will be located have working generators in case of power outages while packing sufficient batteries and flashlights.
Charge essential electronic devices such as cellular phones, laptops, and tablet computers ahead of the planned power outage, and initiate energy-saving functions on these devices as needed.
Disconnect all surge-prone devices such as computers, televisions, and appliances to prevent potential damage.
Allot extra time for travel and flight disruptions; reconfirm overland and flight travel itineraries, and remain cognizant of local updates.
Do not walk or drive through floodwaters.
Avoid contact with floodwater, including through bathing and drinking. Ensure adequate supply of bottled water; boil water before consumption as a last resort.
Practice increased health and sanitation precautions to mitigate risks of contracting waterborne diseases during the flooding. Drink only bottled water and avoid exposure to flood water and natural bodies of water when possible.
For more information please contact [email protected]

Israel’s March 23rd election results likely to prolong political stagnation; may pose challenges to strategic business operations – Israel Analysis

Executive Summary:

On March 23, Israel held its fourth round of parliamentary elections in the past two years, which produced another stalemate. Rather than the left and right, the political fault lines in Israel are currently divided along the pro-Prime Minister (PM) Benjamin Netanyahu bloc and the anti-Netanyahu bloc. At present, neither has been able to form a viable coalition.
Even if either bloc succeeds in forming a coalition through complex political maneuvering, any potential government’s longevity will likely be limited in time. Therefore, the years-long period of political deadlock in Israel is likely to persist due to the lack of a conclusive outcome.
The political stagnation will hinder the implementation of a long-term budget and comprehensive government planning, which will disrupt proper governance, cause some economic damage, limit the ability for strategic long-term security planning, and hamper Israel’s foreign relations with key allies.
This is liable to pose challenges for long-term strategic business operations in Israel, especially those requiring high-level government collaboration. However, regardless of the political situation, essential services and infrastructure remain operational and the country is largely functioning as normal. The highly successful COVID-19 vaccine campaign has significantly reduced restrictions on business and commercial activities, with domestic and foreign companies and organizations able to operate without major hindrance.
Those operating or residing in Israel are advised to remain abreast of the ongoing political situation, which is liable to result in some challenges to long-term business operations requiring state collaboration. Consult with us at [email protected] or +44-20-3540-0434 for more information.

Implications of the political deadlock

As well as leading to an unprecedented situation in which four elections have been held in the past two years, the political stalemate has had, and will continue to have, an impact on the functioning and governance of Israel in various fields. These range from budgetary and economic issues to foreign relations and long-term security doctrines. Below are the primary areas in which the political deadlock is liable to impact until a conclusive outcome is reached and a stable government is formed.

Economy, budget, and domestic governance

The political situation in Israel has had an impact on the country’s economic functioning and ability to strategically plan ahead. As a result of the political stalemate, the Knesset has not passed an annual budget or comprehensive spending plans since March 2018, which has hindered the capacity of ministries and other government-funded organizations to operate effectively. This concern has been shared by Israel’s economic leadership, as evidenced by comments on April 9 by Bank of Israel Governor, Amir Yaron, who reiterated that “without a stable government that operates long-term” Israel will not be able to implement a multi-year economic plan to effectively emerge from the COVID-19 health and economic crises. This view highlights the importance of both the formation of a stable and cohesive government as well as its longevity for proper governance and economic growth. This is particularly in light of the pandemic, which had a severe impact on the Israeli workforce, with unemployment reaching a high of 27 percent early on in the health crisis and falling to 9.8 percent by March amid the opening up of the economy. Prior to the pandemic, unemployment had reached a record low of 3.8 percent.
FORECAST: Payments to furloughed workers in Israel are set to expire at the end of June. Many furloughed workers have preferred to continue receiving state payments instead of returning to the workforce and will thus likely be compelled to return to part-time unemployment when these payments end in June. That said, parts of the population will likely remain indefinitely unemployed. This will require government-funded training programs and investment, potentially in cooperation with the private sector, to assist these individuals to reenter the workforce. This is especially because several sectors, particularly those depending on tourism, continue to operate at lower than pre-pandemic capacity and there are therefore fewer jobs in these fields. In the absence of a stable government able to strategically implement such initiatives, hundreds of thousands of people are liable to be in a precarious final situation, which will place strain on the government and the wider economy as their consumption will be reduced.
The political situation has partly impaired Israel’s ability to respond to pressing needs in a timely manner. This is most saliently evidenced by a reported delay in Israeli payments to vaccine production companies as the Israeli cabinet has not convened to pass this budget due to political infighting in the current Likud-Blue & White caretaker coalition. This is due to the cancellation of a cabinet meeting by Defense Minister Gantz as a result of Netanyahu’s alleged refusal to permit the appointment of a Justice Minister, which also hinders the Knesset’s ability to pass key legislation. The void in the Justice Ministry is one of multiple senior roles, including in the security and defense sectors, that have not been filled due to government infighting. The fact that this led to Gantz’s cancellation of the cabinet meeting underscores the potential for multiple other issues of an important and strategic nature to be hindered or delayed due to political stagnation. The ministers were slated to vote on a 2.1 billion USD procurement of new vaccine doses, which is essential for Israel to sustainably combat the COVID-19 pandemic over the long-term and keep the economy open and thus provide crucial income for individuals and revenue for the state. FORECAST: Although the government will likely find a solution to this specific issue, the development highlights multiple aspects of the current political impasse on proper governance.
The failure to pass a budget has impacted the government’s capacity to fund infrastructure projects and major national initiatives. This has affected multiple sectors and fields. For instance, the lack of a budget hindered the start of the academic year as the Knesset was forced to pass a special budget in order for schools to open while other state-funded educational services were impacted. More generally, the lack of a long-term budget poses challenges in terms of structural economic reforms and for ministries to provide essential services, including physical and mental healthcare, social provision, and education, which require increased investment in order to meet rising inflation and demand.
FORECAST: Although the government has managed to pass a series of short-term spending plans and special budgets to cover specific needs, the longer the political deadlock continues, the more that certain services and infrastructure plans will be impacted. Furthermore, even if a coalition is formed, if its primary components lack a shared vision beyond replacing the current Netanyahu-led government, this will also hinder state funding and the passing of a viable long-term budget due to disagreement over policy and economic priorities. Taken as a whole, the political situation will continue to have a relative impact on the functioning of the state over the coming months at least. It may also reduce the desire of international firms to commit to invest and set up offices in Israel until a stable government is in place that can facilitate such operations and work in collaboration. This is also evidenced by a warning by an international credit ratings agency from March 31 indicating that while the present situation does not pose immediate risks to Israel’s economic rating, shown by the fact it kept Israel’s credit rating at AA-, if the political situation persists, it will elevate the fiscal risks due to the difficulty in reducing the deficit. Bank of Israel governor Yaron reinforced this concern, stating that “credit ratings companies are worried by the government’s instability and the failure to pass a budget.”
Regardless of the political situation, essential services and infrastructure remain operational and the country is largely functioning as normal. The highly successful COVID-19 vaccine campaign has significantly reduced restrictions on business and commercial activities, with domestic and foreign companies and organizations able to operate without a major hindrance. FORECAST: The political stagnation in the country is more likely to pose a challenge to foreign companies potentially seeking to initiate major investments or launch large-scale projects within Israel. This is because government ministries face both budgetary issues and obstacles in the decision-making process. This may also affect collaboration with ministries or state-funded organizations, but routine operations of existing companies within Israel will continue regardless, albeit delays can be expected when receiving permits, regulatory approvals, or other activities that depend on legislation.

Foreign Relations

The political situation is also somewhat affecting Israel’s ability to forge relations and gain international influence. As a result of political infighting, the current caretaker government, even when it managed to convene on a fairly regular basis, struggled to project a united message to the international community regarding Israel’s policies as senior members of the Likud and Blue and White parties frequently undermined each other. This is particularly the case in sensitive issues of foreign and defense policy, with the latter portfolios being held by Blue and White’s Gabi Ashkenazi and Benny Gantz, respectively, but many diplomatic and security matters being directed by Netanyahu. These competing points of authority have likely posed problems for various states when dealing with Israel. FORECAST: The failure to establish a viable and stable government led by ministers appointed for the long-term will likely pose a challenge for Israel’s efforts to forge relations in essential sectors such as trade and commerce. Foreign governments may be reluctant to commit to such agreements with caretaker officials, while the latter may be restricted by legal obstacles placed upon an interim government.
The current impasse has resulted in a situation wherein 36 new ambassadorial appointees, which have been approved by Israel’s Ministry of Foreign Affairs (MFA) appointments committee are not yet fulfilling their roles. This situation has been ongoing since November 2020 and many of the ambassadors are reportedly ready and set to be posted on diplomatic missions on an immediate basis. Reports state that this delay is due to a refusal by Netanyahu to bring their approval to the cabinet for its consent. The absence of new ambassadors is a significant issue that is liable to harm Israel’s diplomatic, trade, and security interests. This situation can hinder Israel’s ability to conduct diplomatic campaigns and strategic discourse with other international actors as well as to advance visits of economic delegations to other countries.
Most importantly for Israel, the lack of government can undermine the country’s relations with key strategic allies such as the US. Continued political paralysis within Israel has likely somewhat hindered its ability to build strategies and coordinate with its allies on matters of essential policy and national security. This is because these allies may be reluctant to engage in long-term planning in the absence of a stable government, especially one that may be perceived as volatile and potentially liable to fall as soon as a political crisis emerges. This may impact Israel’s positions on the Iranian nuclear agreement, especially amid international efforts to revive the Joint Comprehensive Plan of Action (JCPOA); and any US engagement with the Palestinians.
Another area that the political situation can impact in terms of foreign policy is the pre-election, US-brokered normalization trend that was recorded, consisting of diplomatic agreements between Israel and four Arab states (the UAE , Bahrain, Sudan, and Morocco). These deals are extremely important and strategic for Israel’s diplomatic, security, and economic interests as they enable Jerusalem to garner additional international support against its adversaries and forge trade and investment relations. FORECAST: This trend is likely to slow down or be suspended altogether in the absence of a stable Israel government that other potential Arab states perceive to be a long-term partner. The regional actors that are most likely to reach a normalization agreement with Israel tend to be relatively risk-averse and attach great importance to stability. Thus, if the political deadlock continues or an unstable government is formed, further normalization agreements are unlikely.

Security

In terms of security, the political deadlock will have an impact on the procurement of military hardware and weaponry. It may also impact the development of advanced security doctrines based on these weapon systems and long-term, large-scale organizational planning. This is due to various budgetary obstacles and challenges posed to the decision-making process. However, over the past two years, despite the political stalemate, Israel has continued to act to safeguard its security interests across multiple arenas. Military activity, both overt and covert, has been reported in various theaters of operation throughout the Middle East region. That said, although these operations are informed by a guiding strategy that has been formulated by previous governments and continues to be updated by Israel’s security agencies, especially vis-a-vis the regional threat posed by Iran and its proxies, the lack of a cohesive government is liable to affect proper governance and the decision-making process. This is shown for instance by the Israeli government’s apparent lack of strategy regarding the best way to manage the threat of militant groups based in the Gaza Strip, which is an issue that periodically emerges with a potentially decisive operation indefinitely put on hold until a stable government is formed. Taken as a whole, despite the political situation dictate, Israel can continue to respond to any threats to its national security and continue to formulate a military strategy to defend these interests.
FORECAST: This situation will impact Israel’s security in the strategic realm and possibly lead to long-term damage as Israel’s adversaries can gain an edge on delays to procure and develop weaponry due to budgetary and decision-making challenges. However, the ability of Israel’s security apparatus to mitigate and thwart security within Israel itself will remain intact over the coming period. The Israeli security agencies have proven during this period of relative political instability and throughout periods of far greater security volatility that the vast majority of local and regional threats, namely along its northern borders and vis-a-vis Palestinian militants in the West Bank and Gaza, are manageable. Thus, the political situation will not lead to a fundamental destabilizing of the security environment within Israel over the coming period.

Election Results and Political Blocs

On March 23, Israel held its fourth round of elections for its parliament (the Knesset) in the past two years.
During this two-year political deadlock, a government was formed in May 2020, which was led by Prime Minister (PM) Benjamin Netanyahu and the Likud party alongside Benny Gantz, his political rival from the“Blue and White” party. The government’s functioning was hindered by in-fighting and discord between the rival political factions, which eventually led to the dispersal of the Knesset in December 2020, resulting in the March election.
The results of the election can be seen below. The political fault lines within Israel since the first election in March 2019 have revolved around the parties’ willingness to join or rejection of a government led by PM Netanyahu, who is on trial having been officially indicted in November 2019 for breach of trust, bribery, and fraud.
The debate on Netanyahu’s political and legal status has transcended the traditional left-right discourse within the Israeli political landscape. In this context, parties that are part of the right-wing political camp in Israel, such as former Likud member Gidon Saar’s “New Hope”, have formally declared themselves to be part of the “anti-Netanyahu” or “change” bloc. Other parties, such as Naftali Bennett’s right-wing “Yamina” and Mansour Abbas’ Islamist “Raam”, remain unaffiliated with either of the pro- or anti-Netanyahu blocs.
This has resulted in a situation that neither the pro-Netanyahu bloc, primarily made up of right-wing and religious/ultra-Orthodox parties nor the ideologically diverse anti-Netanyahu bloc has been able to form a coalition, which requires a 61-seat majority in the Knesset.
On April 6, Netanyahu was given a four-week mandate to form a government by President Reuven Rivlin. He has until May 4 to try to assemble a viable coalition and can thereafter request a 14-day extension at the discretion of the president. If he fails, Rivlin can ask a second person or return the mandate to the Knesset. If these alternatives fail to yield a government, the Knesset will automatically dissolve and another election will be held.

Affiliations of political parties

These are the various political parties and their affiliations and policies.

Main options for government coalitions – likelihood and longevity

Option 1: Pro-Netanyahu bloc & Yamina government plus Raam external support in Knesset

Prime Minister: Benjamin Netanyahu
Coalition Components: Likud, United Torah Judaism, Shas, “Religious Zionism”, and Yamina (59 seats)
External support for government votes: Raam (4 seats)

Analysis:

This option is somewhat feasible as it includes various political parties with broadly similar ideological agendas and worldviews in government. Although the Raam party would likely not be a formal part of the government, but an external support bloc, its inclusion poses the greatest challenge to the formation of the government. The “Religious Zionism” party has explicitly stated and reiterated that it will not be part of a government that depends on Raam’s support and this is likely to hinder any progress on this option. This is compounded by major concessions that Netanyahu may have to make to Bennett for the latter to join a government led by the former. In terms of longevity, the Raam party’s leadership is able to cooperate with the religious factions in this potential government, particularly over social policy and support for religious institutions. However, its overall Islamist agenda and links to the Palestinian cause are liable to create complications for the government’s functioning, which would be exacerbated during periods of escalation or religious sensitivities.

