Analysis selection for JCC - July 2021 - IHS Markit
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Analysis selection for JCC July 2021 Foreign troops’ deployment in Mozambique likely reducing insurgent capability, but funding and lifespan of operation unknown 6 Aug 2021 - Country Risk | Headline Analysis Tanzania Air Force freight aircraft reportedly unloaded troops and military supplies at Pemba airport in Cabo Delgado province, northern Mozambique, between 1 and 3 August. • In the past month, to counter the insurgency in northern Mozambique, an estimated total of 3,300 to 4,000 troops have been deployed in the country by Angola, Botswana, Malawi, Rwanda, South Africa, Tanzania, and Zimbabwe, as well as small contingents from Portugal and the United States. The South African navy’s SAS Makhanda offshore patrol vessel, docked at Pemba port, is part of a small maritime contingent. South Africa has also deployed mechanised infantry, while Botswana, Rwanda, and South Africa have stationed helicopters in Pemba. Rwanda has established a logistical base in Nacala, Nampula province, northern Mozambique, and reportedly has deployed 1,000 personnel in Pemba and Mueda, Cabo Delgado province. Rwanda has taken a more aggressive stance than other countries, with its forces retaking from insurgents and holding the city of Awasse on 27 July, 40 kilometres west of Mocímboa da Praia, Cabo Delgado. The other countries’ militaries and governments have been in discussions on organising as a Southern African Development Community standby force (SADC-SF), but the command structure remains undefined as yet. Following a disagreement between Mozambique and South Africa over which country should head the mission, South African Major-General Xolani Mankayi, who commanded the South African National Defence Force peacekeeping mission in Burundi from 2001 to 2009, was appointed commander during the second half of July. • The Rwandan troops will very likely be able to secure a limited area within Mozambique’s northeastern Cabo Delgado province. However, the 1,000 Rwandan soldiers will be unlikely to secure a wider perimeter due to the focused nature of their offensive operations. According to an IHS Markit source, insurgents at least partly deserted Mocímboa da Praia in early August to avoid a confrontation with Rwandan troops, and based themselves 30 km south, near the Messalo river. The insurgents will likely carry out hit-and-run attacks on roads and villages in this district, and in the future, possibly attempt to develop crude improvised explosive devices (IEDs) to target troops present in the area. However, the insurgents are likely to be deterred from staging a large-scale assault on a city, due to their need to defend against the foreign forces arriving. Pemba will most likely remain an aspirational target, but the presence of the SADC-SF and the SAS Makhanda ship will very likely deter an assault on the city as long as they remain in place. • If the SADC-SF achieves enough co-ordination to provide support to Rwandan troops, the insurgency is likely to lose its current level of territorial control of the northeast of Mozambique and to be reduced to carrying out hit-and-run attacks. Such support from the SADC-SF would probably include ensuring a Confidential | Copyright © 2021 IHS Markit Ltd
Analysis selection for JCC - July 2021
month-long presence in key cities, performing regular patrols on the province’s roads, providing intelligence,
surveillance and reconnaissance (ISR) capabilities and airpower (attack helicopters). The insurgents will very
likely fully withdraw from Palma, Mocímboa da Praia, Macomia, and Muidumbe districts in Cabo Delgado
province. This loss of territorial control will diminish the insurgents’ sources of revenues by hindering their
ability to extort civilians, engage in smuggling, and ransom kidnapped civilians. The remaining insurgents will
very likely attempt to carry out occasional small-arms and crude IED attacks on Mozambique Armed Defence
Forces (Forças Armadas de Defesa de Moçambique: FADM) and SADC-SF soldiers and attempt to loot,
extort, and carry out attacks on civilians in the northern Niassa province’s rural areas.
• Insurgents’ tactic of avoiding confrontation with the armies will likely lead to quick claims of victory
by the government-aligned forces. Unless the SADC-SF secures external funding, it is unlikely to be able to
sustain itself beyond six months, which, combined with a perceived quick victory, is likely to lead to the
withdrawal of the SADC-SF in early 2022. However, the insurgency's social roots will most probably remain
unaddressed, leading the threat to reappear in the future.
• The SADC-SF and Rwandan troops’ deployments increase the likelihood of the ruling Mozambican
Liberation Front (Frente de Libertação de Moçambique: FRELIMO) party’s opposed factions calling for
an extraordinary central committee congress in an effort to replace President Felipe Nyusi as party
leader before the end of his mandate in 2024 and to call for an early general election. All the factions of
FRELIMO have been against the presence of foreign troops in the country, something that President Nyusi
was also against but eventually relented to under regional pressure. The government forces’ inability to mount
efficient counterterrorism operations on their own, despite the president having been minister of defence from
2008 to 2014, as well as being from Cabo Delgado province and an ethnic Makonde, one of the groups
specifically being targeted for execution by Cabo Delgado insurgents, is likely to weaken his authority within
FRELIMO.
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Indicators of changing risk environment
Decreasing risk
• If the SADC-SF finds an external source of funding, it will likely be able to sustain its presence for over six
months, increasing its ability to secure cities in Cabo Delgado province.
Increasing risk
• The SADC-SF does not co-ordinate well, leading to ineffective operations, including friendly fire incidents,
civilian casualties, and/or criminal accusations that fuel Mozambican domestic opposition to the foreign troops’
presence.
US withdrawal timeline precipitates Taliban attacks on Afghan provincial
capitals, representing hardening negotiations to seek interim government
6 Aug 2021 - Country Risk | Headline Analysis
The deputy chairman of Helmand’s provincial council, Majid Akhund, said on 3 August that the Taliban now
controlled nine out of the 10 districts of the provincial capital, Lashkar Gah. Fighting has also intensified during
the past week in other provincial capitals, specifically Herat and Kandahar. The Taliban also claimed the 3
August attack in the capital Kabul, where a vehicle-borne improvised explosive device (VBIED) was detonated
at the residence of Afghan Defence Minister Bismillah Mohammadi, who was not injured. The VBIED attack
was followed by multiple explosions and shooting in Kabul’s ‘Green Zone’, with at least 20 people injured.
