Monthly Risk Spotlight: August 2020


War on Criminal Networks in Mexico
Under immense pressure to cut a soaring murder rate, which is on track to make 2020 Mexico’s deadliest year on record, the Mexican government arrested José Antonio Yépez, known as “El Marro”, on August 2nd. El Marro is the leader of the notorious Santa Rosa de Lima cartel, a family-run criminal enterprise from the central state of Guanajuato, which primarily focused on petroleum theft from the numerous pipelines that run across the state. Often compared to a startup, the Santa Rosa de Lima organization was known for punching far outside its weight, squaring off against both the Mexican government’s security forces and more diversified criminal enterprises, like the feared Cártel de Jalisco Nueva Generación (CJNG).

In the first four months of 2020, Mexico’s murder rate broke all previous records and puts the country on track to possibly have its most violent year in more than two decades. The theft of oil from Guanajuato’s pipelines was rumored to be netting the Santa Rosa de Lima cartel upwards of $2 million per day. It is such a lucrative criminal industry, that Mexico’s larger criminal networks, especially criminal cells affiliated with the CJNG, soon began muscling their way into the state to compete with El Marro’s organization. In 2019, infighting between criminal groups contributed to the majority of over 3,000 homicides registered in Guanajuato, which account for about 15% of Mexico’s total homicides.

The Mexican government, under the leadership of President Andrés Manuel López Obrador, known as AMLO, appears to have made a gamble in arresting El Marro. AMLO campaigned on a platform of demilitarizing Mexico’s approach to the drug trade, and went so far as to claim he would end the government’s US-supported “Kingpin Strategy”, which targets the leaders of Mexico’s numerous and powerful criminal networks. Responding to widely-held theories that the strategy merely causes fracturing among groups, increased competition, and therefore more violence, AMLO vowed to address the root causes of violence instead, from poverty to lack of educational opportunities. In practice, first with the creation of Mexico’s National Guard and now with the capture of El Marro, AMLO appears to merely be mimicking his predecessors’ approach to the drug war. Although it appears unlikely, it remains to be seen whether the arrest of the leader of one small upstart cartel in central Mexico could attenuate the violence that is all too pervasive in the country.


Compounding Crises in Lebanon
Over the past year, recurrent mass protests have demanded the dismantling of the Lebanese political establishment. The decision by so many in Lebanese society to take to the streets has been driven by deteriorating economic and social conditions, paired with frustration over government mismanagement and widespread corruption. The current pandemic and associated restrictions, as well as a recent explosion in the port of Beirut, have turned crisis into tragedy.

Mass protests, although originally sparked by a proposed tax on the well-known messaging app WhatsApp, were rooted in economic distress, created by a currency crisis. Lebanon currently has one of the highest national debt to GDP ratios in the world. In 2016, the Lebanese government increasingly unable to maintain this debt. Despite a highly scrutinized practice of “financial engineering,” by which the Lebanese Central Bank took out high interest loans from Lebanese commercial banks to support national debt payments, foreign currency reserves continued to deplete. The Lebanese lira exchange rate subsequently collapsed, causing prices for highly relied upon imports including food, medicine, and fuel to become increasingly expensive. While the official government exchange rate has remained around 1,514/USD, black market prices for US dollars have consistently risen throughout 2020 and currently stand around 8,000/USD. This reflects a failure by the government to stabilize the lira either through their own reserves or by closing a deal with the international community (contingent on reforms).

The current pandemic only exacerbated economic conditions, as businesses were forced to shut down and many lost their main or sole source of income, rendering increasingly expensive basic goods more inaccessible. To make matters worse, on August 4th, a large explosion in the port of Beirut resulted in widespread destruction and bodily harm in the city. Over 150 people are reported dead, thousands injured, and approximately 300,000 people displaced. The blast destroyed Lebanon’s main entry port, which has crippled the import of critical goods. The accident was reportedly caused by a large cache of confiscated ammonium nitrate, stored in the port without any precautionary measures since 2014. In light of recent events, and associated mounting anger over government negligence, the Lebanese government has resigned. Lebanon now needs a swift, smooth, and fair transition of power. With increasing numbers of families pushed into poverty by compiling crises, robust leadership is needed to reverse the latest declining economic and social trends. The hardships that brought protesters to the streets over the past year could intensify if significant reforms fail to take place.


Heightened Tensions between China and the United States Prompt Consulate Closures
Tensions between the United States and China have intensified over the past weeks. The United States Government ordered the closure of the Chinese Consulate in Houston, which led to the Chinese Government ordering the closure of the US Consulate in Chengdu. The closure of these consulates not only restricts the ability of both governments to project their soft power and provide routine consular services to their citizens abroad, but it’s also indicative of declining relations between the two countries.

The US closure order of the Chinese Houston Consulate was prompted by accusations that Chinese Consulate workers were guilty of theft of scientific research and intellectual property. While the US Department of State did not specify what had specifically been stolen, intellectual property theft is a common accusation leveled against the Chinese government by various foreign governments and international organizations. The order to close the Houston Consulate also coincided with the US government charging four Chinese nationals with visa fraud, claiming they did not disclose their association with the Chinese military when they submitted their visa applications. Both actions by the US government indicate the US is becoming less tolerant of Chinese espionage activities; however, the actions of the US government also indicate an indifference to the reciprocal actions the Chinese could have taken against US diplomatic missions in China.