Option 2: Pro-Netanyahu bloc & Yamina government plus defectors from the anti-Netanyahu bloc

Prime Minister: Benjamin Netanyahu
Coalition Components: Likud, United Torah Judaism, Shas, “Religious Zionism”, Yamina + 2 members of anti-Netanyahu bloc shift allegiances (61 seats)

Analysis:

This government is unlikely due to the reluctance of members of the center or center-right parties to renege on their pledges not to join a government led by Netanyahu amid his indictment on corruption charges. The “Blue and White” party has insisted it will not join a Netanyahu-led government following its previous power-sharing experience with the incumbent prime minister while “New Hope” members, more likely to defect, have so far insisted they will not join the pro-Netanyahu bloc. Although individual members of these parties may choose to join Netanyahu under the pretext of preventing another round of elections, the parties themselves are unlikely to do so due to the potential for a fifth vote and the impact this would have on voters who will perceive this as the violation of election pledges. In terms of longevity, a government made up of the Netanyahu bloc, Yamina, and two defectors from the anti-Netanyahu bloc would likely be more stable on key policies than a Raam-backed coalition. However, with legislation pertaining to Netanyahu’s legal complications, this government would likely face substantial hurdles as several members of Yamina and most potential defectors are unlikely to support any perceived efforts by Netanyahu or his supporters to release him from or evade the legal process.

Option 3: Anti-Netanyahu bloc plus external support from Raam

Prime Minister: Naftali Bennett/Yair Lapid (Rotation)
Coalition Components: Yesh Atid, Blue & White, Yisrael Beitenu, Labor, Meretz, Yamina, New Hope (58 seats)
External support for government votes: Raam (4 seats)

Analysis:

In terms of the likelihood of formation, this government faces multiple challenges due to the ideological diversity of the parties it would include and the pressure within both the left-leaning (Yesh Atid, Labor, Meretz) and right-leaning factions of the potential coalition (Yamina, New Hope) to extract concessions from the other. The former parties seek to ensure Yesh Atid’s Labor is the prime minister (PM) or first in any rotation, while the latter right-leaning bloc insists on Bennett as PM and first in the rotation. The right-leaning parties will also aim to block the left-leaning parties from holding key cabinet posts and thus advancing a left-wing agenda as well as blocking their entry to the security cabinet. Even if this government does materialize, it would likely be hindered by major in-fighting and its longevity is thus very low.

Option 4: Netanyahu chooses/forced to sit aside; right-wing government formed

Prime Minister: Consensus among right-wing parties
Coalition components: Likud, Shas, United Torah Judaism, Yamina, New Hope, Religious Zionism (65 seats)

Analysis:

This option is extremely unlikely due to Netanyahu’s widespread popularity among the Likud party and the Ultra-Orthodox parties that support the Likud. Members and voters of these parties would consider any attempt to coerce Netanyahu to step down as anti-democratic, which would create major tensions within Israeli society. Netanyahu also continues to hold significant support among parliamentarians in his and other supporting parties, while even some of his detractors may oppose legislation that prevents him from being prime minister due to its targeted nature. This is evidenced by the failure of anti-Netanyahu parties to pass such legislation over the past years despite their overall opposition to his continued premiership. Taken as a whole, this option is highly unlikely and its longevity is thus negligible.

BOTTOM LINE

Overall, given that all of the above-mentioned options pose considerable challenges to political actors in terms of both the formation of a viable coalition and the longevity of any government, the most likely scenario is either a fifth election with a similar outcome along pro- and anti-Netanyahu lines or an unstable government that fails to complete its term and thus elections are again called.

Recommendations:

In light of the current situation:

Those operating or residing in Israel, or seeking to do so, are advised to remain abreast of the ongoing political situation, which is liable to have an impact on business continuity.
It is advised to allot for obstacles to cooperation with public sector bodies and ministries as well as other state-funded organizations.
Allot for disruptions to processes that require government permits, regulatory approvals, or other activities that are liable to depend on legislation.
More generally, allot for continued restrictions on entry to Israel due to the COVID-19 pandemic. Consult with us at [email protected] or +44-20-3540-0434 for guidance on entry to Israel amid the current limitations.

General Recommendations:

Travel to Israel may continue at this time while adhering to security precautions regarding militant attacks, while avoiding the immediate vicinity of the Syrian, Lebanese, and Egyptian borders, due to the persistent risk for cross-border violence.
Those traveling in the 40 km area surrounding the Gaza Strip should continue adhering to all safety precautions regarding early warning sirens for incoming rockets. Remain cognizant of the situation along with the Lebanese and Syrian border areas, as minor hostilities between various groups can escalate into a broader conflict. In case you hear a siren, seek shelter in a protected area and remain inside for at least 10 minutes.
In major Israeli cities, remain vigilant in crowded commercial areas or public transport hubs, as these locations have been targeted by militant groups in the past. Alert authorities to suspicious, unattended packages in these areas.
As a general precaution, avoid nonessential travel to the vicinity of Jerusalem’s Old City, particularly in the vicinity of Damascus Gate, due to the increased potential for acts of militancy and civil unrest. For those seeking to travel to the Old City, it is advised to contact us for a security-oriented travel guide.

Death of President Magufuli likely to result in fraught transition process, renewal of power struggle within ruling CCM party – Tanzania Analysis

Executive Summary

The death of President John Magufuli comes just four months after he was sworn into office for a second term. Given the two-week uncertainty regarding his whereabouts, the fact that Vice President Samia Suluhu Hassan made the announcement is significant and may be a sign of adherence to constitutional protocol regarding presidential succession.
However, the transition process may be fraught, as factionalism within the ruling Chama Cha Mapinduzi (CCM) is likely to remerge over the coming weeks as other party figures may seek greater influence.
Given this factionalism, elites within the CCM may attempt to attract loyalty from institution heads of the judiciary, intelligence, and security services by proffering them positions within government if their factions manage to capture power within the state.
Opposition response to President Magufuli’s passing is likely to be relatively inconsequential. The two major opposition parties may pursue divergent courses of action but have nonetheless been marginalized over the years and thus will have limited effect.
Any calls for the public mobilization of supporters are likely to fail, given their inability to organize and fears of suppression by security forces. The situation on the ground in Tanzania will also likely remain calm over the coming days.
Those operating or residing in Tanzania are advised to maintain vigilance and avoid the vicinity of gatherings as a general precaution due to political uncertainty.

Please be advised

In a televised address, Tanzania’s Vice President (VP) Samia Suluhu Hassan announced that President John Magufuli died in a hospital in Dar es Salaam on March 17. Hassan stated that Magufuli died of heart complications after being hospitalized at Dar es Salaam’s Jakaya Kikwete Cardiac Institute on March 6.
President Magufuli was reportedly last seen in public on February 27. Multiple opposition leaders had alleged that Magufuli was ill, potentially with COVID-19 and that he had sought treatment abroad. This remains unconfirmed.
Vice President Hassan announced that there would be a 14-day period of national mourning. As per constitutional protocols, VP Hassan is to be sworn in as President for the unexpired period of the five-year mandate won by Magufuli.
However, this process has not been confirmed by the government at the time of writing. Additionally, following consultation with the ruling Chama Cha Mapinduzi (CCM), a new VP will be appointed.
Following the announcement of President Magufuli’s passing, the opposition ACT-Wazalendo party issued a statement noting the loss for the Tanzanian people. The party also welcomed incoming President Samia Suluhu Hassan.
Furthermore, the main opposition Chadema party stated that it would hold a press conference at 17:00 (local time) on March 18, and would issue a statement on the matter following party discussions.
Sources on March 18 noted that the situation in Dar es Salaam remained calm, with traffic moving normally, albeit with a light security presence.

Assessments & Forecast

The transition process may be fraught, with tensions likely over new President Hassan’s status in CCM

The death of President Magufuli is highly significant and comes after he was not seen in public for more than two weeks. Furthermore, it is notable that Magufuli passed away only four months into his second term in office. Magufuli won controversial elections held on October 28, polls that he was always likely to prevail in given his dominance within the CCM, effective sidelining of the political opposition, and shrinking of political space nationally. More recently, Magufuli had been a vocal skeptic of COVID-19, urging Tanzanians to shun wearing masks while also denouncing vaccines as a Western conspiracy. VP Samia Suluhu Hassan had publicly supported Magufuli, often representing Tanzania abroad, but has been noted as being more amenable to dialogue. The fact that VP Hassan made the announcement of Magufuli’s passing is notable, given the general government’s aversion to scrutiny and doubts over whether constitutional protocol would be followed in the immediate term.
As per Article 37 of the Constitution, succession protocols are that the VP is sworn in for the remaining period of the five-year term. Following this, as per Article 40 guidelines, after consultations with the party of the President, the head of state shall propose the new VP. However, the new VP can only be sworn in after being confirmed by the National Assembly by obtaining a vote of no less than 50 percent of all MPs in Parliament. In this context, while the succession plan appears to be straightforward, it is likely there still remain concerns over the transition process, especially considering VP Hassan’s uncertain status within the CCM hierarchy.
While Hassan has been VP since 2015, the fact that she hails from Zanzibar is likely to cause friction within the CCM, given that Tanzania has never had a President from Zanzibar, and more broadly given the historically tense relations between the mainland and Zanzibar. Furthermore, given that President Magufuli had often pursued Christian-centric policies while in government, Hassan being Muslim may be an unpopular choice for Christian hardliners within the party. That said, there are reports that Hassan may be backed by CCM factions that continue to support former president Jakaya Kikwete, especially those factions with a strong Muslim presence.
FORECAST: In light of this uncertainty, it remains plausible that the transition process will be tense. Magufuli occupied a strong and especially centralized role and his absence could leave a significant gap. Even if Hassan is able to take power in accordance with the constitutional procedure, tensions are especially likely in the nominations for the new VPs, where MPs will attempt to lobby to allow favorable candidates to take the position. Within the CCM, it remains probable that factionalism, which was the inherent state of the CCM before Magufuli assumed power, will return.

Magufuli’s ascension to power enabled by CCM factionalism but later subverted by his centralization of power

Factionalism was especially prevalent in the CCM during the reign of President Kikwete from 2005-2015, wherein he struggled to exercise control over the CCM’s ruling coalition. Instead, Kikwete depended on a powerful mtandao, or network, to maintain power. However, this network fractured into a competing group, which he struggled to reconcile. Given these tensions, Kikwete adopted the most inclusive candidate selection procedure CCM has ever had, allowing all party members to participate, highlighting how the president was caught between various factions.
However, Magufuli’s ascension to power changed this dynamic, given that he was considered an outsider with no mtandao to speak of. His rise to power itself was a result of a complex sequence of intra-party tensions, where two major factions broke CCM rules and effectively knocked each other out of running for the presidency. Following this, Magufuli reversed the CCM dynamic, centralizing power over committees and agencies under his control both as President and, from mid-2016, as CCM Chairman. Magufuli accomplished this by limiting independent sources of political finance, along with wide-ranging party reforms allowing him to undermine rival factions within CCM and thereby reinforce his own power.
FORECAST: In the absence of a figure like Magufuli, there remains a high likelihood that factions within the CCM will re-emerge, with various leaders attempting to shore up support to challenge Hassan during the transition process. Given the paucity of information on CCM dynamics at the time of writing, it remains unclear which particular leaders may emerge as potential candidates vying for either the VP position or just greater power within the CCM. Just as Magufuli came to power as a relative outsider, there remains a possibility that another leader who may be unheralded may garner enough support to attempt to capitalize on the political instability. Furthermore, it remains plausible that supporters of Magufuli within the CCM will lobby for policies followed under the former president to remain unchanged.

A resurgence of divisions within CCM heightens the potential for jockeying for influence within state institutions, as the possibility of civil unrest remains muted

FORECAST: Given the likely resurgence of factionalism within the CCM, leaders who were sidelined or given less authority under Magufuli may seek to court influence with various state institutions such as the judiciary, intelligence, and security services. This strategy will allow competing factions to better position themselves in terms of their ability to influence both political and ground situations. While Magufuli had centralized all these institutions unto himself, faction leaders may aim to attract loyalty from institution heads by offering them positions within government if their factions managed to capture power.
However, this strategy is fraught, given the possibility that various important institutions allied to various competing factions may undermine the overall stability of the state, especially in the case of the military and the police. Given that Magufuli used the security services, and intelligence agencies to undermine party rivals and the opposition, thereby offering them a foothold in politics, there also remains a latent probability that powerful security elites may aim to use to leverage to their advantage, further entrenching securitization of the political environment and instituting a democratic backslide. That said, a military takeover of the government remains highly unlikely, given the military has traditionally adhered to civilian control of state institutions.
FORECAST: Given these conditions, the opposition response to Magufuli’s passing is likely to be relatively inconsequential. Both of the main opposition parties, namely the ACT-Wazalendo and the Chadema party, may take divergent stances. For instance, ACT-Wazalendo has called for the immediate installation of Hassan and cautioned against allowing a power vacuum to form. The Chadema party, at the time of writing, is yet to publicize its position on the transition process. However, it remains likely that Chadema will adopt a more aggressive stance as compared to ACT-Wazalendo. Chadema leader Tundu Lissu, who now resides in exile in Belgium, remains a strident critic of the Magufuli administration, who he claims was responsible for his assassination attempt in 2017. Given these conditions, the chances of opposition-led protests are dim, especially since the opposition parties remain weak and incapable of mobilizing supporters either through lack of ground coordination or the fear of suppression by security forces if demonstrations do arise.
FORECAST: The situation on the ground in Tanzania, and especially in Dar es Salaam and other major urban hubs such as Arusha, is likely to remain relatively calm. While small-scale gatherings of civil society activists who may call for greater democratic freedoms after Magufuli’s passing cannot be ruled out, precedent dictates that such gatherings are unlikely to cause any significant disruptions. Security forces, who were already loosely deployed to Dar es Salaam before the official announcement of Magufuli’s death, will likely not allow any public demonstrations or disruptions to official national mourning.