• The Taliban’s recent attacks on key provincial capitals reflects a hardening of its negotiation strategy
to demand the formation of an interim government. Although the Taliban and the Afghan government
issued a statement on 18 July reaffirming their commitment for a political resolution, the increasing attacks on
Lashkar Gah, Herat, and Kandahar mark a hardening of the Taliban’s negotiating position. Initial Taliban
commitments to not target these cities were probably intended as leverage against a potentially protracted
timeline of the withdrawal of US troops. With the withdrawal now expected by end-August – although the
official date is 11 September – the Taliban calculates that an expedited timeline for intensifying its offensives
would probably force Afghan President Ashraf Ghani to resign and allow for an interim government that it
would dominate, which is a key Taliban demand for a ceasefire. On 2 August, President Ghani told parliament
that the offensives were a consequence of the “hasty” US withdrawal, but offered no indication of resigning.
The attacks, however, are unlikely to represent a broader shift in Taliban intent to take control of the country
militarily, even if it has the capability to do so. The Taliban is wary of internationally delegitimising the resultant
government: for instance, on 2 August, the US Special Representative for Afghanistan reconciliation, Zalmay
Khalilzad, said that the United States would consider the Taliban a “pariah state” should it control the country
by force.
• Afghan forces successfully resisting the Taliban in these cities would be a key marker of President
Ghani’s options to delay a Taliban-dominated interim government. Media reports as of 6 August showed
that Afghan forces were still fighting the Taliban in Lashkar Gah. Similarly in Herat, Afghan forces were
attempting to push Taliban militants back towards the peripheries of the city and were still in control of the
city’s civilian airport, with fighting continuing in Kandahar as well. Afghan security forces have a numerical
advantage over the Taliban, although their morale is very likely to be low, given the Taliban’s increasing
military momentum. Holding these cities would be key to the forces’ security, and successfully pushing the
Taliban back would be a boost to their morale, also allowing Ghani to not yield to Taliban demands for the
interim government. Security forces’ morale would likely be further aided by civilian support, which took the
form of anti-Taliban street protests in Herat and Kabul this week. Crucial to this would be continued close air
support from the US, which the US has not yet confirmed following its withdrawal from Bagram and Kandahar
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air bases earlier in July. Although the Afghan Air Force has the capability to strike Taliban positions, its
experience, ability to co-ordinate with ground forces, munition stocks, and aircraft maintenance capability are
lower than those of US forces.
• Even if the Taliban assumes military control of these cities, it is unlikely that the group intends to hold
them indefinitely. For the aforementioned reasons of seeking a political resolution and forming a legitimate
international government, should the Taliban come to control Lashkar Gah, Herat, and/or Kandahar, this is
unlikely to be intended as indefinite. In early July, the Taliban entered Qala-i-naw – the capital of Badghis
province – but did not assume control of the city. The Taliban’s current focus is on controlling supply chains
and reducing revenue generation avenues for the Afghan government, especially import duties. A Ministry of
Finance spokesperson said on 5 August that revenues from collection of these duties for the government had
fallen from USD91 million in June to USD58 million in July, after the Taliban took control of at least eight of 14
cross-border posts. These include Islam Qala, Spin Boldak, Wesh, and Ay Khanum, where the Taliban has
now reportedly imposed its own tariffs on cross-border trade of goods.
Indicators of changing risk environment
Increasing risk
• Explicit statements from President Ghani refusing to resign following the Taliban’s attacks on these provincial
capitals would increase Taliban intent to fight to capture and hold these cities.
• The Taliban assuming control of airports in Lashkar Gah, Herat, and Kandahar and continued intent to resist
counter attacks.
• Substantially increasing defections from Afghan forces, presenting a challenge to their numerical strength,
would offer more momentum for Taliban military offences.
Decreasing risk
• The formal resumption of intra-Afghan talks would indicate momentum in negotiations for an interim
government and a ceasefire.
Lithuania’s push for expanded EU sanctions against Belarus likely to further
disrupt fertiliser supply chain, transport sector
6 Aug 2021 - Country Risk | Headline Analysis
Lithuania’s Foreign Affairs Minister Gabrielius Landsbergis said on 4 August that Belarusian fertiliser exports
via Lithuania’s Klaipėda seaport could be completely halted, adding that the government had submitted a
formal proposal to expand EU sanctions against Belarus, including expanding sectoral restrictive measures.
The proposal is in response to the increased illegal influx of third-country citizens, primarily from Iraq, via
Belarus to Lithuania, which is probably being facilitated with the involvement of Belarusian authorities. In
June, the Council of the European Union imposed sectoral economic sanctions on Belarus, with bans
including trading in some potash, petroleum, and tobacco products, affecting about 13–15% of total
Belarusian exports to the EU. The EU and Lithuania have increased diplomatic engagement with Iraq, aiming
to curb migrant arrivals to Belarus and accelerate readmission of Iraqi nationals with rejected asylum claims in
Lithuania back to Iraq. On 5 August, sources within Iraqi Airways, confirmed by EU Ambassador to Iraq Martin
Huth, announced that flights from Iraq to Belarus have been cancelled, potentially until further notice. At the
same time, Landsbergis said that there were indications that Belarus was attempting to open similar migrant
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arrival routes from Morocco and Pakistan. In July, a Belarusian delegation to Pakistan was negotiating visa
liberalisation.
Significance: The Council of the EU representing EU member states will probably expand at the earliest in
September and only marginally sectoral sanctions against Belarus to include more oil refining and potash
trade. This will probably additionally disrupt the fertiliser industry’s supply chain and the transport sector,
including railways and ports. Road cargo delays at EU-Belarusian borders continue to be likely. If the
Belarusian government facilitates more passenger flights from other African, Middle Eastern, or Asian
countries, it will increase the risk of a gradual introduction of further sectoral sanctions. If the EU announces
possible restrictions regarding visa procedures for nationals of third-countries such as Iraq and Pakistan, this
will increase the likelihood of accelerated readmissions of third-country nationals with rejected asylum, thus
reducing the risk of migrant smuggling operations from Lithuania into other EU countries.
