Novel Coronavirus Continues to Spread

Time to Update Disease Response Protocols

The novel coronavirus that originated in the Chinese city of Wuhan (2019-nCoV) at the end of 2019 has spread to at least 15 countries, with the vast majority of the nearly 8,000 reported cases occurring in China. The virus has resulted in 170 reported fatalities, all in China so far. We are still in the early days and there are as yet many unknowns. It is not clear how easily the virus is transmitted from person-to-person, the typical severity of the disease, its lethality or the ultimate extent of its spread. What experts do agree on is that the actual number of cases is likely much larger than the numbers reported.

At this point, 2019-nCoV has a far lower fatality rate than the MERS or SARS coronaviruses, but it is more lethal than typical seasonal influenza. Virus symptoms can resemble the flu or a bad cold in mild cases, but more severe cases can cause high fever, difficulty breathing, and lung lesions.

China has taken extraordinary measures to contain the virus such as severe travel restrictions in Wuhan and other major cities, effectively locking tens of millions of people in place, as well as other measures like suspending school in the capital. However, the risk of significant global spread remains high. India has its first confirmed case. If the virus breaks out in India in a major way, the global picture could change dramatically. India has nearly a fifth of the world’s population, but it does not have anywhere near China’s capacity for implementing containment measures.

Global corporations are taking protective measures. Companies like Google, Starbucks and McDonald’s are temporarily closing offices and stores in China, major airlines cutting back on flights to and from China, and firms like Facebook and Goldman Sachs are implementing the CDC’s recommendation to stop all non-essential travel to China.

However, even companies without a significant global work force would do well to revisit and augment their business continuity plans. The United States has thus far seen a handful of imported cases, but the CDC expects the number of cases here to increase, and person-to-person spread in the U.S. is a real possibility. Companies should have in place travel policies, social distancing guidelines, cleaning protocols and illness/return to work recommendations that unfold in step with key outbreak indicators.

If your company requires assistance in planning a response to this outbreak, the Arkin Group has assisted numerous companies including global law firms, financial firms and manufacturers, in putting comprehensive readiness plans and business response plans into place.

If you or your firm would like an individualized consultation or information, please contact The Arkin Group at 212-333-0280.

Dealing with the Challenges of Political Violence and Crime in Latin America

Want to know how to manage your business interests in Latin America amid rising levels of political violence, unrest, and crime in the region? TAG President Jack Devine and Amanda Mattingly discuss the nature of the threats in Mexico, Brazil, Venezuela, Nicaragua, and Chile and give guidance for clients operating in these environments in the recently released and updated 2020 edition of Latin Lawyer’s Guide to Corporate Crisis Management.

“Dealing with the Challenges of Political Violence and Crime in Latin America”

Jack Devine’s Winter 2020 Intelligence Report

TAG President Jack Devine’s Winter 2020 Intelligence Report includes his current assessment of Iran, the fault lines within the Middle East, the dilemma for Kim Jong-un in regards to testing nuclear weapons and a potential U.S. response, the current respite of the U.S.-China struggle, Putin’s maneuvering with a government reshuffle, and Latin America’s protests and unrest.

Iran – the Road Ahead

We noted in January 2017 in our first Intelligence Report of the Trump administration that Iran would become the trickiest foreign policy issue President Trump would have to confront. Iran certainly has lived up to that billing and is likely to continue to be the greatest foreign policy challenge in the decade to come.

Iran’s surrogates crossed an unspoken red line when they attacked the U.S. embassy in Baghdad. It was a serious miscalculation on their part in failing to understand Trump’s willingness to use force when American personnel are directly attacked. With the lethal attack on Iranian Quds Force commander, General Qassim Suleimani, that message was received loud and clear. The Iranian leadership was under immense internal political pressure to respond with visible force. Knowing a war with the U.S. would be unwinnable, they needed to find a response that would look tough, but at the same time ratchet down the crisis.

Ultimately, firing nearly a dozen ballistic missiles at two Iraqi bases housing U.S. personnel, after forewarning the Iraqi authorities, was smart and well-calibrated. It flexed Iranian muscles, while avoiding fatalities, and it enabled an almost immediate deescalation.