Recommendations

Those operating or residing in Tanzania are advised to maintain vigilance and avoid the vicinity of gatherings as a general precaution due to political uncertainty.
Travel to Dar es Salaam, Dodoma, and Arusha can continue while adhering to general security precautions regarding the risk of crime.
Avoid openly espousing political views or demonstrating affiliation to local parties, either in person or online, due to political tensions and a restrictive political climate.

Conflict with TPLF in Tigray Region likely to be prolonged, transform into insurgency, involve neighboring states – Ethiopia Analysis

Executive Summary

The ongoing military offensive against the Tigray People’s Liberation Front (TPLF) is being framed as a ‘rule of law operation’ to downplay the scale of the operation. However, given the TPLF’s entrenched position and capabilities, the conventional war is likely to devolve into a protracted insurgency.

The government’s alliance with Amhara militias particularly in disputed areas along the Amhara-Tigray border is likely to set a dangerous precedent. Given that land disputes are common across Ethiopia, the perception of tacit approval for these militias may prompt other conflicts over disputed areas.

The federal conflict with the TPLF also threatens to involve Eritrea, whose role thus far has largely been logistical or in self-defense. However, this restraint will likely be tested, particularly if the TPLF conducts further attacks on Eritrean locations or forces.

The conflict will result in a humanitarian crisis, with tens of thousands of Ethiopian refugees fleeing in Sudan. Sudan remains ill-equipped to deal with the strain on its system, heightening existing insecurity caused by arms proliferation, land disputes, and resource competition.

While the government has stated that the conflict is only against the TPLF and not ethnic Tigrayans, this nuance is likely to be lost as the conflict endures. Increased nationalistic sentiment and anti-TPLF rhetoric heighten the potential for violence against Tigray citizens.

Those operating or residing in Ethiopia over the coming days are advised to avoid all travel to Tigray Region as well as the Tigray-Amhara border region due to the ongoing conflict.

Introduction

On November 4, following months of simmering tensions, the federal government under PM Abiy Ahmed launched a military offensive that he later described as a “war” against the Tigray People’s Liberation Front (TPLF), which leads the Tigray Regional State government. The immediate trigger for the conflict was an alleged attack by the TPLF on the Northern Command of the Ethiopian National Defense Forces (ENDF) in the state capital of Mekelle and in other areas. However, tensions had become amplified after the TPLF held state elections on September 9, polls that the federal government called illegal. This appeared to escalate in late October after the federal government diverted program funds away from the state government and, at the same time, the TPLF refused to allow a newly-appointed deputy commander of the Northern Command to take his position.

Relations between PM Abiy and the TPLF have been strained since 2018 when Abiy was designated as the first ethnic Oromo PM in Ethiopia, essentially unseating the TPLF from the center of the government after they had ruled since 1991. Abiy later embarked on a raft of reforms, including the contentious dissolution of the then ruling Ethiopian People’s Revolutionary Democratic Front (EPRDF) coalition on February 4, 2019. Following this, the TPLF refused to join Abiy’s new ruling Ethiopian Prosperity Party (EPP), as the TPLF which has dominated politics in Ethiopia within the EPRDF, despite only constituting 6 percent of the population, felt increasingly marginalized. This appeared to culminate in the September 9 elections, as the TPLF regards the federal government as “illegitimate” because its constitutional mandate was supposed to end on October 5 after national polls slated for August were delayed due to the COVID-19 pandemic.

Current Situation

The House of Federation and Council of Ministers declared a six-month state of emergency in Tigray Region on November 4 and later approved the establishment of a transitional government. This followed statements by the federal government that the purpose of the operation is to disarm the TPLF and remove its leaders.

Sources citing internal UN documents indicate that the TPLF took control of the ENDF Northern Command headquarters in Mekelle and seized weapons from its armories, which partially verified the TPLF’s claims that the Northern Command defected.

TPLF leader Debretsion Gebremichael called for negotiations on November 8, though also stated that Tigray would defend itself until such time that talks take place. PM Abiy and other federal spokespeople have rejected calls for dialogue.

The TPLF repeatedly accused Eritrea of sending troops over the border to attack Tigrayan forces, which Eritrean officials have reportedly denied. Meanwhile, Sudanese officials and aid agencies have reported that over 27,000 Ethiopian refugees have crossed into Sudan, with thousands more expected in the coming days.

On November 13, the TPLF fired rockets toward the cities of Bahir Dar and Gondar in Amhara Region, causing damage to airport complexes in both cities. On November 14, the TPLF fired at least three rockets that struck Asmara, Eritrea. Both attacks were claimed by the TPLF.

As of November 18, the federal military offensive in Tigray Region has reportedly moved through western, northern, and southern Tigray toward Mekelle.

Assessments & Forecast

PM Abiy’s war against TPLF likely to result in protracted insurgency in Tigray Region

PM Abiy Ahmed gave a speech on November 8 framing the military intervention in Tigray Region as a ‘law enforcement operation’ to guarantee peace and stability and to bring the TPLF to justice, as the perpetrators of instability. By labeling the military offensive as a means to re-establish law and order, PM Abiy is likely attempting to downplay the scale of the military activity in Tigray despite not giving any timeline for the operations, along with the political and military difficulty in rooting out the TPLF from the region. This effort is further aided by the communications blackout that remains in place in Tigray and the government’s efforts to consolidate information releases into select federal sources. While PM Abiy and the federal authorities have repeatedly insisted that the ENDF has been successful “on all fronts”, the lack of independent information makes all claims difficult to corroborate.

Such corroboration is needed, as the TPLF commands a regional paramilitary force that is led by the former army generals, while also commanding militias containing war veterans of the conflict against Eritrea in 1998-2008. Furthermore, even a partial defection by the Northern Command could aid the TPLF’s defense against the ENDF offensive. The presence of significant Ethiopian military hardware in Tigray Region, intended for the defense of the country against Eritrea, has given the TPLF significant resources. This was evidenced by the use of rockets against Bahir Dar and Gondar in Amhara Region as a warning to halt the advance in Tigray.

With that said, the ENDF does appear to be moving its advance forward and pushing the front lines increasingly toward Mekelle. FORECAST: In the coming days and weeks, the ENDF is likely to continue its success in moving further into Tigray, reaching the state capital Mekelle, with the TPLF likely withdrawing from the major urban centers and engaging in guerilla tactics against federal forces. This is significant, as the TPLF is well-versed in these tactics, as witnessed by the guerilla war to topple the ‘Derg’ government in 1991. In this sense, while the ENDF may capture major urban centres in Tigray including Mekelle, the rugged terrain of the countryside and the TPLF’s experience in waging an insurgency provide a platform for a protracted and costly war. This insurgency effort is likely to be further aided by the call to all ethnic Tigrayans to defend themselves against the federal government.

Conflict with TPLF risks violence expanding southward, with fragile internal cohesion further likely to be strained

Given the specter of a prolonged insurgency against the TPLF, albeit with the ENDF controlling the major urban centers, the government will need additional troops to secure the countryside. In this context, the government is likely to revert to redeploying troops placed in other restive areas of the country such as the Southern Nations, Nationalities, and Peoples’ Region (SNNPR), and Oromia Region to the Tigray theater. This also appears to include troops recalled from Somalia, which are intended to act as a buffer against al-Shabaab militants along the border. Such actions will likely stretch ENDF capabilities, especially given that many areas of the country continue to witness ethnically driven violence. FORECAST: In this scenario, the absence of ENDF troops in other volatile regions of Ethiopia heightens the potential for attacks by ethnic militias against minorities in various states, which could then be countered by these minorities forming self-defense groups to protect their neighborhoods.

Given these conditions, the government will likely come to rely more heavily on ethnic Amhara militias to preserve the stability in the Tigray Region, especially in the disputed areas in western Tigray. The status of these disputed areas is likely to draw Amhara Region’s interest as well as represent a potential trigger for wider grievance or conflict. Amharas living in areas bordering Tigray Region claim the Welkait Woreda illegally annexed by the TPLF when it assumed power in 1991, for example. This longstanding dispute likely spurred greater Amhara involvement in the federal offensive in Tigray, with Amhara Region troops as well as local Amhara militias operating in coordination with the ENDF in its operations in these territories. These militias will likely use the targeting of Bahir Dar and Gondar to galvanize local citizens and further spur recruitment efforts against the TPLF.

However, the use of Amhara militia in apparent tandem with ENDF operations is likely to set a dangerous precedent. While it is likely that the ENDF now holds the disputed lands such as Wolkait, with other efforts ongoing to push through the Raya Woreda, also claimed by Amhara, the perception of the role of Amhara will heighten the perception of PM Abiy’s acceptance of Amhara nationalism. Such a dynamic is likely in areas such as Oromia Region, where leaders have long accused Abiy of favoring the Amhara over the Oromo. FORECAST: The perception that the federal government has allowed Amhara militias to recapture their disputed territory may embolden other states to use their own militia forces to raid and attempt to retake disputed regions. In Tigray, the TPLF will also likely use the presence of Amhara militias in disputed land to further bolster recruitment efforts against both federal and Amhara forces.

FORECAST: Given that nearly every state in Ethiopia claims land in neighboring states, this type of escalation could lead to pockets of violence across the country. If pressured by the Abiy administration to halt, other state governments may allude to the appearance that the federal government has tacitly accepted the Amhara role in Tigray, which further complicates the efforts to curb violence. Additionally, given that the stated goal of the military offensive is to remove the TPLF and install a provisional Tigray transitional government, the fact that Amhara militias have appeared to capture long sought after land is likely to act as an impediment, as the Amhara government is unlikely to allow a new Tigray government to retake these lands. This will likely raise objections among the ethnic Tigrayans, who will already be inclined to view the transitional government as false or weak and continue to support the TPLF, which has commanded strong support in the state since they came to dominate the national government in 1991 and made Tigray Region the richest and most influential state in Ethiopia.

Role of Eritrea in conflict with Tigray likely to provoke tensions within Ethiopia

Another dynamic in the war against the TPLF is the perceived and actual role of Eritrea during the conflict. The TPLF and Eritrea have been at odds with each other since Eritrea seceded from Ethiopia in 1993. Ethiopia, then led by the TPLF, fought a war with Eritrea from 1998-2000, which is said to have left 100,000 people dead. However, relations between Asmara and Addis Ababa improved considerably after PM Abiy came to power, and signed a peace deal with Eritrean President Isaias Afwerki in 2018. However, Tigrayan leaders remained highly skeptical of the peace deal, which included a promise by PM Abiy to honor a 2002 ruling on the demarcation of the border between Eritrea and Tigray, where the town of Badme was rewarded to Eritrea but remained and continues to remain under Ethiopian control.

Eritrean involvement in the conflict thus far has remained muted, with Asmara mainly acting in a defensive capacity in preventing TPLF fighters from fleeing north, as the ENDF advances northward. That said, the TPLF has accused Eritrea of shelling Tigrayan positions along the border, which both Eritrea and Ethiopia have denied. However, the Ethiopian government has made statements noting that ENDF soldiers, who were allegedly wounded in TPLF attacks, crossed the border into Eritrea before regrouping and counter-attacking. This is a sign that Eritrea is at least cooperating with Ethiopia, and is likely tacitly assisting with medical and logistical support on the frontlines. The TPLF rocket attack on Asmara was likely a response to this perceived involvement in the conflict. However, it also remains possible that the TPLF attacked Eritrea as a means to galvanize the Tigryan populace by propagating the narrative of the TPLF defending Tigray Region from both internal and external aggression.

FORECAST: In this context, it is likely that Eritrea will likely remain uninvolved in major combat operations, despite TPLF claims of PM Abiy and President Isaias working together to crush the TPLF. Asmara’s likely pragmatic stance is likely due to the fact that despite the peace deal with Ethiopia, a protracted civil war will weaken Ethiopia and increase its reliance on Eritrea in the process. Furthermore, following the 2018 peace deal, the UN lifted sanctions on Eritrea, which means that President Isaias will likely be wary of openly sending troops into active combat, and risk the reimposition of sanctions. However, given the rocket attack on Asmara, the Eritrean government’s restraint will likely be tested if further such attacks continue. In this scenario, Eritrea’s involvement in the war would further destabilize an already precarious conflict and open up another front in the fighting.

Conflict against Tigray to adversely affect Sudan with increased refugee flows, given porous frontier

Given the TPLF is unlikely to escape northward towards Eritrea, and the conflict will likely metastasize into an insurgency, TPLF elements will likely seek refuge along the border with Sudan. While Sudanese authorities closed the border on November 5, the frontier is approximately 775 km and has long been a hub for smuggling. This partially explains why the ENDF targeted western Tigray at the start of the campaign and seized airports and territory along the border, seeing this as a way to cut off TPLF escape. While these actions will likely make it more relatively difficult for the TPLF, it will be difficult to fully secure the border, particularly in the long term. FORECAST: Thus, the TPLF is likely to utilize the frontier with Sudan to procure weaponry and other supplies for their insurgency campaign against the government. While Ethiopia will likely press Sudan to increase patrolling at the border to prevent smuggling, these efforts may not be sufficient and the border will serve as some form of pressure release for the TPLF.

Furthermore, the conflict in the Tigray Region is poised to be a humanitarian disaster for both Ethiopia and Sudan. The border with Sudan will remain a gateway for fleeing civilians and potentially combatants, with Sudanese and UN authorities saying that they are preparing for approximately 100,000 refugees over the coming weeks. According to UN reports and local Sudanese sources, the majority of the crossings are occurring near Hamdayat in Kassala State, with Luqdi in Gedaref State being another major point of refugee inflows. FORECAST: The displacement will cause immense strain on Sudanese authorities who lack the resources to deal with such a massive inflow of people, in rural areas with lack of infrastructure. Further exacerbating the crisis is the fact that both Kassala and Gedaref states have witnessed intense ethnic conflicts, often over land disputes and resource competition, both internally as well as with Ethiopian farmers across the frontier. Access to land and resources are further likely to be further compromised by the refugee crisis.