Risks: Ground cargo; Regulatory burden
Sectors or assets affected: Oil refining and trade; Potash mining, processing, and trade
Zimbabwean chrome ore export ban likely to result in contract alteration in
gold and platinum mining
5 Aug 2021 - Country Risk | Headline Analysis
Zimbabwe’s government approved on 3 August a ban on all exports of unprocessed chrome ore, effective
from July 2022. The government says the ban is to protect the domestic ferrochrome industry, and, it says, is
integral to the country's attainment of an envisioned USD12 billion industry by 2023. Zimbabwe attempted the
same ban in 2012, but withdrew it after local smelters expressed a lack of capacity to process the
concentrated ore. Zimbabwe has the second-largest known chrome ore reserves after South Africa and its
total export earnings from chrome ore were USD230 million in 2020, exporting close to 900,000 metric tons.
Significance: Zimbabwe has 22 chrome ore smelting facilities, which mostly involve investment either wholly
or partially by Chinese companies. The minister of mines announced that the July 2022 timeline for the
introduction of the ban would afford local smelters the opportunity to build further smelting capacity. He added
that limited chrome-ore export consignments would be allowed provided local operators had no capacity to
process those consignments. This will likely lead to a review of all export contracts with trade partners,
including Germany, Mozambique, Russia, and South Africa, based on local smelting capacity. This ban will
also affect supporting industries, such as ground cargo and shipping contracts. IHS Markit assesses that
small mines and smelting facilities that fail to build up their capacity by July 2022 are likely to lose their
licences to Chinese companies subsequently. These licence awards will likely be made at the discretion of the
minister of mines and likely will be politically motivated. Consequently, companies associated with rivals of
President Emmerson Mnangagwa are most likely to have their licences revoked. Other industries earmarked
for a similar policy stance in the next 6 to 12 months include the gold, copper, and platinum mining sectors.
Risks: Policy instability; Regulatory burden; Contract alteration
Sectors or assets affected: Mining; Ground cargo; Shipping
RISK NOTE: Boarding of tanker, electronic interference, highlight ongoing high
risk of seizure in Gulf region
4 Aug 2021 - Country Risk | Headline Analysis
|5Analysis selection for JCC - July 2021
On 3 August, the United Kingdom Maritime Trade Operations (UKMTO) warned of a potential hijack incident
in the Gulf of Oman. According to additional media reporting, as the Panama-flagged MV Asphalt Princess
(IMO 7382988), an asphalt/bitumen tanker owned by Emirati free zone-based Glory International, was roughly
61 nautical miles east of Fujairah, several armed men boarded the vessel and apparently ordered it to
navigate towards Iran. Shortly afterwards, however, the men left the vessel, prompting the UKMTO to report
"Vessel is safe. Incident complete." Iran denied involvement in the incident.
• The boarding of the MV Asphalt Princess coincided with news reports of at least four other vessels (the
Queen Ematha, Golden Brilliant, Jag Pooja, and Abyss) in the vicinity announcing briefly, through their
Automatic Identification System (AIS) trackers, that they were “not under command” (NUC). These NUC
incidents, unusual in their simultaneous numbers within a defined area, though not in their occurrence as
such, suggest the use of electronic or cyber interference in the operation to board the MV Asphalt Princess.
• Although a false-flag operation by third parties is a remote possibility, the temporary boarding of the MV
Asphalt Princess, and potential use of electronic interference technology, point to Iran as the most likely
perpetrator. Furthermore, the Homa, an Iranian amphibious landing craft, reportedly entered Omani waters
just before the day’s incidents. Like the 29 July 2021 unmanned aerial vehicle (UAV) attack for which Iran was
almost certainly responsible, and which caused two fatalities aboard the Israeli-managed MT Mercer Street
(IMO 9539585) in the Gulf of Oman, these additional maritime tactics – the commandeering by armed men of
merchant vessels, and the use of electronic or cyber interference – especially when taken together, reflect not
only Iranian capability but also operational precedent (especially in 2019).
• These 3 August maritime incidents coincided, on the same day, with the official endorsement ceremony of
Iranian President Ebrahim Raisi, a hardline conservative under US sanctions for human rights violations.
Unlike outgoing President Hassan Rouhani, a centrist, during whose second tenure Iran’s Islamic Revolution
Guards Corps (IRGC) sabotaged and hijacked several vessels after the Trump administration withdrew from
the nuclear agreement and reinstated sanctions, Raisi and the IRGC are aligned on taking a more
confrontational approach to Iran’s foreign policy.
• If these latest incidents indeed carried the approval of Iran’s highest authorities, there would likely be at least
two objectives. Firstly, to emphasise Iran’s capacity to disrupt commercial shipping through the Strait of
Hormuz if Israel retaliates militarily, and if a broader international front that includes the United States and the
United Kingdom takes additional collective action against Iran, for the MT Mercer Street attack. Secondly, to
mark a strategic shift away from easy compromise that will likely accompany Raisi’s foreign policy moving
forward.
Lebanon’s political and economic impasse
3 Aug 2021 - Country Risk | Strategic Report
On 29 July, the oil products tanker MT Mercer Street (IMO 9539585) was reportedly struck by multiple
Lebanon remains without a functional cabinet 11 months after Prime Minister Hassan Diab’s government
resigned, following the Beirut Port explosion on 4 August 2020. Government formation and, subsequently,
promised political and economic reforms are necessary conditions for Lebanon to receive international
financial assistance. Since summer 2019, the country has faced hard currency shortages and currency
devaluation, worsened by the COVID-19 pandemic and the Beirut Port incident. In March 2020, Lebanon
defaulted on its external debt (Eurobonds) for the first time.