In his remarks after the counterattack, President Trump put down another critically important marker when he said Iran would not be allowed to have nuclear weapons during his Administration. Coming after the strike on Suleimani, the Iranians will take this statement seriously, and it may even get them back to the bargaining table.

At the same time, there are a number of factors that could derail this potential opening. Shia terrorist groups, like Hezbollah, receive significant financial and military support from Tehran, but are not totally under Iranian control and could strike out against American targets, despite Tehran’s wishes. Also, Iran’s Revolutionary Guards unwisely might attempt clandestine, cyber assaults and terrorist attacks on global U.S. and allied targets imagining they have deniability. Our intelligence agencies will have to perform at the top of their game, which they have been doing in recent years, to sort out the instigators of such attacks. Iranian leadership will try in the near term to keep a lid on the situation, but that is easier said than done.

One very important factor that works in favor of preventing another major crisis is the high importance given in the Middle East to the exercise of power. This is often what is understood best, and the Iranians will be careful not to misread Trump’s resolve a second time. However, Iranian leadership just cannot walk off into the night. The next move is theirs to make, and the risk of misjudgments on both sides is high. For now, we remain in a high risk and unpredictable environment.

Middle East Fault Lines

Even before the strike on General Suleimani, Iran was embattled on multiple sides. Protests against economic hardships and corrupt and ineffective leadership in Iraq and Lebanon are also animated by widespread anger toward Iran which is rightly viewed as a destabilizing force in both countries, including by the Iraqi Shiite community. The 2019 protests in Iran were brutally quashed, but force cannot extinguish the underlying problems. Following the unprecedented acknowledgement that the Revolutionary Guard inadvertently shot down the Ukrainian airliner last week, protesters were back out in the streets.

2019 was a clarifying year for Saudi Arabia; in September the country temporarily lost 50% of its crude production in just 17 minutes of sustained attack from Iranian drones and cruise missiles. Although he sent additional troops and imposed sanctions, President Trump decided against a retaliatory attack. In contrast, Trump’s recent response to the Iranian inspired attack on U.S. citizens at the embassy in Iraq could not have been clearer. The combination of the two has served to increase the risk level for U.S. allies in the region such as Saudi Arabia and Israel, while signaling that the United States’ most forceful response will come when our citizens are threatened. The Saudis have wisely taken steps to deescalate their confrontation with Iran, particularly in Yemen. It is likely that those efforts will continue in 2020.

Kim Jong-un’s Dilemma

Kim Jong-un’s takeaway from the killing of General Suleimani is likely to be a mixed one. He now has a vivid illustration that Trump will use force when vital U.S. interests are on the line, but in the North Korean context it may not be entirely clear to Kim where that line is. Kim recently announced at the Workers’ Party Central Committee meeting at the end of December that he was ending his moratorium on nuclear and ballistic missile testing and referenced a “new strategic weapon.” Post-Suleimani, however, Kim will take care in determining exactly how provocative he can be in pushing for sanctions relief. For example, Kim ignored his year-end deadline for U.S. movement on negotiations. It is likely that Kim will quietly continue to produce nuclear material and conduct missile tests, but for now will refrain from testing the type of long-range ballistic missile or nuclear device tests that could provoke a U.S. response and signal an end to negotiations. As Kim’s demands for sanctions relief continue to go unmet, however, the likelihood of a destabilizing movement on his end increases.

Momentary Respite in U.S.-China Struggle

The U.S.-China trade war is at an inflection point.The first-phase trade agreement signed by Trump this week, is a positive development which puts further escalation on hold but resolves, at least for now, few of the major issues of contention. Most critical to the U.S. in phase one is China’s pledge to increase the purchase of U.S. goods and services by $200 billion in the next two years over 2017 levels. The actual target may prove beyond China’s capacity, but progress is measurable and perfect for public messaging. In contrast, a second phase agreement will focus on trickier issues that are much harder for the public to grasp and for China to implement domestically, such as intellectual property protections and state support for industry. Progress will be slow.

