This is the second blog post in a series on protests in key regions of the world and their potential impact on companies and executives. The series focuses on protest likelihood as well as takeaways for short-term travel risk, long-term corporate planning, and everything in between.
Demonstrations and Transformations
Social protests in Latin America have been disruptive for business operations and have signaled some major political developments (e.g., think the ousting of Dilma Rousseff in Brazil). Nowhere have they been as transformative, however, as in the Middle East and North Africa (MENA), where demonstrations led to wholescale shifts in regimes and swings in multiple categories of corporate risk over the last several years.
This blog entry looks at the MENA region and offers a starting point for considering the long-term impact of demonstrations. Recent history serves as an excellent reminder that companies with local operations or frequent travel to the area need to employ diverse analytical tools such as scenario planning in assessing their overall security risk.
Beyond the Immediate Danger of Protests
More than six years after the initial protests that rocked Tunisia in December 2010, the “Arab Spring” is a household term and the demonstrations that erupted in several MENA countries around late 2010-early 2011 irreversibly shaped the region. From the perspective of political and security risk, most of that change has been for the worse. Figure 1 highlights this volatility. While the Arab Spring protests do not account for everything that has happened in the region since—for example, the July 2016 coup attempt in Turkey was largely unrelated— those initial demonstrations account for most of the “significant” deteriorations in the security climate.
The Arab Spring protests were a clear risk to our clients and to most firms working across the region, but organizations focused overwhelmingly on the immediate threat of violence and disruptions without seeing the transformative implications of the demonstrations. Nearly seven years out, operating in Syria, Yemen, and to some extent Libya has become next to impossible for Western firms. The security environment in traditionally less at-risk countries such as Jordan and Turkey has also deteriorated, particularly at the borders. In Egypt, the initial fall and resurrection of an authoritarian regime continues to foster an unpredictable landscape in the political, economic, and security spheres. Even in the markets where political changes have been relatively insignificant (e.g., Morocco, Algeria) or positive (Tunisia), dozens of terrorist cells planning attacks against government and private-sector targets are now dismantled every year. Following the expected homecoming of Islamic State of Iraq and Syria (ISIS) fighters, the risk of terrorism across MENA will probably increase further in 2017.
With all of these repercussions for what started out as minor protests, the questions all risk managers and corporate security personnel should be asking is: how did we miss this and how do we make sure we don’t miss it again?
The Perils of Predicting Long-term Impact
Answering the first question is relatively easy because most experts made the same mistake and all were operating under the same fog of uncertainty. The difficulties of protest prediction mentioned in the last entry do not compare to the even greater challenge of predicting long-term effects.
To be sure, there are factors that can influence the impact of demonstrations, among them: the strength of state institutions; the nature of grievances; organization of the protestors; and the type of government response (i.e., compromise or repression). If some of these factors seem familiar, they should be. In many cases, they overlap with the same variables that may cause protests to turn violent.
Despite these helpful indicators, analysts and experts have not yet found a way to consistently forecast when protests transition into coups, revolutions, or civil wars. In the case of the Arab Spring, the likelihood of a fruit vendor’s self-immolation resulting in government overthrow seemed negligible. The possibility that the same level of anti-government zeal would take down Hosni Mubarak in Egypt was even more remote. That Syrian security forces could not contain unrest within that country seemed beyond the pale.
What to Watch for in 2017…and How to Watch for It
In order to prevent another Arab Spring surprise in the MENA region, organizations need to recognize that the most likely outcome is not always the one needing special attention. Companies should instead consider the less likely pathways for protest resolution or even the lowest likelihood, high-impact outcomes known as “fat-tails.” This means utilizing techniques such as scenario planning, which evaluates radically different possibilities for how a protest may evolve.
Here are just a few of the key protest-related issues in the MENA region that could benefit from scenario planning (also known as scenario analysis):
- Will Egypt’s economy continue to recover and how will regime popularity be affected?
- How will a controversial constitutional referendum in Turkey impact President Erdogan’s consolidation of power?
- How will MENA region countries address the danger of returning ISIS fighters as they flee from the besieged caliphate in Syria?
- How will Algeria prepare for or manage its transition from the presidency of the ailing Abdelaziz Bouteflika?
- What are the possible outcomes of the May presidential election in Iran?
Analyzing protest risk requires a holistic approach that looks at the immediate security threats of demonstrations and the consequences of protests months or even years later. The next blog entry will take us to Europe, a region that brings to light emerging trends in the causes of protest.