MIDDLE EAST RISK WATCH – ISSUE 4 – JUNE 2016
Succeeding in North Africa - mitigating key security risks
The Maghreb region offers many opportunities for foreign companies and investors such as natural resources, a large youth population, and growth sectors like renewable energy. Moreover, countries such as Tunisia and Algeria are expected to release new investment codes in the coming year with provisions to attract foreign investment. Despite these opportunities, companies operating in the region also face significant challenges: endemic corruption, frequent unrest and challenges to political stability all have the potential to disrupt business operations.
Not least of these challenges are risks posed by the security environment, which has evolved in recent years as a result of various factors, including the growing presence of the Iraq- and Syria-based militant group Islamic State (IS) in the region. Economic and demographic drivers ranging from the impact of low oil prices to widespread unemployment also threaten future political unrest.
IS’s capture of territory in Libya and claim of responsibility for mass casualty attacks in Tunisia has in recent years drawn attention to the militant threat in North Africa. Foreign companies should be aware of the broader context in which this threat is emerging and understand that militancy in the Maghreb region is driven by an interaction of regional and local factors. Take Tunisia as an example: though IS claimed three mass casualty attacks there in 2015, it does not control any towns or cities. The group as it exists in Tunisia is a complex, difficult-to-pin-down mix of former al-Qaida militants, returning fighters and homegrown militants. Those returning from conflict abroad or who have links to al-Qaida-linked fighters in Algeria will have had access to training and weapons. Tunisian security forces – overburdened, undertrained and operating under outdated statutes– will struggle to contain the threat. The level of threat varies on the basis of region and sector, and foreign companies should invest in understanding the extent to which IS could impact their operations.
Companies should also be aware that even where IS has a more limited presence, it still retains the ability to influence militancy trends that could also have implications for operations. For example, in Algeria, local al-Qaida affiliate AQIM remains the principal militant threat, but foreign companies are likely to face increasingly erratic militant targeting patterns as a result of competition between AQIM and IS over recruits and financing. An attack by AQIM militants on a gas facility in Algeria’s Ghardaia province in March is likely to have been driven to some extent by such considerations. The oil and gas sector, as the lifeblood of the Algerian economy, is likely to be at highest risk.
Aside from the increasingly complex militant landscape, foreign companies should consider local socio-economic issues which drive unrest. From Tunisia, whose increasingly democratic politics has not been matched by economic progress, to Morocco and Algeria where promised democratic reforms remain glacial in their implementation, socio-economic grievances regarding unemployment, standard of living and service delivery drive frequent protests and demonstrations. In Tunisia in particular, demonstrators at company sites demanding employment have caused significant business disruption, notably in the hydrocarbons and extractives sectors.
Several mitigating factors contribute to the significant variation in the threat environment across the Maghreb region. For example, in Morocco, the highly capable security forces have disrupted a significant number of cells recruiting people to fight in conflicts abroad or planning attacks in the kingdom. Nonetheless, to successfully operate in the region, companies will have to monitor the security environment, understand local variations and likely risks to key sectors, and implement mitigation measures.
Companies operating in the region should continue to expect security alerts and register with relevant embassies and available warden networks to keep fully appraised. Many inherent risks can be mitigated with good planning and the application of sustainable security measures such as the regular updating of contingency plans and reviews of workplace and residential security arrangements. Staff traveling to and operating in the region should be fully briefed on the threat environment. Companies should also be prepared to address natural feelings of paranoia or anxiety among personnel and proactively communicate any actions taken to mitigate security risks.
Those looking to invest in the region should consider reviewing new properties, accommodation locations and worksites at an early stage of the project cycle in order to assess the locations’ potential attractiveness for targeted attacks. Assessments should be conducted in line with a nuanced understanding of the local security environment, for example, to evaluate the ability to conduct an effective lockdown procedure should an incident occur. With access to accurate information and with appropriate risk mitigation measures in place, foreign companies can be well positioned to avail of the opportunities that the Maghreb market offers.
By: Fiona Barsoum & Simran Singh