PM Abiy likely to consolidate power, persecution of ethnic Tigray likely to intensify

Within days of the launch of the offensive, PM Abiy replaced his army chief and reshuffled his entire security cabinet in what the government termed as a regular change of staff. While initial reports sought to portray the replacement of the army chief as a sign of dissension within the ranks of the national security apparatus, it is notable that most of the individuals were given different responsibilities within the government hierarchy and not demoted, with few exceptions. This is likely a reflection of Abiy staffing key positions with people he regards as trustworthy and capable in handling the Tigray offensive, while also keeping the security hierarchy relatively stable. For example, Temesgen Tiruneh resigned from his post as President of Amhara Region and was appointed as the intelligence chief, likely because he is a known confidant and ally of the PM.

However, PM Abiy’s consolidation within the security establishment, with the appointment of trusted aides runs the risk of the government disregarding any dissenting voices, and concern over the effect of the war on internal cohesion. FORECAST: The government is likely to continue seeking to portray complete support for the ENDF and its operations in Tigray by organizing additional pro-government demonstrations, events, and blood drives, as has been seen across the country. However, these activities are propped up by the fact that the government has arrested some of its most strident critics, especially in the Oromia Region, where opposition politicians such as Jawar Mohammad and Eskinder Nega remain and will continue to remain imprisoned or under house arrest in the coming months. Furthermore, the government’s suppression of the press will allow the administration to portray public support for the Tigray operations, while the internet blackout in Tigray allows the government to project its battlefield successes.

FORECAST: In Addis Ababa, the government and the security agencies will likely continue with the arrests of TPLF leaders and ethnic Tigray linked to the party. Security agencies will also likely periodically publish information about raids conducted wherein the government uncovered large caches of weapons, they alleged were to be used by TPLF elements to cause insecurity in the city. However, at the time of writing, the TPLF has not demonstrated any capability to conduct large-scale attacks in Addis Ababa, the potential for disgruntled TPLF elements or supporters to conduct small-scale incidents such as the throwing or planting of grenades as witnessed on November 11, and November 14.

FORECAST: More broadly, while PM Abiy has stated that the war in Tigray was aimed specifically against the TPLF and not the ethnic Tigray, this nuance is likely to get further ignored over the coming months. Multiple reports have indicated that ethnic Tigray working within the government have been relieved of their positions, while the government has also sought to remove Tigray security officials from positions of power within regional organizations. These assessments are bolstered by the African Union’s sacking of its head of security on November 11, after a memo from the Ethiopian defense ministry questioned the ethnic Tigray officer’s loyalty to Addis Ababa. This perceived sense of persecution by the government is likely to filter through into other areas of the country, leading to a heightened potential for attacks on ethnic Tigray by majority communities. Ultimately, the conflict with the TPLF will likely herald entrenched insecurity within Ethiopia over the coming weeks and months.

Recommendations

Those operating or residing in Ethiopia over the coming days are advised to avoid all travel to Tigray Region as well as the Tigray-Amhara border region due to the ongoing conflict.

Those in Tigray Region are advised to minimize all movement. Consider contingency and evacuation plans when possible.

Travel to Addis Ababa may continue while maintaining heightened vigilance in crowded areas due to the high risks of non-violent personal property crime.

Those operating or residing in Oromia Region’s West Wollega Zone are advised to maintain heightened vigilance over the coming days and be prepared to comply with additional or sudden security measures and checkpoints.

Those operating in Ethiopia and particularly in Addis Ababa are advised to consult with us for support at [email protected] or +44 20-3540-0434.

Political, economic, health crises to be exacerbated by August 4 explosion at Port of Beirut – Lebanon Analysis

Executive Summary

On August 4, a large-scale explosion occurred in Beirut, which was reportedly caused by the ignition of ammonium nitrate that was stored at the Port of Beirut. The incident caused mass casualties, prompted significant unrest in the city, and fueled broader widespread anti-government sentiments against alleged endemic state corruption and incompetence.

Against the backdrop of a long-term economic crisis, the incident will force Lebanon to seek external aid, which will have major conditions attached to it that Lebanon may not be able to meet. Additionally, this will alter the geopolitical dynamics of the country.

The incident led to the resignation of the government and will have immense political ramifications for Lebanon, including carrying the risk of a long-term political vacuum, which will trigger further violent unrest, sectarian tensions, and societal polarization.

It is advised to avoid nonessential travel to Beirut at the current time, in light of the increased risk of civil unrest and political instability.

Please be advised

August 4 Explosion

On August 4, a large scale explosion occurred at the Port of Beirut, reportedly caused by 2,750 tons of a chemical compound called ammonium nitrate that was stored in a warehouse at the port and caught fire, before exploding.

The explosion destroyed many buildings in the vicinity of the port and caused widespread damage to much of Beirut.

At the time of writing, the explosion has reportedly killed 220 people and wounded over 6,000 more.

Reports citing Beirut Governor, Marwan Aboud, indicate that approximately 300,000 people were made temporarily homeless by the explosion and that the estimated losses related to the incident may reach 10-15 billion USD.

The ammonium nitrate had arrived in Beirut in 2014 and port officials reportedly made multiple requests for the material to be removed, to no avail.

Domestic Reaction

In the immediate aftermath of the incident on August 4, Lebanese Prime Minister (PM) Hassan Diab stated that he will not “rest until we find the person responsible for what happened.” On August 6, 16 port officials were reportedly apprehended as part of the investigation.

On August 8, Diab announced that Lebanon “cannot get out of this crisis” without early parliamentary election.

On August 7, Lebanese President Michel Aoun indicated that the “cause [of the blast] has not been determined…there is a possibility of external interference through a rocket or bomb”.

On August 7, Hassan Nasrallah, the leader of the Hezbollah militant group, made a televised address in which he categorically denied that the Shiite organization had stored any weapons or explosives at the Port of Beirut.

He added that “if you want to start a battle against the resistance [Hezbollah] over this incident, you will get no results”. He attacked “liars who want to…provoke a civil war” and claimed Hezbollah’s attention is more focused at Israel’s Haifa Port, than Beirut Port.

Since the August 4 explosion, unruly anti-government protests have been held in Beirut. Most notably, on August 8, thousands of demonstrators gathered in Martyrs’ Square and staged mock hangings of President Aoun, Parliament Speaker Nabih Berri, and Hezbollah’s Nasrallah.

The protesters temporarily occupied the buildings of the Economy, Energy, and Foreign ministries, the last of which they claimed as the “seat of the revolution”. During violent clashes that took place at the protest, a police officer was killed and 728 protesters were wounded.

Protesters chanted “all of them, means all of them” and “resign!”, with reference to the removal of the entire political class; “revolution”; and some called Hezbollah “terrorists”.

On August 10, the PM announced his resignation and that of his cabinet. He reportedly stated that “corruption is greater than the state”, attributing “chronic corruption” as the cause of the explosion, and added that the “political class is using all their dirty tricks to prevent real change.” Lebanese President Michel Aoun accepted his resignation.

Background

Prior to the explosion, Lebanon was already experiencing a severe, long-term national crisis on several fronts. The economy has been in a dire state for a prolonged period. Public debt in the country has reached approximately 170 percent of GDP, rendering Lebanon one of the most indebted states worldwide. In March, the government defaulted on 1.2 billion USD of debt. In July, the Labor Minister, Lamia Yammime Douaihy, reportedly announced that the unemployment rate had risen above 30 percent, up from 11.4 percent in 2019. The local currency, the lira, has reportedly lost over 80 percent of its value since October 2019. This has led to substantial inflation, including to essential goods such as food, which as of July, had witnessed price increases of 200 percent.

There has also been profound political instability and civil unrest in Lebanon, particularly over the past year. In October 2019, a proposed tax on the use of a cellular call application prompted major nationwide protests. The demonstrators, harboring multiple grievances, called for an end to perceived endemic state corruption and incompetence, and “new era” of transparency and accountability; significant reforms to counter the mismanagement of the economy and poor quality or lack of public services, especially waste removal; the resignation of the entire ruling political class, as illustrated by the “all of them, means all of them” chants; and in some cases, radical reform that replaces the sectarian-based political system with a renewed non-sectarian method that focuses on Lebanon as a whole.

On October 29, 2019, as the anti-government protest movement gained momentum, former PM Saad Hariri announced his resignation. He was replaced in January 2020 by Hassan Diab. In accordance with the Lebanese constitution, Diab is a Sunni Muslim. His candidacy as PM was supported in the Lebanese Parliament by the Hezbollah-allied March 8 Alliance, but failed to receive the support of Sunni parties. He presented the new cabinet as technocratic that would serve the interests of the entire populace of Lebanon. However, the new ministers were widely perceived by the protest movement as continuing to serve sectarian interests. While small-scale demonstrations have continued, the protest movement has subsided in recent months, in part due to COVID-19-related restrictions on gathering.

Assessments & Forecast

Explosion at Port of Beirut to exacerbate pre-existing economic crisis over coming months, force political leaders to seek external support

Over recent months, the aforementioned economic downturn was further aggravated by the COVID-19 pandemic. The global health crisis has had a very adverse impact on the economic situation in Lebanon, which imports approximately 80 percent of its goods. The economy is highly dependent on the services industry, tourism, and remittances from the Lebanese diaspora, which is made up of approximately double the number of citizens currently residing in the country. All of these sectors and sources of income have been majorly hampered by the pandemic due to restrictions on travel and business continuity, which have prompted many financial institutions, companies, and organizations to sever payments and contracts.

This has been further compounded by the severe devaluation of the Lebanese currency, which has rendered it near-impossible for many import-dependent companies to stay afloat. Other sectors of the domestic economy have also been affected as a result, which negatively impacted the wider economy and level of unemployment. For instance, as a measure of economic activity, nearly 1,000 restaurants have reportedly been forced to close during recent months, translating into 25,000 job losses in this sector alone. Taken as a whole, 3.25 million people, amounting to approximately 65 percent of the population, have reportedly fallen into poverty as a result of the prevailing economic conditions in Lebanon. This has manifested in widespread hunger and food insecurity, which PM Diab himself raised alarms about in May, stating that the “coronavirus is pushing Lebanon toward a major food crisis”. Meanwhile, amid dwindling fuel supplies, the country has additionally been experiencing widespread power outages over recent months.

Against this backdrop, the massive explosion at the primary port in a country that imports the majority of its goods is liable to have a profoundly negative impact on its economy and provision of basic goods to citizens. In the short-term, Lebanon will be compelled to rely on other points of entry, such as the Port of Tripoli, for the import of essential goods. These ports have a lower capacity than the Port of Beirut, which will reduce the quantity of goods entering the country as well as the speed at which they arrive. This, in turn, is likely to create further shortages of basic goods and ramp up prices, which will pose more challenges for local residents seeking affordable access to basic goods and services. The situation will be further aggravated by the fact that the August 4 explosion destroyed Lebanon’s sole grain silo, which was located at the Port of Beirut. This issue will become more acute by the government’s reported failure to maintain grain reserves for use in an emergency, which will further aggravate food insecurity in the country.

The longer-term reconstruction process will require substantial capital investment, which Lebanon, already highly indebted, does not possess. This renders any rehabilitation highly contingent on external finance and implementation. Over recent months, in an attempt to revitalize the economy, the government had conducted negotiations with the International Monetary Fund (IMF) to secure a 10 billion USD aid package. The talks with the IMF had stalled prior to the explosion, largely due to Beirut’s failure to satisfy the IMF that it was capable or willing to enact financial reforms to address corruption and budgetary inefficiency. FORECAST: Given this precedent, and a previous 11 billion USD aid package that was pledged to Lebanon at an April 2018 conference in Paris on the condition of reforms that were not fulfilled, the reconstruction process is likely to be drawn out. This will be exacerbated by political and geopolitical tensions pertaining to Lebanon’s preferred affiliation with Western-aligned institutions and states or those that are broadly anti-US, such as Russia, China, and Iran, which backs Hezbollah. As a result of these deliberations and the likely complications in implementing reforms, the heightened levels of uncertainty in Lebanon will render the creation of jobs or large-scale reforms to public services even more difficult.

Although many states throughout the world have offered and delivered humanitarian relief in the immediate aftermath of the disaster at the port, as illustrated by a France-led international summit that raised 297 million USD, the more substantial aid required to rebuild large parts of Beirut and ultimately revamp the economy will require tens of billions of dollars, as highlighted by the Beirut governor’s estimate that the explosion alone caused up to 15 billion USD of damage. FORECAST: In the absence of aid, the economy will remain in recession and plunge further into debt, translating into elevated poverty and unemployment. This will also be likely caused by the perception that Lebanon is fundamentally, both politically and economically, unstable, which will complicate any efforts to attract external investors or tourists, when travel and business operations resume following the COVID-19 pandemic.

FORECAST: Even in the event that Lebanon does successfully secure foreign aid, which will provide a significant boost to the economy and generate some growth, it will still face substantial economic challenges over the coming years. Given the precedent of the 2018 conference in Paris, wherein 10.2 billion of the 11 billion USD aid package was reportedly slated to be granted as a loan, any potential assistance over the coming months is also likely to be in loan form, which will add to Lebanon’s rising levels of external debt. Moreover, the aid will be conditioned on the implementation of financial reforms to the banking and energy sectors, as well as a combination of spending cuts and tax increases in order to reduce the budget deficit. Such reforms have proven extremely difficult in the past due to both opposition by state institutions to make reforms and civil unrest by local citizens in condemnation of austerity measures. Furthermore, although the inflow of capital into Lebanon will help to shore up foreign currency reserves and bolster the state’s ability to provide some services, without measures to strengthen the local currency, the purchasing power of Lebanese companies and citizens will remain limited. Overall, even a potential aid package, which will have multiple conditions attached to it, presents no guarantee of an economic recovery.

Widespread anger, elevated anti-government sentiments to persist, resulting in civil unrest, prolonged political instability over coming months

Significant portions of the Lebanese population perceive the explosion at the Port of Beirut as symbolic of the endemic corruption, mismanagement, and incompetence of their political leadership. The presence of a highly incendiary chemical at the country’s main point of entry for over six years, seemingly without professional or government supervision, which has had catastrophic consequences, has enraged local residents. This is evidenced by the large-scale protests, the mock hanging of prominent political leaders, and calls for a “revolution”. FORECAST: Given that the rehabilitation process in Lebanon is likely to take years to implement, anti-government sentiments are likely to remain high for the foreseeable future, even with a potential change of the incumbent government. Over the coming weeks, in an attempt to capitalize on the ramification of the explosion to drive reforms, further large-scale protests and widespread unrest are likely to take place, particularly in Beirut. However, even when tensions subside, the absolute lack of trust in the national leadership harbored by many citizens, alongside the profound economic crisis, render it likely that protest activity, often accompanied by violence, will continue periodically. This will be exacerbated if the protesters perceive security forces to be employing excessive force.