• Even if Prime Minister-designate Najib Mikati succeeds in agreeing on a cabinet with President Michel
Aoun, factional disagreements mean government decision-making stalemate is likely to persist. On 15
July, PM-designate Saad al-Hariri resigned, after insisting on a technocratic cabinet, against President Aoun’s
|6Analysis selection for JCC - July 2021
demands to include political appointments consistent with the National Pact. For Hariri, the latter risked
allowing Aoun’s Christian-majority Free Patriotic Movement and its allies – mainly the Shia parties Hizbullah
and Amal – to establish a one-third veto bloc challenging the premier’s policy decisions. On 26 July, President
Aoun then selected former two-time prime minister, Najib Mikati (2005, 2011–13) – a telecommunications
magnate and Lebanon’s richest individual – as the third PM-designate since August 2020. Even if Mikati
manages to form a cabinet with Aoun’s endorsement, the persisting disagreement between Lebanon’s
political factions even amid a worsening national emergency, combined with legislative and presidential
elections scheduled for 2022, suggest a heightened likelihood of blockages to policy implementation. By
extension, that would affect key issues including French-proposed structural political, economic, and anti-
corruption reforms (such as an electricity sector re-haul, an audit of the Central Bank, legislation on capital
controls, and judicial independence).
• Lebanon’s economic difficulties are likely to persist in the near term, fuelling associated widespread
street protests. Since August 2019, the Lebanese pound has depreciated from its official pegged rate of
LBP1,507/USD1 to nearly LBP24,000/USD1 at its lowest, stabilising at LBP19,000/USD1 as of 2 August.
Given that Lebanon imports most of its consumption requirements, dwindling hard currency (especially US
dollar) reserves, which are currently estimated at USD14 billion – USD15 billion or less (the equivalent of 10
months of goods and services imports, or 15 months of goods imports only), have fuelled price inflation across
almost all types of basic goods and commodities including food and medicine, with knock-on effects on the
availability of fuel, electricity, and water. Immediate but temporary remedial measures include a one-year
agreement with Iraq reportedly involving Lebanese health-related services for 1 million tonnes of Iraqi oil (to
be traded with third countries for Lebanon-compatible fuel). High prices and shortages will almost certainly
continue driving protests countrywide. Protesters will likely attempt to force entry into government buildings
(especially ministerial buildings and water and electricity facilities), banks, pharmacies, petrol stations, and
supermarkets; block intra- and intercity roads and roundabouts with burning debris; and occasionally use
small arms fire, including against security forces. Hard currency shortages are additionally impeding the repair
and maintenance of the remaining five of 16 gantry cranes at Beirut Port – the country’s foremost import
gateway.
• Even if a government were to be formed in 2021, political, economic, and anti-corruption reforms
would probably unfold only very slowly and partially, given the various factions’ economic interests at
stake, and because of likely political disagreements. Consequently, additional protests are probable,
reviving demands to abolish the current sectarian quota system, and to call to account the political class,
popularly perceived as corrupt and predatory. In the immediate term, protests would likely persist over the
Beirut Port explosion, with demands for investigations to be completed and for officials responsible to be
prosecuted. Moreover, Lebanon’s slow COVID-19 response (only 16.3% of the population has received one
vaccine dose, and 12.2% both doses, amid another rise in infections), and weak pandemic support such as
for businesses and the retrenched, remains another driver of popular anger.
Indicators of changing risk environment
Increasing risk
• Media report disagreements between Mikati and Aoun; Mikati eventually fails to form a government, further
reducing the pool of consensus candidates, and protracting the political and economic deadlock.
• Miscalculated south Lebanon border incidents, including by Palestinian factions firing rockets into Israel (and
Hizbullah allowing them to do so), increase the likelihood of Israeli retaliation in the form of air strikes, if not
ground operations, worsening Lebanon’s social and economic hardship.
• The European Union sanctions Lebanese individuals/entities – accused of public corruption or of impeding
accountability, the democratic process, and government formation – with targeted restrictive measures, the
broad framework of which was adopted on 30 July 2021. This would likely make government formation even
more difficult.
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Decreasing risk
• Mikati forms a government, paving the way for international financial assistance, including from the
International Monetary Fund (IMF), to at least cover some of Lebanon’s most pressing economic needs,
dampening some protest risks.
Israel will almost certainly retaliate militarily against Iran for fatal maritime
attack, but avoid targeting commercial vessels
2 Aug 2021 - Country Risk | Headline Analysis
On 29 July, the oil products tanker MT Mercer Street (IMO 9539585) was reportedly struck by multiple
weaponised unmanned aerial vehicles (UAVs). The incident occurred approximately 152 nautical miles
northeast of Oman’s Duqm port, outside Omani territorial waters. The Liberian-flagged vessel is Japanese-
owned, but managed by Israeli magnate Eyal Ofer’s Zodiac Maritime shipping group. The attack reportedly
killed two crew members – the Romanian captain and a British security officer. Israel’s government formally
accused Iran and, having seen Israel’s evidence, the United States and United Kingdom also now accuse
Iran. Iran’s government has rejected the claim, but Iranian media earlier stated that the attack had been
carried out by “resistance factions” in revenge for a 22 July airstrike at Dabaa airbase in Syria’s Qusayr
region, attributed to Israel. On 24 April, an Iranian oil tanker off the coast of Syria’s Baniyas port was allegedly
targeted in a UAV strike resulting in several fatalities onboard, although Iranian and Russian media later
denied that a UAV strike was the cause.
• If Iran intentionally caused the fatalities, which is currently unclear, the resulting escalation will
increase the probability of more substantial damage to Israel-linked merchant vessels in the Middle
East Gulf, the Gulf of Oman, and the Arabian Sea. In the context of Iran and Israel’s two-year maritime
confrontation, the attack is the first of its kind publicly known to have caused civilian fatalities. US naval
specialists who investigated the damage believe that weaponised UAVs were used, at least one of which
targeted the vessel’s bridge or living quarters, suggesting intent to cause casualties (although Israel currently
assesses this to have been unintended). Despite Iran’s denial, the deployment of suicide drones and loitering
munitions has become a hallmark of the operational conduct of both Iran and its regional proxies operating
especially inside Iraq and, from Yemen, targeting Saudi Arabia. Furthermore, Iran is the only state actor that
currently combines this capability with the motivation to target Israeli assets. In April, the Iranian military
conducted drills involving multiple delta-wing loitering munitions, which appeared similar to those used in the
2019 attack on the Saudi Abqaiq oil facility, and have been used by the Houthis in Yemen, with a reported
range of up to 965 km. If Iran’s modus operandi has indeed become less restrained, the resulting cycle of
escalation will increase the probability of more significant damage to vessels and fatalities at sea, involving
merchant vessels in the Middle East Gulf, the Gulf of Oman, and the Arabian Sea believed to be owned or
operated by Israeli entities, and even third-country vessels carrying cargo linked to Israel.
