Political risk in oilfield minerals investments in MENA

• Autores: Industrial Minerals
• Localización: Industrial Minerals, ISSN 0019-8544, Nº. 556, 2014 (Ejemplar dedicado a: Enero)
• Idioma: inglés
• Texto completo no disponible (Saber más ...)
• Resumen

  • In those territories most severely impacted by the Arab uprisings, rulers had provided investors with stability at the expense of the rule of law, individual rights and political participation. Under these circumstances investors should consider the long term political risks associated with their trades and investments. From an actuarial perspective, if stability is dependent on a dictatorial ruler, even without a revolutionary uprising, the leader will pass away at some point, potentially ushering in an era of instability. Qatar's preemptive handover of power from the 61-year-old modernising emir, Sheik Hamad bin Khalifa, to his 33 year old son, is an exception to the rule of succession in the regions hereditary monarchies. Ailing monarchies in other territories are clinging tenaciously to power and are reluctant to pass the reigns to the younger generation.

    Through fair means and foul, the Arab world's remaining eight monarchies have so far managed to head off popular pro-democracy revolutions that erupted in January 2011 and ousted the dictators of Tunisia, Egypt, Libya and Yemen and embroiled Syria in conflict. Despite this, King Mohammed VI of Morocco, King Abdullah of Saudi Arabia, King Abdullah II of Jordan, Sultan Qaboos bin Said of Oman and the various sheiks of the Persian Gulf are less certain of their grip on power than a decade ago and the monarchies of Jordan, Bahrain and Saudi Arabia face particular challenges.

    Investing in MENA is far more complex than the television images of protests and violence which can act as a deterrent. There is rarely such a thing as a'good' or'bad' country. In reality it is more appropriate to think in terms of a good or bad risk. While historically, management of political risk by corporations was considered an oxymoron, today we recognise that companies change and influence the political risk environment they operate within. As such, there are several startegies companies can adopt to manage and mitigate the impact of political risk on their investments.