As the anti-government protest movement strengthens, it is likely that anti-Hezbollah rhetoric at the demonstrations will become more prominent. This has already been evidenced by the chants against the Shiite group since the wave of protests in October 2019, which have continued during the current protests. This was also demonstrated by the extremely rare and notable decision by protesters to stage a mock hanging of an effigy of Hezbollah’s Nasrallah in the center of Beirut. FORECAST: However, the Iran-backed militant organization continues to harbor significant influence and control in Lebanon, especially among the Shiite community that makes up approximately one third of the population. As witnessed during the anti-government protests in 2019, as protesters amplify calls for Hezbollah to disarm and relinquish control over state institutions, the latter’s supporters will likely respond in kind by launching a counter-protest movement. This movement will likely not defend the current government due to its widespread unpopularity. However, it will defend Hezbollah against accusations and demands from anti-government protesters as well as seeking to protect the current political status quo that yields influence to Hezbollah. Thus, a deep polarization of Lebanese society can be expected over the coming months as tensions rise and accusations are hurled at different sectors of society and their respective leaders.

A key part of these tensions will be the degree to which Lebanon’s new government will be willing to lead a comprehensive investigation into the explosion that is perceived by citizens as independent of political interests. In light of the citizens’ significant lack of trust in the political leadership, any inquiry by Lebanese authorities is likely to be met with significant cynicism and attempt to absolve responsibility. The leadership’s narrative would likely be discarded by many citizens, which will give rise to alternative versions of the events that resulted in the explosion and thus more instability. As a result, there have been calls from both within Lebanon and by external actors for there to be an international investigation into the events. However, this is likely to be rejected by many government-linked elements in Lebanon, particularly Hezbollah, due to the perceived international interference in Lebanese domestic affairs and the potential for accusations to be made against the Shiite group regarding its broader alleged placement of explosives and weapons in civilian installations. In either scenario, the investigation is liable to prompt significant political tensions and instability in Lebanon.

The explosion has already had a major impact on the political landscape in Lebanon, as illustrated by PM Diab’s resignation and call for early parliamentary elections, which was one of the key demands of the anti-government protest movement. Thus, for at least the months leading up to the potential elections, the focus of the movement will be trying to affect the potential election’s results rather than broadcasting broad anger against the current government. However, new elections would also be a potential trigger for major political instability for two reasons. Given the precedent of Lebanese elections, in the months following the vote, a long, drawn out process will take place in order to form a viable coalition government that can command sufficient support in the parliament. This is illustrated by the most recent election that took place in May 2018, and only yielded a government nine months later. Second, due to Lebanon’s sectarian system, wherein the Speaker of the Parliament must be a Shiite, the Prime Minister a Sunni, and the President a Christian, as well as the allocated share of the parliament between the country’s various sects, there are inherent obstacles to radical political change, which is desired by protesters. This built-in system is liable to trigger renewed sectarian tensions in Lebanon and potentially sectarian-motivated violence, as will be discussed in the next section.

Hezbollah’s anti-US, anti-Israel rhetoric to increase in attempt to shift blame to external adversaries, liable to increase sectarian issues

As discussed before, the protesters’ anger at the political establishment has either included Hezbollah (“all of them, means all of them”) as part of broad dissatisfaction at systemic corruption or has specifically targeted the Shiite group (chants of “terrorists”). Hassan Nasrallah’s initial reaction to the incident in which he attacked “liars who want to…provoke a civil war” and attempted to absolve the Shiite group of responsibility for the explosion by denying the presence of explosives at the port suggests that the Lebanese militant organization, which is a part of the national leadership, is under pressure at the current juncture. Nasrallah’s reference to Haifa Port amid rising anti-Hezbollah sentiments following the explosion is part of the group’s effort to portray itself as the “resistance”, and by extension, an attempt to detach itself from the ruling political class and its perceived mismanagement of state affairs.

As previously mentioned, the Shiite group continues to harbor influence among significant segments of the Shiite community, as well as parts of the non-Shiite sector. These elements adhere to Nasrallah’s narrative of events and are likely to reject any accusation of wrongdoing by the group in the lead-up to the explosion or condemnations of its border militant activities. However, in the likely scenario that the economic situation deteriorates further and pressure increases on the government, and in turn, Hezbollah, the Iran-backed militant group may seek to divert attention from the domestic crisis by attributing the US and Israel with blame for Lebanon’s demise.

FORECAST: With regards to the former, Nasrallah will likely invoke Washington’s sanctions against Hezbollah and its allies, Iran and Syria, (recently exacerbated under the 2019 Caesar Syria Civilian Protection Act) as the source of Lebanon’s woes. This, in turn, may prompt an increase in anti-US sentiments among some segments of the populace, which, as part of the polarization process, will potentially push the anti-Hezbollah camp to align more with the West. Meanwhile, with regards to Israel, the current explosion has de-escalated recent tensions surrounding an anticipated retaliation by the Shiite group for the alleged Israel Air Force (IAF)-perpetrated killing of a Hezbollah fighter in Syria on July 20. This is likely a short-term de-escalation due to the circumstances, as the Iran-backed militant group will not seek to be perceived as further aggravating Lebanon’s crisis in a potential armed conflict with Israel. Over the coming months, however, should the anti-Hezbollah movement grow stronger and undermine the Shiite group’s hold on the country, it may seek to raise its profile as a “resistance” movement defending Lebanon’s sovereignty by acting against perceived hostile external threats that are “responsible for the country’s plight”, namely Israel.

Hezbollah is also known to leverage the significant control that it exerts at state institutions for its own interests, especially during periods of crisis. For instance, during the coronavirus, the Shiite group has reportedly taken advantage of its major influence at the Ministry of Health, where it nominated the minister, to bolster its support among the broader Lebanese populace. Hezbollah effectively mobilized approximately 25,000 personnel, including physicians, nurses and medics, in the fight against COVID-19. It also reportedly dedicated resources to the preparation of hospitals and medical centers. FORECAST: Thus, Hezbollah may seek to capitalize on the current crisis to improve its reputation among the Lebanese populace as an organization promoting welfare.

Explosion at Beirut Port to exacerbate health crisis amid global COVID-19 pandemic

Even prior to the explosion at the Port of Beirut, the economic crisis was having an adverse impact on Lebanon’s health infrastructure. Reports from July 7 indicate that, due to the lack of electricity and resources, private hospitals in Lebanon were forced to reduce operations to emergency procedures only, including to those requiring kidney dialysis and cancer treatments. Moreover, Rafik Hariri University Hospital, the primary care center for COVID-19 patients, was compelled to turn off air conditioning units in its administrative areas to reduce power use. Other hospitals were reportedly forced to rely on generators to maintain a power supply.

FORECAST: Thus, the blast at the Port of Beirut, which in itself caused major damage to a nearby hospital, will have a substantial impact on Lebanon’s ability to provide healthcare. The treatment of thousands of injured individuals from the blast, many of whom will likely require long-term care, will put additional pressure on the already strained healthcare system over the coming weeks and months. These patients will require medication and other healthcare supplies that will need to be imported from abroad, which will also be complicated by the immense damage to the port. Meanwhile, the aforementioned lack of food security and homelessness in the capital and its surroundings, which will only be exacerbated in the coming weeks and months, will also likely cause disease and illness. This will also place the country’s medical infrastructure under further pressure to function.

FORECAST:This will be compounded further by the likelihood of a COVID-19 outbreak in the country due to crowding, prolonged periods at hospitals where coronavirus patients are present, internal displacement of citizens to other areas of the country who may transmit the condition, and the inaccessibility to various types of needed equipment and supplies. Overall, the August 4 explosion will have a major impact on the already struggling healthcare system in Lebanon, including in the private sector. This will also trigger anger and further grievances among citizens, leading to a general sense of instability in the country.

Recommendations

It is advised to avoid nonessential travel to Beirut at the current time, in light of the increased risk of civil unrest and political instability. This is especially the case in the capital’s southern suburbs, including Dahiyeh neighborhood, in light of the potential for militant attacks, spontaneous Hezbollah checkpoints, and civil unrest.

Due to instability, it is advised to avoid all nonessential travel to Lebanon’s outlying areas, particularly near the Syrian border, the Bekaa Valley, the area south of the Litani River, and Palestinian refugee camps. In such areas there remains an increased risk for sectarian-related attacks and abductions targeting foreign nationals as well as local Lebanese residents.

In light of current reduced capacity of local medical treatment facilities, it is advised to prepare a contingency plan for medical evacuation to nearby locations where appropriate medical care can be provided, such as Cyprus.

It is advised to maintain heightened vigilance in the cities of Tripoli, Hermel, Baalbek, Arsal, Tyre, and Sidon.

Travelers are additionally advised to keep identification and travel documents on their persons at all times, due to the increasing prevalence of Lebanese military or Hezbollah checkpoints in Beirut. When coming in contact with a security checkpoint, comply with the instructions of security personnel, regardless of their affiliation, avoiding behavior which may be viewed as threatening.

Police statistics indicate violent, opportunistic crime to pose major threat within London following easing of COVID-19 lockdown – UK Analysis

Executive Summary

Police have warned of a significant increase in violent crime in London as lockdown measures ease.

Met Police statistics released in July show increases in drug offenses, knife crimes, and racist hate crimes in June following the easing of restrictions.

Opportunistic and violent crime is likely to be a major risk to those operating or residing in London over the coming months

Travel to London may continue while maintaining heightened vigilance for the expected increase in local criminal activity over the coming months.

Current Situation

Since COVID-19 related lockdown measures have been implemented in London, the Metropolitan Police (Met) have warned of marked increases in violent crime once lockdown measures ease. Police have warned of an increase in knife crime in London and a general increase in gang-related crime across the UK.

London Crime Statistics – January until June

Knife crime increased in June by 28 percent compared to May. Knives have increasingly become the preferred method to settle scores between gangs, carry out opportunistic robberies, assaults, gang initiations, intimidations, and homicides. Youths are also often paid to carry out certain activities. Overall, knife crime gradually decreased from January until April. Although they have since increased, the June numbers remain below the six-month average. Newham recorded the highest number of knife crimes followed by Haringey in the past six months.

Although thefts remained below the six months average, they rose by 28 percent in June compared to May. Burglaries targeting residences and businesses steadily increased by 11 percent in June, however, remain below the six months average. Westminster is the worst affected by burglaries targeting businesses while the boroughs of Barnet and Enfield recorded the highest number of offenses against residential properties.

Drug offenses, which include possession, as well as trafficking, rose in May by 26 percent before dropping in June by 28 percent, although was still up 15 percent from June 2019. In particular, the borough of Westminster recorded the highest number of arrests for drug trafficking. During the lockdown, local-level drug dealing evolved to adopt innovative tactics to avoid attention. Instead of dealing on the streets that would have risked being flagged by passing patrols, gangs resorted to taking orders on social media, dropping off the drugs in letterboxes via couriers, or conducting drive-by sales.

According to the Met, racist and religious hate crimes, which include physical assaults, verbal abuse, and incitement to hatred and cover crimes against the LGBT community, Islamophobia, and anti-Semitism, increased by over 80 percent between April and June. Westminster followed by Southwark, Lambeth, and Hackney were among the worst affected boroughs. These have sharply increased by 51 percent in June compared to May and are well above the six months average.

Notable Criminal Incidents

On July 2, The National Crime Agency cracked a secret communications system used by organized crime groups to trade narcotics and weapons, called EncroChat, in a transnational operation with French and Dutch police, and Europol. The operation led to 746 arrests in the UK, including two law enforcement officers. Large amounts of cash, narcotics, and weapons were seized.

On June 27, two individuals were stabbed in Clapham Common near a kosher bakery during the evening hours (local time). The incident occurred during an illegal street party against COVID-19 restrictions in the area.

In June, the Black Lives Matter (BLM) protests in London recorded unrest and clashes between BLM protesters and opposing far-right groups and the police. More than 100 people were arrested at the June 13 rally on charges of violent disorder, assault of officers, possession of an offensive weapon, and possession of drugs.

Assessments & Forecast

Lockdown measures significantly shifted crime trends, with easing seeing sudden increase and return to previous levels

As knives became the preferred weapon for a variety of criminal activities due to the easy availability and concealment of the weapon, the aforementioned statistics are directly related to the effects of the lockdown. The steady increase in knife crime is likely due to individuals adapting to the ‘new normal’ as lockdown measures are gradually eased, given that previously, the drop in people being outdoors, especially at night, increased the risk for gang members to operate outdoors, immediately being considered suspicious or open to police checks for breaking lockdown. That individuals were allowed outdoors in groups of up to six people and congregate in public spaces such as gardens and other private outdoor spaces from June 1 supports the assessment as it allows for criminals to again operate with reduced suspicion.

The change in rates of thefts and burglaries is directly dependent on the lockdown measures as they tend to be more opportunistic in nature, with individuals spending more time at homes. Given that major decreases in thefts targeting businesses and residences were recorded in April, when London was under a strict lockdown and saw a heightened police presence on the streets, supports the assessments and as curbs on movement are gradually being lifted, instances of burglaries steadily increased, supported by nonessential businesses being permitted to reopen as of June 15.

The May and June increase in racist and religious hate crime was likely influenced by misinformation campaigns by a range of actors, such as foreign states or foreign or domestic far-right groups, promoting xenophobic notions, exacerbating the deepening of political polarization in UK society, which is reflected in the anti-racism protests. Claims that the virus was caused by “foreigners” or that religious groups have not upheld lockdown measures were promulgated among online forums.

That the statistics suggest a decrease in organized crime activity in June is likely directly related to the COVID-19 lockdown measures, which saw inter-gang rivalry shift to online platforms and social media as domestic operations and international trafficking routes were disrupted. However, that regions in the UK are responding to the crisis in differing ways provides rival gangs the opportunity to expand in each other’s area of operations without immediate repercussions, signaling potential turf wars in the medium-term.

Violent, opportunistic crime to be an increased risk going forward due to economic fallout of lockdown

The economic and political impact of the COVID-19 crisis is expected to affect various crime trends into the medium and long term. Given that individuals from low-income neighborhoods are likely to be disproportionately affected by the expected economic downturn, the major risk to individuals in London in the immediate future is likely to come from opportunistic crimes, such as armed mugging and racist attacks, with knives remaining the preferred weapon for attacks.