• Israel will almost certainly retaliate against Iranian military targets, potentially including ports used by
the Iranian navy, but is very unlikely to specifically target Iranian commercial vessels. Israel has
indicated it will seek a broader diplomatic front, in consultation with international allies, to isolate Iran and to
emphasise the threat it poses to international shipping. This comes as a new hardline conservative president,
Ebrahim Raisi, assumes office in Iran in early August, bringing into being only the second such hardline
presidency since 1989. Israel, however, is almost certain to also retaliate militarily, with the Israel Defense
Forces (IDF) having convened over the weekend to debate options. Prime Minister Naftali Bennett publicly
favours striking directly at Iran even for attacks conducted indirectly by its proxies. Given the diplomatic
campaign, this is unlikely to target civilian vessels, but likelier to target Iranian military personnel or Iran-
backed militias both in Iranian territory and abroad, including aboard Iranian naval vessels and ports used by
Iran’s regular or Islamic Revolution Guards Corps navy, such as Bandar Abbas, Bushehr, Jask, Bandar
|8Analysis selection for JCC - July 2021
Mahshahr, Kharg Island, and Bandar Khomeini.
• Israel is likely to not only maintain, but intensify broad-spectrum pressure on Iran to curtail the latter’s
growing regional entrenchment, influence, and power. The MT Mercer Street attack, which IHS Markit
assesses was very likely carried out by Iran, will also be the first known public occasion of an Iranian attack at
sea in response to an Israeli attack not conducted at sea. This shift hints at an Iranian intent to escalate rather
than contain its tit-for-tat measures vis-à-vis Israel. Iran’s decision to conduct maritime attacks likely reflects
the belief that it has an asymmetric naval and aerial advantage in waters near Iranian territory. It also likely
reflects Iran’s assessment that naval power is relatively the least developed dimension of Israel’s warfare
capabilities (besides land, air, cyber, and space), especially outside of the Mediterranean and the Red Sea,
heightened by Israel’s dependence on maritime trade. With Iran under incoming President Raisi being
increasingly willing to seek confrontation and snub compromise, including potentially over its nuclear
programme, Israel is likely to ramp up and expand its range of measures against Iran and its proxies. These
include, but are not limited to, ongoing airstrikes in Syria and nearby regions such as Iraq; cyber-attacks
including increasingly on Iran’s civilian infrastructure (particularly the hydrocarbon sector, Gulf-water ports,
and the recently opened Goreh-Jask oil pipeline); sabotage operations and assassinations targeting Iran’s
nuclear, missile, and military sectors; and maritime conflict.
Indicators of changing risk environment
Increasing risk
• The P5+1 talks over Iran’s nuclear programme collapse, signalling heightened incentive for and risks of a
regional war involving Israel/the US and Iran.
• An attack on commercial shipping near Iranian territorial waters sinks a vessel, not necessarily linked to Israel,
triggering more robust international maritime security activity in the region, and further increasing the risk of
naval confrontations with Iranian forces.
Decreasing risk
• The Biden administration and Iran reach an agreement on a return to compliance with the 2015 nuclear
agreement, but also (improbably) agree to address Iran’s missile programme and support for regional militias,
presumably with the US willing to offer more substantial and farther-reaching concessions to Iran.
Alongside military deployment, South Africa reinstates social grants to prevent
further unrest; increasing fiscal pressures remain elevated
30 Jul 2021 - Country Risk | Headline Analysis
President Cyril Ramaphosa announced on 25 July a series of measures to assist people and businesses
affected by several days of looting, damage to property, and arson following the imprisonment of former
president Jacob Zuma on 7 July. Violent protests began with the blocking of the two key N2 and N3 national
roads on 9 July, and later resulted in the looting of large retail stores in the Durban and Johannesburg inner
city areas and surrounding neighbourhoods. The protests largely have stopped following the deployment of
25,000 soldiers by Ramaphosa on 14 July. Zuma was arrested after the Constitutional Court on 29 June
ordered his imprisonment for reportedly refusing to appear before the Commission of Inquiry into Allegations
of State Capture. Zuma has denied all allegations of wrongdoing.
• Military deployment is likely to be scaled down only after the Constitutional Court rules on Zuma’s
appeal against his 15-month jail sentence. On 12 July, the Constitutional Court heard an application by
|9Analysis selection for JCC - July 2021
Zuma seeking rescission of his 15-month jail sentence and is very likely to announce its ruling during August.
If Zuma’s application is rejected, which is very likely, a resumption of protests is likely in his home province of
KwaZulu-Natal, especially in low-income neighbourhoods surrounding Durban and Pietermaritzburg. Protests
are likely to last half a day and recur for less than a week. They are unlikely to become violent or result in
significant looting of retail stores because of the South African National Defence Force (SANDF) deployment.
The protests are also unlikely to spread to other provinces. Thus far, the presence of the SANDF has allowed
critical supply routes including the freight rail network and roads to return to full operational capacity. The
SANDF has also been deployed in areas regarded as potentially sensitive locations in Gauteng and KwaZulu-
Natal, and to protect key economic and government infrastructure, shopping malls, warehouses, and
factories. Ramaphosa is likely to wait up to two weeks after a decision on Zuma is delivered by the court
before reducing military deployment. However, Ramaphosa is likely to seek minimal SANDF presence for
municipal elections, due before end-February 2022.
• New social measures to reduce future unrest will increase fiscal spending during fiscal year (FY)
2021/22. The reintroduction of the Social Relief of Distress Grant, providing a monthly payment of
ZAR350/month (USD24/month) to unemployed South Africans until March 2022, will cost approximately
ZAR27 billion, while a further ZAR9 billion will be disbursed via several mechanisms aimed at alleviating the
effect of the unrest on small businesses, including those that are uninsured. The government has also agreed
to a new wage deal with public-sector unions, costing ZAR20 billion. As further adverse indicators for the
fiscal deficit, progress on the unbundling of financially constrained state-power-producer Eskom is proving
slow, while the privatisation of the national air carrier South African Airways (SAA) will be hindered by its
subsidiary Mango Airlines seeking bankruptcy protection, according to its interim chief executive.