Within days of the closure order of the Houston Consulate, the Chinese government responded by ordering the US to close its Chengdu Consulate. While primarily claiming the closure of the Chengdu Consulate was in retaliation for the closure of the Chinese Consulate in Houston, the Chinese government also ambiguously stated that US Consulate workers were responsible for interfering in internal Chinese affairs. The accusation stemmed from the US Consulate in Chengdu being strategically located in Chinese western Sichuan Province, in what is considered the best location where the US could gain vital intelligence on the political and social situations in China’s restive Xinjiang and Tibet regions. Thus, while the US still maintains a robust diplomatic mission in China, the loss of the Chengdu Consulate hinders American interests in the region.

The tandem closures of the Chengdu and Houston consulates are indicative of the ongoing decline in relations between the US and China. As neither country appears willing to appease the other, escalations in rhetoric and diplomatic retaliations could continue.


Deepening Political and Economic Crisis in Zimbabwe
Mass anti-corruption demonstrations were planned for Friday, 31 July in Zimbabwe. But instead, on that day, the streets of the country were left deserted. The planned demonstrations intended to denounce years of government mismanagement and corruption, in light of a deepening economic crisis, were quickly shut down by the government. Protests were said banned in the name of public health, and in compliance with the social distancing orders in place to battle the current pandemic. Critics of President Emmerson Mnangagwa saw this reasoning as a ruse, as Mnangagwa, much like his predecessor President Robert Mugabe, is infamous for his tactics of political repression and violence. Members of the opposition, journalists, and activists were detained ahead of the planned demonstrations for inciting violence and division. Additionally, the government declared a dusk to dawn curfew two days prior to the protests, a curfew it ordered be enforced by security forces. President Mnangagwa then ordered the deployment of hundreds of soldiers to the streets of several cities throughout Zimbabwe to intimidate prospective protestors who he warned would be treated as terrorists if they violated the ban.

Ultimately, Mnangagwa made his objective clear when he addressed the public and denounced the protests as divisive and ruinous. He claimed those involved were rogue Zimbabweans and their intrusive foreign backers with plans to overthrow the current government. The Zimbabwean government has even gone as far as to accuse the US government of unwelcome foreign interference in their national affairs, and has threatened to expel the current US ambassador from the country. A move which could sever diplomatic ties between the two countries, and possibly result in increased sanctions for Zimbabwe, which in turn has the potential to further devastate the deteriorating economy.

Zimbabwe is on the verge of economic collapse. Inflation is nearing 800 percent, and shortage of food and other basic goods is impoverishing the country’s poor. This is the worst economic crisis the country has experienced since 2008. When Mnangagwa took office in 2017, after Robert Mugabe was ousted from power following a 37-year long rule, the population hoped the era of autocratic ruling and mismanagement of funds closed. Unfortunately, belonging to the same political party as Mugabe, Mnangagwa subscribed to the same damaging ideology as Mugabe, and thus continues his pattern of destruction. Mnangagwa understands his presidency is fragile. He is not perceived as a legitimate leader by the Zimbabwean people or by the majority of the international community. Mass protests can only serve to negatively impact public opinion on his presidency, and work in favor of the opposition. The presidential term in Zimbabwe is set to five years, however, Mnangagwa is predicted to use all means necessary to hold on to power. Mnangagwa is in good posture to become Zimbabwe’s newest dictator. 


Mass Protests in Belarus
Protests have broken out throughout Belarus, following the government’s preliminary announcement that President Alexander Lukashenko has won a sixth consecutive presidential term, with 70 percent of the vote. The opposition leader, Svetlana Tikhanovskaya has disputed the results, and claims that the election results are fraudulent and do not represent the will of the people. International observers reported several concerning developments in the weeks leading up to the announcement, including a late invitation from the government to the Organization for Security and Cooperation in Europe to monitor the election, and numerous violations at polling boxes. Additionally, President Lukashenko stated in a press conference prior to the election that his government would not “give the country” to the opposition.

Many political commentators consider Lukashenko, who has been in power since 1994, to be “Europe’s last dictator”. While Lukashenko has historically been able to hold onto power without significant opposition, the pandemic has exposed significant economic inequality in the country and reinstated public anger over human rights violations. In the weeks leading up to the elections, at least 100 international journalists were arrested on false charges, including a Deutsche Welle reporter, Alexander Burokov. Additionally, members of Tikahnovskaya’s campaign and political scientists speaking out against the government were arrested.  International news outlets and human rights groups have condemned the arrests, referring to them as “intimidation tactics” by the Belarusian government to stifle free speech and independent media reporting.

At least 60,000 demonstrators gathered throughout Belarus the weekend of August 8th, to demand Lukashenko’s  resignation. The protests mark the largest period of civil unrest since the breakup of the Soviet Union in 1991. Clashes between police and protesters have been reported, with an unknown number of protesters injured or killed. Police have yet to confirm how many individuals have been arrested, but independent journalists estimate the number to be over two hundred. Lukashenko is may refuse to concede and continue to take a “strong-man” approach to handling protesters. It remains unclear if the opposition movement will sustain or wither as long as Lukashenko has the support of local police and security forces.


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