Fluctuations in rates of thefts and burglaries are expected. In the immediate term, that the police have long regarded summer months in London to record higher instances of thefts, a bolstered security presence in potential target locations or quick response to these incidents is expected. As people return to normal patterns of activity, theft, and burglaries are liable to return to previous norms, with shops with high-cash turnover, residences in wealthy neighborhoods, and high-value businesses such as jewelry stores, banks, and ATMs liable to be primary targets, given the potential for large cash sums or sellable objects, which offer quick access to profits after the recent downturn.

That Lewisham has recorded the highest number of drug trafficking arrests on average in the past two years suggests that individuals in the borough will be at risk as it will likely continue to have a higher presence of gangs than the rest of London. As groups attempt to re-establish their operations and reclaim territories/bases to open up trafficking routes to adapt to changing country restrictions, the possibility of targeted violent confrontations such as shootings that may pose a risk to bystanders cannot be ruled out. That gangs tend to involve youths from poorer socio-economic backgrounds to be couriers and distributors of narcotics suggests that individuals in local distribution areas of Croydon, Lambeth, Newham, Tower Hamlets, Southwark, and Westminster are at risk. Overall, possession-related offenses may decrease as gangs adopt certain techniques used during the lockdown to avoid police scrutiny as standard practice.

Given the range of criminal activities in which knives are used, such crimes are likely to quickly return to pre-COVID-19 levels as lockdown continues to be eased, remaining a major challenge to authorities in the long term. Low-income boroughs such as Newham are expected to be a higher risk for such criminal activity, given the direct correlation between unemployment, poverty, and knife crimes. Given police reports on 2019 hotspots and a two-year average, individuals in Brent, Camden, Enfield, Haringey, Hackney, Southwark, and the West End area of Westminster are most at risk of knife crimes targeting passersby.

In light of the current political climate, hate crimes, which are predominantly spontaneous, are likely to persist, with verbal abuse or online messages reported more frequently than physical assaults. Target groups in the near term are expected to be members of the Islamic community, the LGBT community, and individuals of Asian or African extraction. Based on trends observed in the past two years, individuals are more likely to be targeted in Barnet, Camden, Lambeth, Tower Hamlets, and Westminster.

Unlikelihood of return to pre-pandemic norms and a possible second-wave indicate further changes in criminal trends

While Westminster’s higher-than-normal crime rates indicate that the borough is the most dangerous in London for residents, the assessments indicated above suggest that the major threat to individuals in Westminster is primarily to tourists in the form of muggings, pickpocketing or racist incidents. This is supported by July typically seeing an increase in such crimes, during the height of tourist season. That said, given the reduction in tourism, criminals may change their targets to locals to retain revenue over the coming months.

In the event that a second wave of COVID-19 occurs, the possibility of another lockdown remains high, impacting criminal trends, with possible spikes or dips in certain activities expected to return. However, latest reports indicate that the government would prefer localized, targeted lockdowns, although London Mayor Sadiq Khan claims such measures would be nearly unenforceable beyond specific buildings or sites.

With the COVID-19 outbreak likely to disrupt multiple sectors into 2021, at which point Brexit will come into full force, while a trade deal with the EU remains unlikely to be in place by January, further disruptions and changes to criminal trends within London and nationwide are possible. Changes to tourism, trade routes, imports and exports, checks at borders, immigration and other factors that are liable to be impacted by Brexit into the long-term will in turn influence the criminal trends mentioned above.

Recommendations

Travel to London may continue while maintaining heightened vigilance of local criminal activity.

Refrain from pedestrian travel during the night hours, particularly in the vicinity of high-value targets such as ATMs or isolated areas that may not be well lit.

If confronted by muggers, it is advised to cooperate fully and not engage in any behavior that could raise tensions and lead to violence.

Foreigners in the city or undertaking travel in the coming months are advised to maintain vigilance due to the potential for abuse incited by anti-foreign sentiments.

Businesses and residents are advised to review existing measures against robbery and theft in light of returning to more regular activities and routines.

Written by Alefiya Rangwala

Edited by Adam Charlton

COVID-19-induced impact on oil, tourism sectors to have wide-ranging economic, social ramifications on GCC countries over coming months – GCC Analysis

Executive Summary

The decline in global oil prices and tourism due to ongoing COVID-19-induced travel and business restrictions has led to severe economic challenges for the Gulf Cooperation Council (GCC) states, which heavily depend on these sectors for revenue. This will likely lead to a recession, as per International Monetary Fund (IMF) projections that the GCC economy will contract by 7.1 percent in 2020.

The ongoing repatriation of thousands of expats from the region to their countries of origin as a result of the crisis is likely to have multiple social and economic ramifications, particularly in countries like the UAE and Qatar, where foreign nationals make up almost 90 percent of the total population.

This will lead to labor shortages, increasing the need to expedite the nationalization of the workforce and rapidly train domestic workers, which is unlikely to occur in such a short time span.

Those operating in the GCC states are advised to remain abreast of COVID-19-triggered restrictions and related economic and labor measures that are being undertaken by the respective governments, and to take mitigating actions against potential resultant risks.

Please be advised

In light of the ongoing COVID-19 pandemic, Gulf Cooperation Council (GCC) countries have adopted various measures, the most prominent of which include:

Bahrain

On March 17, the government announced an economic stimulus package worth 11.4 billion USD to support the country’s private sector.

On April 20, Bahrain announced that the budget of ministries and government departments will be reduced by 30 percent, for an unspecified period, in order to mitigate the impact of COVID-19.

According to June 12 reports, the state-owned oil company decided to terminate the contracts of “hundreds of foreign employees”.

On June 15, the government approved a draft law to allocate approximately 470 million USD to the budget of 2020 in order to “deal with emergency expenses required for mitigating COVID-19 impacts and curbing its spread.”

Kuwait

On June 3, Kuwait’s Prime Minister vowed to “resolve the demographic imbalance” by reducing the expat population from 70 to 30 percent.

On June 10, the government announced that expats will no longer be hired in the oil sector.

Oman

On March 17, Oman’s Ministry of Finance announced a five percent reduction in the budget allocated to government agencies.

On April 29, Oman ordered public sector companies to accelerate the process of replacing foreign staff with Omani nationals.

Qatar

According to June 11 reports, Qatar directed ministries and government-funded entities to reduce costs through layoffs or salary cuts of non-Qatari employees.

On July 8, the Qatari cabinet approved a draft law, which stipulates that state-owned private sector companies must strive towards ensuring that their overall workforce is made up of at least 60 percent Qatari nationals.

Saudi Arabia

On April 12, the Organization of Petroleum Exporting Countries (OPEC) Plus, which is de-facto led by Saudi Arabia, agreed to reduce production by 9.7 million barrels per day (mbpd) until July, then by 7.7 mbpd from August-December, and then by 5.5 mbpd until April 2022. The group also called upon “all major producers to contribute to the efforts aimed at stabilizing the market”.

On April 15, the Saudi government allocated 13.3 billion USD to support the private sector.

On May 11, Saudi Arabia announced budgetary cuts totaling eight billion USD to “Vision 2030”-related programs and increased the value-added tax (VAT) on goods and services from five to 15 percent for an unspecified period.

UAE

On July 5, the UAE announced a broad government restructuring for “agile and swift” decision-making amid the pandemic. This includes the merging of energy and infrastructure ministries as well as abolishing several government service centers and converting them to digital platforms within two years.

The UAE has announced a phased stimulus package for businesses, totaling approximately 1.7 billion USD, the most recent part of which was announced on July 11. This has included postponement of rent payments, customs reimbursements, and refunds of 50 percent on municipality fees on sales for hotels and restaurants.

Background

There are several common features that characterize the six GCC economies, namely, Saudi Arabia, UAE, Qatar, Kuwait, Bahrain, and Oman. These include high dependency on hydrocarbon revenue, a young and rapidly growing national labor force, and high reliance on the expat workforce. Together, they account for approximately one-fifth of the world’s crude oil production and possess approximately two trillion USD worth of financial wealth.

However, there is a wide variation in resource endowments across these states, which, in turn, poses unique risks and challenges for these economies. For instance, Kuwait, Qatar, and the UAE have substantial energy reserves, with relatively small populations, as compared to Saudi Arabia, which has the largest reserves of oil but is spread across a much larger territory and population. Bahrain and Oman, with oil and gas reserves that are relatively limited, are more vulnerable to economic deficiencies when compared to the other GCC states. While plans to diversify their energy-based economies have been in place across the Gulf states in varied scale since the 1970s, the drop in oil prices since 2014 has brought forward the urgency of economic diversification in GCC states.

COVID-19-related restrictions on travel and business operations have had an overall adverse impact on the global economy. The economic ramifications of these restrictions have been severely witnessed in GCC states amid a decrease in the global demand for oil, approximated at 18 percent since the start of 2020. This has led to a steep decline of more than 70 percent in the price of oil, the lowest in over 20 years. According to an IMF report on July 13, oil revenues are now projected to decline by more than 270 billion USD in 2020, relative to 2019.

Assessments & Forecast

COVID-19-related restrictions on business, travel pose significant economic challenges to Gulf countries

Challenges posed by steep decline in oil prices

The hydrocarbon sector, namely oil, petroleum, and gas, as well as their derivatives, contribute significantly to the GDP and government revenue of GCC countries. In the case of states such as Kuwait, Qatar, and Saudi Arabia, the GDP derived from the oil and gas sector accounts for almost 50 percent of their total GDP. At the onset of the global spread of the COVID-19 pandemic, an initial catalyst that contributed to the plummeting of oil prices in the February and March was the failure of Saudi Arabia and Russia, two of the world’s largest major oil producers, to reach a consensus to slash oil production, which led to a price war between the two countries. Thereafter, Riyadh propelled its output to an unprecedented 12 million mbpd in early April in a bid to defend its share in a shrinking market. On April 12, the OPEC Plus reached a deal to slash production by 9.7 mbpd until the end of July, which underscores joint efforts to rebalance the demand and supply in the market. Despite this, oil prices have fluctuated over recent months, largely due to oscillations in global uncertainty amid the spread of the pandemic. FORECAST: While it is likely that the expected easing of restrictions on travel and businesses will boost demand for crude oil over the coming months, the ongoing uncertainty surrounding the pandemic, and potential for additional waves of infection, threatens to derail this recovery.

The decline in oil prices of more than 70 percent over recent months has led to increased financial constraints for all GCC states. This has compelled authorities to slash public spending while simultaneously redirecting funds to help citizens and the private sector cope with the significant financial challenges resulting from the virus. This has been particularly evidenced by reductions in the state budget for 2020 in Bahrain and Oman, as well as the allocation of millions of USD by Saudi Arabia and UAE to boost liquidity in the economy.

FORECAST: Overall, given that government spending is a key driver for economic growth, and is mostly derived from the energy sector, the recent cuts in capital and current spending will likely lead to an economic recession in at least some of the GCC states. This is bolstered by the IMF’s prediction, as of July 13, that the GCC economy is expected to shrink by 7.1 percent this year, both in the oil and non-oil sectors. The fact that this is a revision of the 2.7 percent predicted contraction in April, indicates the overall downward economic trend that is likely to be experienced by all six countries over the coming year, albeit in varying degrees. Most notably, the largest GCC economy, Saudi Arabia, is predicted to shrink by 6.8 percent, per June 24 reports quoting the IMF, compared to a 2.3 percent contraction that was predicted in April.

Meanwhile, GCC countries have long sought to diversify their hydrocarbon export-driven economies in order to decrease the vulnerability of their revenues. To this effect, all of the GCC countries have set out ambitious targets and strategic visions that are also designed to appeal to global investors. These include Bahrain’s Vision 2030, Kuwait’s New Vision 2035, Oman’s Vision 2040, Qatar’s National Vision 2030, Saudi’s Vision 2030, and UAE’s Vision 2021. However, given that commitment to these reforms have been inconsistent over the past years, most governments continue to rely on oil revenues. FORECAST: In this context, the slump in oil prices, as well as the overall depreciation of government revenue over the recent months indicates that investments in non-essential projects, such as in the sectors of infrastructure and real estate, will likely be postponed, which will further prolong the countries’ efforts to diversify their sources of income.

Challenges posed by decline in tourism, hospitality industry

Most GCC states have made significant efforts to transform to a hub for tourism and hospitality over recent years, constituting a major economic driver in terms of these countries’ economic diversification strategies. To this effect, GCC states have laid out long-term plans for airport expansions to increase the handling capacity of projected visitor inflow, further supported by the relaxation of visa rules to further boost tourist arrivals. Moreover, the hosting of mega-events, such as the Expo 2020 in Dubai and the FIFA World Cup 2022 in Qatar, were expected to grow the GCC’s leisure and hospitality construction sector expenditure from 467 billion USD in 2019 to 642.3 billion in 2023, implying a five-year compound annual growth of 8.6 percent, compared to the 5.7 percent achieved in 2013-18.

FORECAST: In this context, the effect of COVID-19-induced restrictions on travel between countries will have a significant economic impact on the GCC countries. For example, according to reports, the forecasted revenue loss for the UAE airline industry alone is projected at 5.3 billion USD, due to the drop in approximately 23.8 million passengers. Additionally, the postponement of highly anticipated events will exacerbate these losses. For instance, the Expo 2020 in Dubai, which was originally scheduled to take place in October 2020-April 2021 and was expected to contribute approximately 30 billion USD to the economy, will add to the decline in predicted revenues. Saudi Arabia will likely face similar challenges, given that authorities have banned pilgrims from other countries from traveling for the Hajj pilgrimage, which is slated to begin on July 28. This is particularly given that Hajj, which witnesses the arrival of almost 2.5 million pilgrims every year, generates an annual revenue of approximately 12 billion USD.