• High global commodity prices should permit a significant government revenue overrun during FY
2021/22. Despite the higher outlays, a tax windfall from the mining industry during the first quarter of FY
2021/22 suggests that a significant government revenue overrun of ZAR80 billion could be achieved for the
whole FY. Higher fiscal capture from mining looks more than sufficient to finance the government’s additional
spending commitments and leave the fiscal deficit at an estimated 8.4% of GDP (versus 9.0% of GDP
previously forecast by the government). This projection is based on IHS Markit’s upward revision in our
forecast for South Africa’s GDP growth to 4.2% in 2021 from 3.5% published in the original FY 2021/22
budget statement. South Africa’s GDP rebound of 1.1% quarter on quarter (q/q) during the first quarter of
2021 was well above general market expectations.
• Debt sustainability risk remains elevated beyond FY 2021/22. The 2021 increase in fiscal capture from the
mining sector and resulting revenue overrun are unlikely to be repeated and may well be reversed once
recovery from the coronavirus disease 2019 (COVID-19) pandemic runs its course and pent-up global
commodity demand is satisfied. Even with the mining windfall, the country’s fiscal deficit is unsustainably high
and could rise even further if global commodity prices move sideways or decline and South Africa’s GDP
returns to its potential longer-term projected growth path of 1.5–2.0%. The recent social unrest, combined with
ongoing electricity shortages, remains significant threats to future investment and overall potential growth.
Furthermore, there is a strong possibility that the Social Relief of Distress Grant paid to the unemployed could
become permanent, while the policy objective of curtailing the public-sector wage bill could continue to be
delayed, as already occurred in FY 2021/22. IHS Markit thus projects that public-sector debt-to-GDP could
reach 90% by FY 2023/24 as a result from 83.5% in 2020/21. Higher debt burdens, slow progress in Eskom’s
unbundling, and weak growth threaten further downward pressure on South Africa’s credit ratings beyond FY
2021/22. Debt sustainability would be further damaged by the likelihood of higher global interest rates in 2023,
potentially affecting South Africa’s portfolio inflows, exchange rate, and inflation developments. To avoid rating
downgrades in the one- to three-year outlook, South Africa needs to make significant progress with the
government’s reform agenda. Indicators of progress would include the successful procurement of emergency
electricity supply, the implementation of the renewable energy programme, the lifting of visa restrictions to
| 10Analysis selection for JCC - July 2021
attract scarce skills, ongoing progress in the rollout of the COVID-19 vaccine programme, vital labour market
reforms, and addressing weak institutional and infrastructure capacity, particularly at the municipal level.
Indicators of changing risk environment
Increasing risk
• The Constitutional Court rejects Zuma’s appeal, indicating the likelihood of renewed protests in Durban and
Pietermaritzburg.
• Ramaphosa announces that the Social Relief Grant will become permanent, indicating a softer and more
populist approach to South Africa’s excessive deficit.
Decreasing risk
• The privatisation of SAA is finalised, and the government announces the sale of more state-owned enterprises
(SOEs) including arms manufacturer DENEL.
• Zuma releases a statement calling for his supporters not to riot or loot stores when expressing their support
for him.
Tigray insurgents’ advances towards Gondar and Djibouti highway increase
Ethiopian coup likelihood, with their capture probable triggers
29 Jul 2021 - Country Risk | Headline Analysis
The governments of Ethiopia’s Afar and Amhara regional states called on 23 and 25 July respectively for
mass mobilisations of their civilian populations to fight the insurgent Tigray Defence Forces (TDF). TDF
insurgents have advanced along Amhara’s B30 road towards the major city of Gondar and the A2 highway
towards Weldiya, as well as into Afar’s administrative zones 2 and 4, particularly near Arbala in zone 4.
• We assess that the TDF is likely attempting to capture strategic locations in Afar and Amhara regions
in an attempt either to compel Prime Minister Abiy Ahmed’s national government to negotiate, or to
trigger a coup that replaces him with a more conciliatory administration. In late June, the Ethiopian
National Defence Force (ENDF) and allied Amhara and Eritrean forces made an organised withdrawal from
Tigray’s major cities amid TDF offensives. Subsequent attempts to reverse TDF gains by deploying additional
forces from other Ethiopian regions have failed so far. On 24 July, TDF leader Tsadkan Gebretensae, a
former ENDF chief of staff, claimed, “We are in a position to march into Addis Ababa with no real opposition.”
This followed a 19 July statement by spokesperson Getachew Reda of the TDF-aligned Government of Tigray
(GoT) disclaiming any interest in “territorial gains in Afar”, as well as other previous claims by Reda that the
TDF would “liberate every square inch” of Tigray.
• The TDF capturing Gondar or Afar region’s capital, Semera, and the Semera-Djibouti A1 highway
would make a forced change of Ethiopia’s government likely in the subsequent one-month outlook.
The most likely forms that such a change of government would take would, in our view, be a coup from within
the ENDF; a coup backed by the Amhara region’s security establishment and aligned ENDF elements; or
Prime Minister Ahmed’s resignation in the face of an imminent coup threat or further TDF advances towards
Ethiopia’s capital, Addis Ababa. The most likely aim of a coup attempt or threat against Ahmed would be to
replace him with an interim authority that would negotiate a ceasefire and a subsequent peace agreement
with the GoT. The TDF capturing Semera and the A1 highway to Djibouti would curtail Ethiopia’s external
trade severely, likely causing widespread shortages of imports (such as fuel) in the country, particularly in
Addis Ababa. This would increase the likelihood of an anti-Ahmed coup from within the ENDF, particularly if
shortages, large spikes in prices of imported essential goods, or discontent over TDF advances triggered
| 11Analysis selection for JCC - July 2021
widespread protests (with turnouts in the hundreds of thousands) in Addis Ababa and the surrounding central
Oromia region.
