The Arkin Group

A week before Election Day 2020, TAG President Jack Devine spoke with KARV Communications about the U.S. elections and prospects for political unrest in the country following the vote. Asked what companies should be doing to prepare for any potential civil unrest or other issues in the aftermath of the election, Jack said, “This is potentially the most contentious election of this generation due to the uncertain outcome and COVID-19-related difficulties in voting. There could be some civil unrest if one candidate appears to win on election night, but mail-in votes change the results. Keep in mind that the battleground states of Pennsylvania, Iowa, Ohio, North Carolina, Nevada, and Minnesota all have ballot deadlines three or more days beyond election day. If the eventual numbers are close, there could be short-term unrest. National security and police infrastructure are robust enough to not let this get out of hand. The U.S. is well-positioned to handle protests or other disruptions after the election, and our political institutions will prevail. Due to the level of uncertainty of the election and citizen response, it is essential that companies have well-practiced emergency plans including protection of people, information, and physical facilities.”

Read Jack’s Q&A with KARV Communications here.

November 13, 2020

The International Atomic Energy Agency (IAEA) has reported that Iran now has more than 12 times the amount of enriched uranium allowed under the multilateral nuclear deal signed with China, France, Germany, Russia, the UK, and the US in 2015. The global nuclear watchdog has also found that Iran has been enriching uranium to 4.5% purity, above the 3.67% limit agreed in the accord. Iran began flagrantly violating the terms of the deal when the US, under the Trump administration, withdrew from it in 2018. The election of Joe Biden – who was vice president when the US signed on to the deal – has led to speculation that the US could again seek some sort of rapprochement with Iran on its nuclear program. Progress on this issue is likely to be among the Biden administration’s priorities for reengagement in multilateral accords and institutions, such as the Paris Agreement and the World Health Organization. However, efforts to reestablish productive ties with Iran will encounter obstacles and domestic resistance that would not figure into re-signing a multilateral climate agreement. Iran’s very public violations of the nuclear deal complicate the argument that it will be a cooperative partner in any future agreement the two sides are likely to reach. And even getting to a deal will be an uphill battle – Iran is notorious for driving a hard bargain and will push for any and all advantages it can extract from talks. Biden’s history on this issue suggests that at the very least he may make a good faith effort to cool tensions between the two countries, but under the circumstances, chances are slim that these efforts will succeed.

President Trump has signed an executive order prohibiting U.S. firms or individuals from investing, either via direct share ownership or through funds (including emerging markets and mutual funds), in 31 companies the U.S. has labeled as providing support to modernization of China’s People’s Liberation Army (PLA). The goal of the order is to prevent the channeling of U.S. capital into the buildup and modernization of the Chinese military. The prohibition on new investments in these companies goes into effect on January 11, and investors and funds have until November 2021 to divest existing assets that fall under the newly prohibited category. The firms on the list include state-run providers of aerospace, shipbuilding, and construction equipment and services, as well as those that develop and sell advanced technological products with military applications. Two of the companies on the list, China Mobile Communications and China Telecommunications Corp., have units listed in the U.S., and others are listed on the Hong Kong stock exchange. China watchers have warned that some of the Trump administration’s recent moves to ratchet up pressure on Beijing may push U.S.-China relations to a level of tension that a Biden administration would have difficulty walking back. However, China is known for its long view in foreign policy and other facets of geopolitics – Beijing is unlikely to overreact, and more likely to seek a proportional response that saves face but still gives it latitude to establish a new (and less contentious) normal with the incoming administration.

Political turmoil hit Peru this week when the Peruvian congress ousted President Martín Vizcarra on corruption allegations and installed speaker Manuel Merino as president. Merino was sworn in as Peru’s president on Tuesday after Vizcarra was impeached by Congress on Monday in an act that the Peruvian people saw as a legislative coup on a popular president. Merino, who was the speaker of Congress and instigated impeachment proceedings, has been accused of trying to protect his own political interests and those of his allies, who have also been accused of corruption. Not surprisingly, Peruvians took to the streets after Vizcarra’s ousting. Vizcarra has been popular in Peru, with 50% approval ratings even through the challenging period of coronavirus lockdowns that have pushed the Peruvian economy into a downturn and a projected contraction of 14% in 2020, according to the International Monetary Fund (IMF). Polling data indicates that three quarters of Peruvians believe Vizcarra should not have been removed from the presidency, despite allegations that he took bribes from construction companies. Now, it appears there are no real checks and balances in place on Merino and an elevated concern that he could put off presidential elections currently scheduled for April 11, 2021. Unfortunately, this is another example of how corruption and corruption allegations continue to undermine democratic institutions and the will of the people in Latin America. With many countries in the region mired in their own domestic political and economic issues, it is unlikely that the situation in Peru will be met with much resistance or even reaction from the international community.