Measures adopted to mitigate economic challenges likely to increase socio-economic grievances, labor shortages

The “rentier state” model in the Gulf region has been long associated with the overall lack of taxation due to the abundance of allocated resources, wherein the state offers its citizens goods and services in return for substantial autonomy in decision-making, which is often characterized by a reduction in political engagement. However, economic conditions that have persisted across recent years, particularly in the wake of declining oil prices since 2014 and increased budget deficits in 2015-16, indicate that this pattern of governance is no longer feasible, especially as prolonged low oil prices could worsen the fiscal situation. Along with increased borrowing through the issuing of local and international bonds, in 2016, all GCC states signed an unprecedented framework for the introduction of Value Added Tax (VAT), known as the Common VAT Agreement. While the measure came into effect in the UAE and Saudi Arabia on January 1, 2018, and in Bahrain on January 1, 2019, other countries have stated that they needed more time to implement the reform. In the former states, a five percent levy has been imposed on several designated essential products and services including gasoline and diesel, food, clothes, utility bills, and hotel rooms, with the exception of public transport, medical treatment, and financial services. Similarly, a 50-100 percent “sin tax” has been imposed on certain products, including soft drinks and tobacco, in the UAE, Saudi Arabia, and Oman. In this context, Saudi Arabia’s tripling of VAT from five to 15 percent on May 11 highlights the Kingdom’s efforts to accelerate revenue generation through the collection of taxes.

FORECAST: These measures, combined with the cutting of the cost of living allowance for state workers that has been in place since 2018, will likely increase socio-economic grievances among the local population due to the increase in the cost of living. While Riyadh’s move was expected to cause a ripple effect across the region, the UAE’s Ministry of Finance indicated on May 12 that the country did not have immediate plans to raise taxes. Oman and Kuwait are expected to introduce VAT systems by 2021. However, given the possibility of protracted economic effects of COVID-19, there remains a potential for the introduction of tax reforms and other austerity measures by the remaining GCC states over the coming months.

Furthermore, the COVID-19 pandemic has forced many sectors across the GCC to shore up spending through layoffs and employee salary cuts. In this context, given that a high percentage of the population of most GCC states’ workforce consists of expats, it is this community that is liable to be most impacted by the economic downturn. While several governments have implemented policies that seek to prioritize employment for local citizens at the expense of foreign workers over the recent years, since the outbreak of the health pandemic, an acceleration of these measures has been witnessed in countries such as Oman, Qatar, Bahrain, and Kuwait.

This is evident by Oman’s April 29 decision to replace expats with Omani nationals in its public sector, as well as Qatar’s June 11 directive to all state-owned entities to curb spending through layoffs and salary cuts of expats, rather than Qataris. Meanwhile, Kuwait has explicitly stated its objective to reduce the expat population from the current 70 percent to 30 percent, although no timeframe was attached to this objective. This is part of an effort to address the demographic imbalance in the country, as indicated by the Kuwaiti PM’s statement on June 3. Kuwait has further passed measures such as a ban on the hiring of expats in the country’s oil and municipality sectors. Furthermore, several lawmakers have also tabled a bill in the parliament to introduce a quota system, wherein the percentage of expat population from different countries will be capped at certain ceilings.

To some extent, the sense of urgency in passing such expat-focused legislation has also been triggered by the growing perception that the spread of the virus in some of the GCC countries has been caused by foreigners, particularly by blue-collar workers that make up a high percentage of the countries’ migrant population. This is primarily due to the fact that a majority of such workers live in low-cost, overcrowded labor camps, a number of which had emerged as hotspots for the spread of the virus, as in the case of Doha’s Industrial Area. This may have increased resentment among parts of the local citizenry towards the migrant population, due to the pressure placed on the country’s resources and infrastructure amid the current health crisis.

That said, such policies and sentiments vis-a-vis the expat population do not resonate uniformly across all GCC states. For instance, per June 11 reports, UAE’s Minister for Infrastructure Development stated that the “UAE is a place where expats are well-skilled and we definitely need them. The pandemic is not going to be here for a long time…then we would regret that we got rid of our skilled workforce, whether it is nationals or expats. We would like to keep them”. This indicates the country’s recognition that the expat population, especially skilled migrants that constitute a majority of the middle class in the UAE, are vital for economic growth and development. This is further evidenced by the fact that the UAE and Saudi Arabia have not passed any major legislation over the recent months that seeks to specifically slash the expat population by denying them employment. FORECAST: Regardless of the absence of long-term policies to “address the demographic imbalance”, as in the case of Kuwait, the large departure of the migrant population, some of whom who are being repatriated to their home countries from the Gulf amid the COVID-19 pandemic, is liable to have several far-reaching social consequences. This will be explored in the next section.

Social, economic implications of economic slump, expat-focused measures over coming months

Domestic impact on economy, potential for labor shortage

FORECAST: The sudden exit of the migrant worker population will significantly alter the demographics, especially in countries like the UAE and Qatar, where foreign residents comprise approximately 90 percent of the population. In the UAE alone, more than 350,000 Indian nationals, and over 60,000 Pakistani nationals, have registered to be repatriated, as of the time of writing. Similarly, over 25,000 Indians have reportedly registered for repatriation due to job losses in Saudi, while 10,000 such nationals have already departed from Qatar. Moreover, countries like Kuwait also announced amnesty schemes for the evacuation of workers of all nationalities, which has reportedly benefitted over 45,000 Indians and other nationals. This will therefore have substantial economic and social implications over the coming months and years, which is expected to be larger than those witnessed during the 2008-2009 financial crisis.

FORECAST: The uprooting of middle-class residents and their families is liable to negatively impact the domestic economy, as sectors that relied on these customers such as restaurants, schools, clinics, and the retail sector, will suffer major losses. Without government support, these services will be forced to lay off more people, which may trigger a deflationary impact and likely lead to a secondary wave of migrant exodus. The exit of low-income earners, such as domestic assistance, will also lead to social implications, as this may force a change in the overall lifestyles of locals. In the UAE, it is suggested that 96 percent of Emirati families employ domestic help to raise their children, highlighting the dependence of the local population on expat workers.
FORECAST: The utility of expats as consumers and sources of revenue in the form of taxes and fees, including VAT on goods and services, road tolls, and visa renewal fees will decrease. For example, in 2018, the UAE collected approximately seven billion USD in VAT collection, which accounted for almost 1.7 percent of the country’s nominal GDP that year. Similarly, Saudi Arabia collected almost 9.3 billion USD in the form of VAT in 2018. Saudi was also expected to raise 17.3 billion USD in 2020 in the form of expat visa renewal fees, as well as the charges that are to be paid by companies for every foreign worker they hire. Therefore, this will contribute to a further reduction in government revenue.

FORECAST: A labor shortage will likely be experienced in the market over the coming months due to the departure of expat personnel, both high-earning professionals and low-income workers. This will likely be most acutely felt when the economy and oil prices rebound and stabilize to a relative degree, which will, in turn, facilitate the resumption of several infrastructural and development projects that have been currently postponed. The implementation of these projects will be hindered by the labor shortage. This is given that ambitious development plans adopted by the GCC states have largely led to an extensive, unregulated import of both skilled and unskilled labor. Moreover, the financial ability of these countries to purchase technology and knowledge also meant that professional development has not always been a top priority. This has led to a disconnect between rewards offered to nationals in the form of lucrative jobs in the public sector, unemployment and other benefits, and their level of merit and competency.

FORECAST: Therefore, GCC governments will likely face significant challenges in developing the skill sets of its national workforce to fill the gaps within the labor market over the short term. Authorities will be forced to provide substantial incentives for citizens in order to attract them towards the private sector at a time of diminishing resources, as employment in the public sector for most countries has either been or are approaching saturation. In the absence of such incentives, there also remains a possibility for protests in demand of better employment and economic opportunities. However, in many states, the overall lack of large civil society organizations and protest groups as well as a broader absence of a protest culture will render it difficult for a potential anti-government movement to mobilize.

FORECAST: Overall, COVID-19-triggered restrictions and resulting losses in revenue in both the private and public sectors have, and will likely continue to lead to, job layoffs and salary cuts across the region. For short-term delay, most GCC governments have announced emergency economic stimulus packages. These have included the expansion of government loans provided to businesses, direct cash transfers as partial payment of salaries, as well as deferments on rent and utility payments to help citizens and residents cope with the economic impact of the pandemic. Additionally, governments have been forced to utilize resources on protective measures and health infrastructure to mitigate the spread of the pandemic, bolstered by the free testing and treatment of the virus in several countries, including the UAE and Saudi Arabia. These costs are liable to increase in the event of further waves of infection. However, over the coming years, restrictions will gradually be eased in order to restore economic activity. Given the already diminished government revenue as well as the pressure to curb state expenditure and bolster public finances, states will be compelled to mitigate economic challenges by increasing taxes and training the local workforce. However, as noted, this will have a profound impact on the economic structure, social dynamics, and functionality of these societies.

Recommendations

Travel and operations can continue in GCC states while remaining abreast of COVID-19-related restrictions and procedures, as well as of social and economic developments due to changes to the workforce and reductions in state revenue.

It is therefore advised to take necessary measures to mitigate the potential adverse effect of these developments to ensure business continuity, while allotting for potential disruptions and service failures in these countries.

Furthermore, it is advised to maintain vigilance due to the heightened risk of anti-foreign sentiment in the GCC states on account of the perception among some parts of the local populace that expats are a burden on their resources.

Democratic transition stalls, military influence increases as COVID-19 pandemic threatens revolutionary gains – Sudan Special Report

Executive Summary

Following the overthrow of President Omar al-Bashir in 2019, the democratic transition in Sudan has largely stalled due to myriad factors, leading to a precarious security, economic, and political situation.

The government negotiations with armed groups remain fractious, with the rebel groups bound together in unwieldy alliances that undercut any progress made in talks. This tension is best exemplified by the fragmentation of the Sudanese Revolutionary Front (SRF) coalition and tensions between factions of the Sudan People’s Liberation Movement-North.

Further exacerbating the situation is friction between groups within the Declaration of Freedom and Change (DFC), with composite groups disagreeing on the state of relations with the military. This situation is further complicated by the inability of civilian opposition to protest given restrictions imposed due to the ongoing COVID-19 pandemic.

However, the volatile political climate is aggravated by the crippled Sudanese economy. While PM Abdallah Hamdok has attempted to get foreign investment, these efforts are stifled by Khartoum’s presence on the US ‘State Sponsors of Terrorism’ list, which disallows aid and funding from international financial institutions.

Ultimately, the precarious political and economic situation will suppress the influence of the civilian wing of the government, allowing the military, which retains cash reserves and revenue through various state-owned companies, to increase their political influence.

Travel to Khartoum may continue while adhering to standard security protocols regarding criminal activity, while remaining cognizant of authorities’ instructions regarding restrictions, quarantines, and health procedures due to the ongoing COVID-19 pandemic.

Introduction

A little more than a year after the toppling of President Omar al-Bashir on April 11, 2019 through military intervention spurred by months of massive nonviolent protests nationwide, the stability of Sudan remains precarious. Despite the appointment of the widely-respected Abdallah Hamdok as PM and the signing of a power-sharing deal, the transitional government of the military and the Declaration of Freedom and Change (DFC) revolutionary council of groups remains fragile. This fragility remains despite the signing of a constitutional declaration on August 4, 2019, which laid out the transitional agenda, including the new institutional arrangements for sustained peace. This agenda also included securing a peace deal with armed groups within the first six months of the transitional period.

This process has stalled, even as it is being implemented in the form of peace talks brokered by South Sudan in Juba starting in October 2019. The peace talks were set up as a platform to create a truce between myriad armed groups in the outlying areas of Sudan in return for the safe participation of rebel leaders in the national political process in Khartoum. However, these talks have become the main forum for political negotiations between the government and the rebel groups, upstaging and undermining the role of institutional transition, which remains an unfulfilled promise as envisioned by the constitutional declaration. The efforts of the government to bring the disparate armed groups into mainstream Sudanese polity is further undermined by the internal fragility of the armed groups and the myriad objectives of the groups engaged in discussions.

Key Actors & Groups

Sovereign Council: The Sovereign Council is the collective body that rules as the head of state. It consists of five civilians chosen by the Declaration of Freedom and Change (DFC), five military representatives, and one civilian chosen by common consent.

Declaration of Freedom and Change (DFC): The DFC is a political coalition of civilian and rebel groups. The DFC consists of members such as the Sudanese Professionals Association (SPA), unionist groups, and armed groups such as the Sudanese Revolutionary Front (SRF).

Sudanese Professionals Association (SPA): The SPA is an umbrella organization consisting of 17 different trade unions. The group played an integral role in the mass protests that led to the overthrow of Omar al-Bashir in 2019.

Sudanese Revolutionary Front (SRF): The SRF is an alliance of armed groups from across the country that was formed in 2011 in opposition to al-Bashir. Following the overthrow of Bashir, the SRF has engaged in negotiations with Khartoum over positions in the transitional government.

Current Situation

Negotiations between the Sudanese government led by PM Abdallah Hamdok and the SRF that were supposed to conclude on June 20 with a final peace deal were reportedly extended again.

The breakdown between the government and SRF continued to be on matters of security arrangements, the system of governance, and the wealth and power distribution within the transitional government.

Assessments & Forecast

Eventual fragmentation of SRF likely to open new fronts of negotiations

The stagnation of the peace process is best exemplified by the talks between the government and the Sudanese Revolutionary Front (SRF), a coalition of nine Darfuri groups that have long been at odds with the government under former President al-Bashir. While the government negotiators and SRF leaders have managed to sign provisional agreements over resource sharing in Darfur and the cessation of hostilities by either the government security forces or the armed group, a comprehensive peace agreement remains elusive. The government has made some transitional justice in Darfur a priority and has actively worked to earn the confidence of the populace in Darfur. Steps such as PM Hamdok visiting Darfur in November 2019 and the continued prosecution of al-Bashir for both corruption and atrocities committed in Darfur have been hailed as much needed in building trust between Khartoum and the outlying areas of Sudan. Furthermore, the government has also sought to placate and empower the SRF by allotting four seats on the powerful Sovereign Council to the group.

These developments are threatened by factionalism within the SRF, as various previously antagonistic groups attempt to garner as much influence with the negotiations as possible, while also aiming to consolidate power within the SRF. This was illustrated by the withdrawal of the Sudan Liberation Movement led by Minni Minnawi (SLM-MM) from the SRF on May 18 after consistently being rebuffed in its requests for reforms in the SRF structure that is currently headed by Hadi Idriss of the Sudan Liberation Movement – Transitional Council (SLM-TC). The SLM-MM, whose leader Minni Minnawi was the SRF deputy leader, has consistently criticized the organization of the SRF, while other groups such as the SLM-TC stress the need for progressing in the peace talks with the government and dealing with internal structural issues at a later date.