• Capturing Gondar – a key centre of popular support for the region’s territorial claims in western and
southern Tigray – would allow the TDF to threaten directly Bahir Dar, Amhara region’s capital. This, in
turn, would increase the likelihood of Amhara ENDF and regional security forces’ elements concluding that
Prime Minister Ahmed’s administration is incapable of protecting Amhara region, and consequently deciding
to remove forcibly Ahmed and his political ally, Agegnehu Teshager, president of Amhara region. However, an
Amhara-led coup against Ahmed would probably be rejected by Ethiopia’s other regional governments
(particularly Oromia), leading to fighting between opposing ENDF elements and Oromia regional security
forces in Addis Ababa. The insurgent Oromo Liberation Army (OLA) would also likely respond by attempting
to take control openly of towns in western Oromia (especially West Wellega zone), likely with tacit co-
operation from elements of Oromia’s security forces. This likelihood would be exacerbated if the new Amhara-
backed administration sought a renewed anti-TDF war effort without Ahmed, rather than a ceasefire and
negotiations.
• Amhara regional forces withdrawing from western Tigray to counter the TDF offensive towards
Gondar would decrease the likelihood of the TDF capturing the city, with the TDF likely redirecting its
offensive to retake western Tigray. Amhara forces withdrawing from western Tigray probably would be
accompanied by a substantial outflow of ethnic Amhara civilians from the area, creating a new humanitarian
emergency of displaced persons in northern Amhara. The remaining ENDF troops along western Tigray’s
border with Sudan would also likely withdraw with the Amhara forces, decreasing the likelihood of escalation
with Sudanese forces in the disputed al-Fashaga Triangle. Remaining Eritrean forces would probably also
largely withdraw from western Tigray, although they would be most likely to remain in the town of Himora to
control the border crossing with Eritrea, leading to heavy fighting with the TDF in this area.
Indicators of changing risk environment
Increasing risk
• New anti-TDF military offensives by Eritrean forces crossing into Tigray would cause renewed widespread
heavy fighting in TDF-controlled areas of Tigray.
| 12Analysis selection for JCC - July 2021
• Former or serving regional officials, especially individuals originating from central Afar – who have been
marginalised since Ahmed’s ruling Prosperity Party consolidated power – calling on the Afar population not to
resist the TDF would increase the likelihood of the TDF capturing Semera.
• Access to either the Sudanese or the Djiboutian border would likely allow the GoT to directly allow the flow of
humanitarian aid into territory it controls, as well as secure supplies to facilitate its military efforts.
• The establishment of a TDF-backed anti-Ahmed administration in central Afar would increase the likelihood of
Djibouti’s Front pour la Restauration de l'Unité et de la Démocratie (FRUD-Armé) armed group, which largely
draws its support from the Afar community, receiving cross-border assistance and intensifying its insurgency,
particularly in Djibotui’s Dikhil, Tajdoura, and Obock regions.
• An outbreak of widespread anti-government protests in Addis Ababa, Oromia, or Amhara region would
indicate an increasing likelihood of a coup attempt against Prime Minister Ahmed.
• The forced removal or resignation of Prime Minister Ahmed would likely cause a sharp deterioration in
Eritrean-Ethiopian relations, and increasing the likelihood of Eritrean cross-border anti-TDF military operations
without the new Ethiopian administration’s approval.
• GoT efforts to establish allied administrations in TDF-controlled areas of Afar and Amhara, or pro-GoT/TDF
statements by the OLA’s leadership in Oromia, would indicate an increased likelihood of a wider TDF-led
alliance of forces advancing further towards Addis Ababa.
Decreasing risk
• Renewed utilisation of ENDF air power against TDF fighters in Amhara and Afar regions, without the TDF
inflicting significant ENDF losses via anti-aircraft weapons, would indicate a likely slowing or ending of TDF
advances in these areas.
• New anti-TDF military offensives by Eritrean forces crossing into Tigray would decrease the likelihood of the
TDF capturing Gondar and Semera.
• Prime Minister Ahmed’s resignation or forced replacement by an interim authority that pledged to negotiate
with the GoT would increase the likelihood of a ceasefire and peace negotiations.
New Turkish military deployment in Tripolitania increases likelihood of
resumed fighting with the LNA in southern Libya
21 Jul 2021 - Country Risk | Headline Analysis
Libyan media reported on 19 July that the Turkish military had installed air defence and jamming systems and
deployed further military equipment in a base in Beni Walid, Tripolitania. The operation was reportedly
facilitated by the arrival in the town of the 444 Combat Brigade, an elite security force aligned with the
Government of National Unity (GNU), which has been receiving Turkish military training since January 2021
and tasked with dismantling Tripolitania-based militias and armed groups. According to Libyan media, the 444
Combat Brigade had deployed around 3,000 soldiers and heavy equipment from Tripoli to Tarhunah and Bani
Walid on 15 July, prior to the Turkish military deployment.
Significance: IHS Markit assesses that the latest Turkish deployment is aimed at challenging the eastern-
based Libyan National Army’s (LNA) growing security dominance of southern Libya and countering the risk of
infiltrations from there into GNU-administered Tripolitania. The LNA has been deploying units around southern
towns, including Sebha, Awbari, and Murzuq, since early July, as part of its recently announced Southern
Security Plan, which according to the LNA, is aimed at countering the Islamic State presence in the area. The
new Turkish deployment also indicates that the Turkish government has no intention of withdrawing its military
personnel from Libya, as required by the conclusions of the 23 June Berlin Conference, which IHS Markit has
identified as a key indicator for an increased risk of resumed fighting between the LNA and Turkey-supported
western forces. LNA military movements from Sebha towards Ash Shwayrif over the coming weeks would be
another key indicator pointing to an increasing likelihood for this scenario, with fighting largely involving
| 13Analysis selection for JCC - July 2021
airstrikes targeting rival military positions around Sebha, Murzuq and Beni Walid and increasing risks to
aviation across the southern Fezzan region.