November 6, 2020

Beijing’s suspension of Chinese fintech juggernaut Ant Financial’s initial public offering, triggered by billionaire and company co-founder Jack Ma’s comments criticizing China’s financial regulatory environment, displays the degree to which political priorities trump other considerations in China. The listing, initially scheduled for yesterday, was set to break records – it had attracted orders of around $3 trillion – and would have raised the profile of Shanghai’s STAR market, which was launched only last year. Ma’s comments, made at a conference on October 24, took aim at Chinese and global financial regulators for outdated regulation methods that stifle innovation and fail to provide opportunity for young talent. Ant Financial is a dominant Chinese provider of e-pay services through its Alipay app and is also a major player in consumer lending and credit scoring. Beijing is expected to allow the IPO to move forward eventually, but investors have good reason to be more skittish about the risks inherent in investing in China than they were just a few days prior. China’s tech competitiveness is a critical element of its global rise, but this incident is a signal that just because a company is important for China’s tech ambitions does not mean that company is immune from domestic political risk. Savvy foreign investors in China will understand that they must be mindful that politics – specifically toeing the Beijing line – will override other considerations.

ISIS has claimed credit for a terrorist attack in central Vienna earlier this week that killed at least five and injured more than 20. Police killed the gunman, 20-year old Kujtim Fejzulai, and arrested another 14 people suspected to have been linked to the attack. Fejzulai, a dual citizen of Austria and North Macedonia, spent nearly two years in prison for an attempt to travel to Syria to join ISIS. The incident follows two grisly beheadings in France, the first over use of a cartoon depicting the prophet Muhammad in a class lecture on freedom of expression and the second in a church in Nice, where the attacker also killed two additional bystanders. These incidents are sparking concerns that the EU is now confronting a new wave of terrorism by Muslim extremists as countries across the continent struggle to contain resurgent Covid-19 outbreaks. ISIS and other terrorist groups have encouraged supporters and sympathizers to take advantage of the distraction caused by the pandemic, using it as cover to expand their activities. As the pandemic drags on, possibly through to 2022, EU countries – and other western targets contending with Covid-19, among other worries, such as political turmoil – should remain vigilant against the possibility of stepped-up terrorist activity.

A Taliban attack on the governor’s compound in Kunduz in northern Afghanistan was likely carried out by a drone, signaling a troubling shift in the nature of ongoing warfare in the country. The attack, which killed at least four security officers, came amid ongoing negotiations between the Taliban and the Afghan government in Qatar, which have been the backdrop to a dramatic rise in violent incidents. There has been some speculation that the Taliban has previously used remote-controlled aerial devices in attacks in addition to propaganda and reconnaissance activities – if so, those attacks have gone largely unreported. However, drone attacks have been employed by other regional militant actors, including ISIS. The expanded use of armed drones would imply a new element of risk in an already-volatile situation marked by rising casualties (~2,100 civilians dead and another ~3,800 wounded in January-September 2020) and the ongoing drawdown of US troops. It is also emblematic of a global trend. Drones are cheap, small, and easy to use. Reports of the use of drones to carry out violent attacks has been reported in asymmetric conflicts worldwide, from ISIS in Iraq and Syria to drug cartels in Central America to the alleged assassination attempt on Venezuelan president Nicolás Maduro in 2018. Coupled with the real risk of stepped-up terrorist activity under the cover of the pandemic (see above), this trend is a clear cause for concern that should engender a robust defensive response.

October 30, 2020

The United Nations announced a ceasefire agreement on October 23 between the two main factions in the Libya civil war. Representatives of the UN-recognized government of Libya (GNA,) led by Prime Minister Fayez al-Sarraj, and the Libyan National Army (LNA) forces, commanded by General Khalifa Haftar, reached agreement after negotiations with the UN and signed the deal in Geneva last week. Libya has been in conflict since Muammar Gaddafi’s overthrow in 2011. In 2014, the conflict escalated and the country split into factions following contested elections. Regional actors have been embroiled in the civil war as well, including Turkey, Russia, and Egypt. Russians have sent mercenary fighters and Egyptian President Al-Sisi had even contemplated ordering Egyptian ground forces into Libya to support General’s forces if the opposing GNA forces had attacked the eastern city of Sirte. Under the ceasefire deal, the two sides have agreed to “a complete, countrywide and permanent agreement” effective immediately. The agreement calls for frontline forces to return to their bases and for foreign actors to withdraw. The ceasefire also allows for road and air routes to reopen in the country. UN acting special envoy Stephanie Williams said that the ceasefire agreement will “go down in history” and pave the way for a broader political agreement between the two sides, with talks to begin in Tunis in November. No doubt there will be difficult discussions over representation in the capital, national control over Libya’s oil sector, distribution of oil revenue, and the unification of security forces under a central authority, but the ceasefire is an important first step, provided it holds.