U.S. concerns about the vulnerability of its networks, institutions, and companies to Chinese espionage and theft are justified – they are key components of China’s drive for economic and cultural dominance – but bilateral economic, political, and cultural activity create strong incentives to preserve stable relations. Longer-term, as the U.S. and China seek to carve out economic futures independent of the other, the shift away from competitive interdependence may impact both sides’ motivation to take a measured approach to long-standing conflicts in other areas, such as South China Sea navigation rights and arms sales to Taiwan. Looking out over the horizon, we anticipate an intensifying struggle between two major global powers.

Putin’s Maneuvering Continues

Russia’s recently announced government reshuffle is the first in a series of steps that will keep Vladimir Putin at the country’s helm long past the end of his presidential tenure. We can expect Putin to continue Russia’s campaign of meddling in the internal politics of foreign democracies. Russia’s interference in the 2016 U.S. presidential election will continue in 2020, although the extent of it remains to be seen. Meanwhile, as the U.S. has undertaken large policy pivots in the Middle East – removal of troops from Syria, the attack on Iranian General Qassim Suleimani, and the potential withdrawal of troops from Iraq – Russia is stepping in to take advantage of this and enjoying newfound leverage in an area of the world it has long wanted to dominate. Putin may attempt to broker a peace between the U.S. and Iran if there’s an opening. He also appears to be gaining an edge in Ukraine, having secured key concessions from President Volodymyr Zelensky in the two countries’ dispute over natural gas payments, and with Ukraine’s western allies having declined to put up lethal resistance to its invasion of Crimea. But the reality at home is that Russia is contending with a weak economy and a broad global shift away from fossil fuels, which form the core of its exports. The situation appears stable for now, but further deterioration could lead to internal unrest and ultimately hobble Russia’s global ambitions.

Latin American Protests & Unrest Likely to Continue

Latin America was rocked by violence and protests in 2019, and 2020 does not look much calmer. Already, Venezuela started the new year with a showdown at the National Assembly when opposition leader Juan Guaidó had to scale a fence to get in. The stand-off between Venezuelan President Nicolás Maduro and Guaidó has dragged on for a year now. Unfortunately, Guaidó’s support will continue to wane as the opposition splinters and Maduro takes the upper hand. Even with U.S. oil sanctions and calls for more street demonstrations, the Maduro regime is determined to stay in power. Unlike Bolivia’s President Evo Morales, Maduro will not be whisked off to Mexico anytime soon.

The protests that erupted in Chile in late 2019 were another example of unrest in Latin America and underscored a growing sense in the region that elected leaders are not addressing the social concerns of the people or meeting their expectations for economic opportunity and social mobility. Chilean President Sebastián Piñera proposed a set of social reforms in response to the violent protests, but it is unlikely we have heard the last from Chile where persistent inequality is far from resolved.

Mexico did not experience the same kind of political protests in 2019, but persistent security challenges made it the deadliest year on record with 37,000 murders. The leftist President Andrés Manuel López Obrador (“AMLO”) has maintained his popular support among the people, but his “hugs not bullets” approach to security has left much of Mexico in the hands of the violent drug cartels. At the same time, AMLO has alienated the business community and done little to boost economic growth or dismantle systemic corruption. Still, AMLO has deftly managed his relationship with the United States, and the USMCA trade agreement, which is ready for Trump’s signature, is an example. The “Remain in Mexico” program allowing Central American migrants to stay in Mexico as they await immigration proceedings in the United States was a good temporary solution to the caravan crisis, but thousands of jobless migrants in northern Mexico will only exacerbate the significant economic and security challenges that already exist. As Mexico is our top trading partner, more attention must be paid by Washington to these developments.

If you or your firm would like an individualized consultation or information, please contact The Arkin Group.

“Trump’s Iran Strike Was A Huge Win for the U.S,” Jack Devine on Bloomberg Radio, January 2020

Jack Devine, former chief of CIA’s worldwide operations, and founding partner and President of The Arkin Group, discusses the Iran situation. Hosted by Lisa Abramowicz and Paul Sweeney.

Trump’s Iran Strike Was A Huge Win for the U.S.