By withdrawing from the SRF, the SLM-MM is demonstrating its lack of faith in the ability of the group to negotiate with the government on even terms, given the structural instability within the SRF. However, that the SLM-MM has established its own SRF wing, which includes the Justice and Equality Movement (JEM-Dabajo) led by Bakheet Abdelkarim, is illustrative of the SLM-MM aiming to upstage the original SRF movement led by the SLM-TC. FORECAST: The breakaway faction is likely to pressure the government to negotiate with its constituents in the coming weeks and claiming that the new group is more internally stable than the original SRF organization given that it has fewer members.

FORECAST: To that end, the breakaway SRF will claim that any agreements made between Khartoum and the SLM-MM led faction would stand a better chance at actually being implemented. Additionally, the SLM-MM is likely to talk to other rebel groups within the original SRF to get them to secede and join the new faction, thereby escalating tensions between the already antagonistic groups. That said, the smaller size of the new SRF faction means that the government will likely continue negotiations with both groups simultaneously. The government will likely negotiate with both groups as a leveraging tactic and as a strategy to allow for more maneuvering space. This is likely given the entrenched distrust between both groups, and thereby the government will use this animosity to push for quicker resolutions in negotiations. However, given the wide variety of issues that need to be resolved, it remains unclear if such a strategy will succeed.

Progress with SPLM-N factions remains limited, with distrust between the groups remaining persistent

Meanwhile, the government has made some progress with the Sudan People’s Liberation Movement – North (SPLM-N) faction led by Malik Agar in terms of integrating the group into the political mainstream. On May 2, the government and the SPLM-N Agar agreed to reintegrate rebel fighters into the Sudanese military, police, security and intelligence, wildlife, customs, and civil defense. The government also granted the SPLM-N Agar areas to establish military camps in Blue Nile and South Kordofan states. However, these developments have provoked protests from the rivaling SPLM-N al-Hilu faction, which accused the government of favoring the SPLM-N Agar and stated that the land allotted to established military camps was untenable, given that the Agar faction has a presence in Blue Nile, but does not control any land in South Kordofan or the Nuba Mountains, which remain an al-Hilu stronghold.

In this context, talks between the government and the SPLM-N al-Hilu faction remain volatile, given the group’s initial decision to refuse to negotiate until the government agrees to secularization and self-determination for the Nuba Mountains and Blue Nile regions. However, given that SPLM-N al Hilu faction then agreed to restart negotiations with the government, excluding the points of secularization and self-determination, is indicative of al-Hilu’s cognizance that any government agreement with the Agar faction could lead to Khartoum favoring the rival group.

Ultimately, the renewal of talks with the SPLM-N al Hilu suggests progress, given the group remains one of the major armed factions in Sudan and controls a significant portion of territory. However, the decision of the SPLM-N al-Hilu to resume talks has likely not been made in good faith, given that the group only agreed to discuss issues that preclude the topics of secularization and self-determination. These issues are particularly important to them as a major segment of the population under their control is Christian and Animist, unlike the majority of Sudan. These groups perceive that, without concessions on these issues, they remain vulnerable to attack by Islamist government forces, as was seen by an attack by the Rapid Support Forces (RSF) in October 2019, which led to a suspension of the talks. In this context, it is likely that the group is only resuming talks to prevent the government from overly favoring the Agar faction. FORECAST: Given these conditions, it is possible that the government may agree to small concessions to the group, however, a larger peace deal will likely remain out of reach as the government contends with various Islamist groups and factions and their interests.

Factionalism within the DFC likely to further help the military undermine transitional efforts

Following the ouster of al-Bashir, factionalism within the Declaration of Freedom and Change (DFC) has increased over the past year. This is in contrast to the disparate groups within the political opposition working together with the common purpose of the revolution and preventing the military establishment from gaining total control in the aftermath. However, transitional efforts have been slow and patience among the civilian opposition has waned, with groups such as the Sudanese Professionals Association (SPA), which was a major driving force of the revolution, perceiving that the transitional government has been slow to install civilians into positions of power.

This tension is best exemplified by PM Hamdok’s decision on April 18 to postpone the appointment of state governors, allegedly due to the fact that the PM was still holding consultations with the leaders of the SRF. The delays were exacerbated by the SRF insisting that they should have input on how governors are chosen, despite the fact that the group has not signed a comprehensive peace deal with the government. This stance agitated members of the DFC, who agreed that the democratic transition needed to be inclusive of those in the periphery, especially Darfur, but perceived the SRF to be stalling for time in their negotiations with the government. The DFC raised this as a concern that the military wing of the government would use the delays to further entrench themselves in positions of power. FORECAST: In this context, the military will likely use their influence with the current military-appointed state governors to disrupt any attempts to democratize state institutions. This deadlock has led to violent protests in many parts of Sudan, which has, in turn, led to military leaders cracking down on the demonstrations, as they claim these instances of civil unrest to be a threat to national security.

Meanwhile, the effectiveness of the DFC in pressuring the government to hasten the democratization process is undermined by divisions within the political coalition. This can be seen with the divergent approaches of the SPA and the National Ummah Party (NUP) led by former PM Sadiq al-Mahdi. The NUP has consistently aimed to undermine the DFC, despite being part of the coalition, likely in an attempt to gain favor with the military leaders. Even during the process of the negotiations for the constitutional agreement, al-Mahdi publicly stated his acceptance of the military leadership in the country, as opposed to a power-sharing agreement. Most recently, the NUP froze all its activities in the DFC, criticizing what it perceived to be excessive demands by the armed groups during negotiations with the transitional government.

In contrast, the SPA remains highly suspicious of the military and consistently voices its disagreement on occasions where it perceives that the civilian government under PM Hamdok is ceding too much control to the military generals. The SPA has sought to preserve its influence nationwide by keeping neighborhood resistance committees active and occasionally holding protests to pressure the government into adhering to its schedule of democratization, though this approach has been disrupted by COVID-19 restrictions. The SPA has also taken divergent stances in terms of dealing with armed rebel groups, exemplified by the SPA’s support for the SPLM-N al-Hilu demand for a secular state and self-governance of the Nuba Mountains and Blue Nile State. This position is at odds with the DFC position, which has tended to downplay the SPLM-N al-Hilu’s demands, likely perceiving that any acquiescence to secular demands could lead to a loss of support to the government from the various Islamist groups present within the DFC.

FORECAST: The NUP will likely continue to issue statements criticizing the DFC and the government while positioning itself close to the military establishment. Al-Mahdi likely perceives that any possible eventual failure of the transitional government and subsequent increase in military control would allow the former PM to be positioned to be the civilian face of the military-dominated government. However, given that the generals are unlikely to be willing to divest much influence to even nominal supporters such as al-Mahdi, the NUP’s impact in national politics is likely to remain one of complication, rather than of any real influence. More broadly, the military generals are likely to portray the NUP’s support, and the SPA’s public divergences in policy choices, as proof of the DFC’s disorganized nature as a threat to national security, further putting pressure on the government to cede influence to the military.

Fallout from COVID-19 pandemic likely to further cripple government standing, strengthen military control

Sudan recorded its first case of COVID-19 on March 13, with the majority of cases being reported in Khartoum. However, the disease has expanded its reach exponentially, with the number of cases now doubling approximately every 13 days. The authorities remain ill-equipped to deal with the pandemic with contact tracing procedures remaining relatively non-existent. In this context, the medical infrastructure already incapacitated by decades of authoritarian rule under Omar al-Bashir has all but collapsed. The nationwide lockdown prevented doctors from going to work, with some professionals self-isolating due to the severe lack of protective equipment. The resulting staff shortages have led to many hospitals shutting down, with existing doctors noting that the burgeoning infection and mortality rates are likely being caused by the breakdown in healthcare services. While the government has implemented strict curfews and implored the citizenry to follow social distancing protocols, the low public knowledge of the disease has led to many of these instructions being ignored.

That said, while the military has precluded the treatment of COVID-19 patients in its hospitals, military leaders have used the pandemic to jostle for more influence while improving their image among the public. This is best exemplified by the fact that the leader of the Rapid Support Forces (RSF), Mohammed Hamdan “Hemetti”, took advantage of the cracks within the DFC to rise to head the Emergency Economic Committee, a powerful ad hoc panel which decides matters of national importance such as economic reforms and the national response to COVID-19. Hemetti further attempted to burnish his image by pledging to deposit 200 million USD of his own money into the Central Bank to tackle the economic and COVID crisis.

Amid this play for power by Hemetti, he remains cognizant of his negative reputation among the population and international community given the RSF’s violent repression in Darfur during the al-Bashir era. Given this wariness, Hemetti has sought to allow PM Hamdok deputy positions in government committees, including the Emergency Economic Committee. The PM has not been the driving force for the democratic transition, instead seeking consensus from a fractured DFC, the military establishment, or in many cases both parties. However, such consensus has been difficult to achieve, given the parties involved are at odds with each other. Hamdok has also lost trust within the DFC after he rejected the nomination of DFC figures as state governors. The DFC perceives the PM as being too willing to acquiesce to the demands of the military establishment, with this perception being further bolstered by Hamdok’s statement that he viewed his relationship with the generals as a “partnership which is working,” despite the PM’s power being gradually stripped away.

PM Hamdok’s weakened position, COVID-19 effects likely to impact economic recovery

Exacerbating the situation is the continued downward spiral of the Sudanese economy, with PM Hamdok’s attempts to liberalize the economy being disrupted by the DFC, who have consistently sought to block the implementation of policies that would allow for investment from the “Friends of Sudan” group of foreign donors, which includes the USA, France, Germany, Britain, Ethiopia, Saudi Arabia, UAE, and Egypt. One of the major demands of foreign investors is the removal of a crippling system of subsidies on fuel and wheat. While the removal of subsidies is a way to halt the repeated monetized deficits and currency collapses in the medium term, it will likely lead to a further rise in prices of these essential goods in the short term, which greatly affects members of the DFC, of which unions play an important part. Furthermore, inflation continues to near 100 percent, with experts estimating that the COVID-19 pandemic will cause the economy to contract by seven percent. On the street, there remains considerable discontent over the inability of the government to control the rising prices of goods and services.

Since taking office in 2018, PM Hamdok has sought to solve Sudan’s economic woes by attempting to garner financial support and pledges of aid from various Western governments, most notably the US. In December 2019, Hamdok arrived in Washington, DC, becoming the first Sudanese leader to officially visit the country since 1985 as a result of President al-Bashir’s decision in the 1990s to provide havens for various jihadist leaders such as Osama bin Laden. These policies led Sudan to be placed onto the US ‘State Sponsors of Terrorism’ list. While on this list, the US government is mandated to veto any debt relief for Sudan from international institutions such as the World Bank and the International Monetary Fund (IMF).

While being on the ‘State Sponsors of Terrorism’ list does not place Sudan under formal sanctions, the designation acts as a deterrent to foreign investment and debt relief efforts. Khartoum has gone to significant lengths to prove its commitment to reform, including agreeing to pay damages for its role in the 1998 al-Qaeda bombings of the US embassies in Kenya and Tanzania. While the exact amount of damages has not been made public, the depressed state of the Sudanese economy will make it hard for any damages to be paid, which may further delay any US assistance.

FORECAST: Furthermore, given that US President Donald Trump has decided against fast-tracking Sudan’s removal from the list, this means that the case will likely be caught between the various committees of the State Department, national security agencies, and the US Congress. Ultimately, while the government is likely to continue pleading with the US to take Sudan off the list, Khartoum will likely remain low on the list of priorities for Washington, thereby further delaying any prospect of economic recovery through international investment.

In this context, while the government has traditionally been unable to borrow money from international donors and institutions, Khartoum has received relatively regular aid from China and the Gulf states. The Arab governments, including the UAE, Saudi Arabia, and Qatar, have generally been significant donors, though much of this aid has been directed toward the military generals with an aim to control the levers of power within government and aid the Gulf states in their strategic aims. However, the COVID-19 pandemic has led to historically low oil prices, denting the economies of the Gulf countries, leading to pay freezes and layoffs. Another source of foreign exchange that has been affected by the pandemic layoffs is the remittances sent home by Sudanese workers in the UAE and Saudi Arabia, as both countries have implemented the prioritization of nationals in the workforce. Recent estimates are that remittances are expected to drop by approximately 20 percent given the layoffs, meaning that this money, which is often the sole source of income for families in Sudan, will diminish, thereby heightening insecurity and strife among the populace.

FORECAST: The government and PM Hamdok will continue to seek international assistance and investment, mainly garnered through donor conferences such as the ‘Friends of Sudan’ conference slated to be held in Berlin in June 2021. However, given that the COVID-19 pandemic has resulted in a global economic downturn, with many of the wealthy foreign nations facing slowing growth or recessions, it remains highly uncertain whether these countries will be willing to pledge the large sums of money required to resuscitate the Sudanese economy. In this context, the military establishment will use its control of state-owned companies to keep patronage networks functioning, thereby further undermining the government.

FORECAST: In this context, the shortage of funds for the government is likely to further bolster the standing of the military. The military is unlikely to be affected by a lack of funds as it owns approximately 100 state-run companies, including establishments that sell lucrative commodities such as gold, gum arabic, oil, water, and weaponry. The military also has deep connections with the banks, telecommunications, and real estate, which means that the generals will likely remain liquid financially, money which they can lend to the government or use to gain control of government committees such as the Emergency Economic Committee. While the government has approved a plan to liquidate and privatize many government companies that do not pay taxes and are connected to the military elites, it remains to be seen how well this plan can be implemented. Given that many of the business elites in Sudan are allied to the military leaders, this means that any bidding process for these companies will also likely be compromised. Given these conditions, the government will likely struggle to raise funds for essential services. These entrenched issues mean that the political transition in Sudan will remain highly volatile in the coming months.

Recommendations

Immediately consult a doctor if you are concerned that you have potentially contracted the disease. Only procedure medication and medical advice from vetted professional institutions and remain cognizant of any fake or counterfeit medication.

Those operating or residing in Khartoum, as well as other urban centers across Sudan, are advised to avoid the vicinity of all gatherings and protests given the associated risks of violence.

We advise against all travel to the Darfur region as well as South Kordofan and Blue Nile states given the volatile security situation.

For any further questions or consultation, please contact us at [email protected] or +44 203 540 0434.