Risks: Civil war
Sectors or assets affected: Cargo; Aviation; Security and Defence forces
Haitian president’s assassination
20 Jul 2021 - Country Risk | Strategic Report
In the early morning of 7 July, armed assailants broke into the residence of Haitian President Jovenel Moïse in
Pèlerin, Port-au-Prince, assassinated him, and injured his wife. Interim Prime Minister Claude Joseph has
taken control of the government, but announced that he will step down to allow Ariel Henry, nominated as
prime minister by Moïse shortly before his death, to take over. The National Police (Police Nationale d’Haïti:
PNH) has reported that 28 assailants (26 Colombians and 2 Haitian-Americans) were involved in the killing;
some have been arrested and three killed by the police. Colombian authorities have confirmed that their
nationals were former soldiers. The PNH has arrested a Haitian-American doctor as one of the masterminds
of the attack, but investigations are ongoing with the help of US and Colombian agents. Haiti has been in a
deep political and security crisis since 2020, with the opposition and civil society groups calling for Moïse’s
resignation, considering his term to have expired in February 2021. Gang violence has increased significantly
in the past year, leading to a spike in the number of kidnappings and homicides. Incidents of gang-related
shootings on the streets of Port-au-Prince have become more frequent.
• Constitutional succession is likely to be hindered by institutional shortcomings. Haiti’s constitution
stipulates that if the presidency becomes vacant, power will fall on the president of the Cour de Cassation,
who should organise a presidential election in the next 45–90 days. The president of the court died in June
this year from coronavirus disease 2019 (COVID-19), meaning that it would be its vice-president that should
be vested as temporary president. Government officials, however, have cited a constitutional amendment that
states that it would be the Council of Ministers, led by the prime minister, who should be in charge, while
another one dictates that in the fourth year of government, the National Assembly should choose a new
president to finish the term. The National Assembly was dissolved in January 2020, however, when the terms
of many parliamentarians expired without replacements. Regardless, some opposition parties nominated the
Senate’s president, Joseph Lambert (one of 10 parliamentarians officially still in place), as interim president.
Haiti had been set to hold presidential and legislative elections on 26 September 2021, but it is unclear
whether these will take place.
• The opposition is likely to challenge Moïse’s officials as successors, raising risks of violent protests.
Interim Prime Minister Joseph took control of the government, but announced on 19 July he would step down
in favour of Ariel Henry. Violent protests are likely to re-emerge if there are delays in installing a consensual
transitional government. Demonstrators are likely to erect burning barricades, particularly in Port-au-Prince
city centre, Delmas, Pétionville, and Boulevard Toussaint Louverture, connecting the capital with the
international airport. Demonstrators are likely to throw stones and Molotov cocktails, and the police are likely
to use tear gas and water cannons. Confrontations are also likely to involve the use of firearms. There is a risk
that demonstrators will carry out arson attacks and looting against government and commercial assets.
Considering the arrest of foreign nationals in the killing, other foreign nationals are likely to be singled out by
demonstrators or the population and be attacked in the streets, as confirmed by IHS Markit’s sources.
• Security forces are highly unlikely to have the capacity to carry out the responsibilities required by a
state of siege. On 7 July, Joseph declared a state of siege for 15 days that increases the power of the police
and the army, by allowing them to enter homes and disband gatherings. Freedom of expression, circulation
and gatherings are severely restricted. However, Haiti’s security forces do not have the capacity to implement
| 14Analysis selection for JCC - July 2021
the measures. The army only has 500 soldiers, while the 15,000-strong PNH was already unable to control
protests and increased violence by gangs, which seem better organised and better armed than the police.
• A likely power vacuum risks gangs taking greater prevalence. Gang violence has increased significantly
in Haiti since 2018, with more than 100 gangs operating in the country and effectively controlling at least one-
third of the territory, according to the United Nations Office for the Coordination of Humanitarian Affairs
(OCHA). The likely power vacuum is likely to enable gangs to expand their areas of influence by filling in
public functions that are left unattended, mainly within the poorest communities. Hotspots for gang violence
are Martissant, Fontamara, Bicentennial, Carrefour, and Village-de-Dieu in the southern periphery of Port-au-
Prince, La Saline port area, Bel Air, Cité Soleil, Delmas, and Croix-des-Bouquets commune. In this scenario,
kidnapping risks are likely to increase significantly.
• The risk of civil war will increase in the event that confrontations between security forces, gangs, and
the Phantom 509 armed group escalate. The security forces are unlikely to be able to control the actions by
criminal gangs and armed group Phantom 509, which often targets government assets with arson and
shooting attacks. The combination of different well-armed violent actors in the context of violent protests and a
power vacuum is likely to increase civil war risks.
Indicators of changing risk environment
Increasing risk
• The PNH stops responding to the government and fails to contain an escalation of violence, allowing gangs to
take control of larger areas of the territory.
• The opposition and civil society publicly oppose a government led by figures from Moïse’s government and
call for further disruptive and violent protests, forcing the temporary leaders to step down.
Decreasing risk
• The international community, mainly the UN, the US, and the Organisation of American States, agrees with
different political sectors in Haiti and civil society groups on a co-ordinated action for a political transition.
• The opposition parties agree to participate in presidential and legislative elections in September, as Moïse
had been planning.
Jet shootdown underlines risks to aircraft flying daily sorties against heavily
armed criminal gangs in Nigeria’s North-West
20 Jul 2021 - Country Risk | Headline Analysis
Nigeria’s Air Force admitted on 19 July that one of its Dassault/Dornier Alpha Jet aircraft had been shot down
the day before by members of criminal gangs, locally described as ‘bandits’, as it returned from a mission
targeting their remote hideouts on the border of Zamfara and Kaduna states. The aircraft’s pilot was able to
eject and elude pursuit before rejoining an army unit. President Muhammadu Buhari has directed the military
to step up attacks against heavily armed bandit gangs who operate over vast wooded areas in the states of
Zamfara, Kaduna, Niger, and Katsina. Over the past year in particular, the bandits have graduated from cattle
rustling and highway robbery to mass kidnappings from schools and large-scale looting and extortion, forcing
hundreds of thousands into internal exile. The Air Force states that, during the past two weeks, it has been
flying night and day sorties targeting hideouts and killing hundreds of bandits.
Significance: This is the first time for many years that a Nigerian Air Force jet has been shot down outside
the North-East region, where security forces have been fighting Islamist militants for over a decade. In that
area, insurgents are known to possess man-portable air-defence systems (MANPADS), albeit not
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