Peaceful elections in Chile and Bolivia demonstrate the resolve of Latin Americans hit hard by the pandemic but determined to vote. On October 18, Bolivians elected leftist Luis Arce from the Movement Toward Socialism (MAS) party of former President Evo Morales. Arce won with 55% of the vote, and MAS also won majorities in both houses of congress. On October 25, Chileans voted overwhelmingly to draft a new constitution for the country, with 78% of respondents saying “yes” to a rewrite. Both elections had been postponed from earlier dates this year due to coronavirus shutdowns, and both were the result of political and social strife in their countries in 2019. In Bolivia, former President Morales fled the country amid political protests and a contested election last year, leading to an interim government led by conservative Jeanine Áñez. In Chile, large-scale protests over growing inequities in the country led to an agreement by the government of President Sebastián Piñera to hold a national referendum to decide whether or not to draft a new constitution. The good news is that the elections in Bolivia and Chile saw strong voter turnout and were held safely, peacefully, and without signs of fraud. What is less clear, however, is how a President Arce in Bolivia or a new constitution once drafted in Chile will deal with the most pressing issues facing the region – including the ongoing health crisis of Covid-19, a significant economic recession, and inadequate state resources to deal with either.

Anger over police use of excessive force sparked weeks of unrest in Nigeria after video surfaced of officers from the Special Anti-Robbery Squad (SARS) police unit allegedly shooting a civilian in the street. There have been peaceful demonstrations against the unit since at least 2017, and SARS has since been disbanded. But problems with the excessive use of force and lack of accountability among the country’s security forces are much larger than SARS. The Nigerian military killed at least a dozen in a show of force to disperse protests in Lagos last week, and states across the country have imposed curfews and mobilized all available police resources as protests have persisted in a pent-up response to decades of widespread law enforcement brutality and impunity. Nigerian demonstrations follow similar movements in Kenya, where protests arose over a documented rise in police killings, and in Zimbabwe over security forces’ use of excessive force and government-sanctioned torture tactics. There appears to be some solidarity not only among these movements in sub-Saharan Africa, but also with the Black Lives Matter movement in the U.S., which all call for greater police accountability. Black Lives Matter has sparked solidarity protests all over the world, in a long list of countries including the UK, Belgium, Brazil, India, and Japan. As this point it remains an open question whether demonstrations engender lasting change. However, the wide-ranging uptake of the cause points to an issue that governments will need to confront with solutions, rather than force, lest they add so much fuel to the fire that it becomes a threat to political stability.

October 23, 2020

Russia and Iran are weaponizing U.S. voter registration data, much of it publicly available information, in bids to influence U.S. election results with less than two weeks to go, according to U.S. intelligence officials. The U.S. warned of meddling by both countries, but honed in on Iran being behind a clumsy email blast purporting to be from far-right extremist militant group the Proud Boys and threatening registered Democrats if they did not vote for President Trump in the upcoming presidential election. Evidence suggests that Russia, Iran, and China are all involved in efforts to influence U.S. electoral outcomes. But Russia is widely accepted and understood to represent the largest threat, owing both to its sophisticated hacking and disinformation capabilities and the scale of its attempts prior to the 2016 election and throughout the current administration. More attempts are likely both in the lead-up to election day and in the days and weeks afterward, especially in the event of a close race.

The U.S. plans to lift Sudan’s designation as a state sponsor of terror after 27 years, which could lead to a dramatic expansion in economic opportunity for the country, where nearly half the population lives below the poverty line. The move, which removes restrictions on Sudan’s access to international financial networks, will enable receipt of foreign investment, debt relief, and humanitarian and military aid. However, Khartoum will first be required to pay $335 million in restitution to victims and their families of attacks on U.S. embassies in Kenya and Tanzania and an attack on a U.S. Navy destroyer in Yemen in 1998 and 2000 respectively. The U.S. policy pivot comes in the wake of a change in government in Sudan last year when Omar Hassan al-Bashir was forced out and replaced with a transitional government. Sudan is expected to be the fifth Arab country to normalize relations with Israel, in what is broadly understood as a concession to the U.S. in exchange for lifting the designation. Sudanese recognition of Israel is unlikely to have a significant impact on other, more influential Arab states mulling a normalization of relations with Israel, but nonetheless maintains momentum on the issue, with Morocco and Oman potentially next in line.

France has conducted a series of raids on suspected radical Muslims and Muslim groups, expelled foreigners suspected of links to terrorism, and closed down a mosque and multiple Muslim aid organizations. The crackdown comes in the wake of the murder of a teacher for using caricatures of the Prophet Muhammad as part of a lesson. The caricatures had been published several years prior by satirical magazine Charlie Hebdo, prompting a 2015 terrorist attack on its offices that killed 10 of its staff. This latest attack has fed a surge of nationalism, along with anti-Muslim rhetoric from the French far right, muting potential criticism of the crackdown. However, once the initial shock subsides, President Emmanuel Macron and his administration will have to decide how to calibrate a longer-term response that addresses growing terrorist concerns without further inflaming extremist sentiment among the country’s Muslims. Too light a touch could put his 2022 election prospects in doubt, whereas too harsh a crackdown could backfire and fuel additional attacks.