Monthly Risk Spotlight: December 2024

AMERICAS 

Implications of Additional Tariffs on the United States-Mexico-Canada-Agreement (USMCA)
Immigration and trade, two topics that have taken center stage for Donald Trump and his incoming administration, will be major points of contention between the United States (U.S.) and its neighboring countries. Although trade and immigration are typically analyzed separately, the Trump administration has attempted to cast both issues as interrelated. Canada and Mexico will be most affected by any changes in U.S. policy. Trump’s recent threat to implement a 25% tariff on goods from Canada and Mexico, the two largest trading partners, will have far reaching consequences for both the U.S. and its neighbors.

The three countries are currently governed by the USMCA trade deal, initiated by Trump during his first term. This deal allows mostly duty-free trade, facilitating the movement of raw materials from Canada, manufactured goods from Mexico, and cheaper goods for American consumers. The USMCA includes mechanisms for revision every six years and re-extension every 16 years, requiring approval from all three countries. Trump’s proposed 25% tariff would violate the USMCA, raising questions about his authority to implement it. However, Mexico and Canada are taking the threat seriously.

Mexican President Claudia Sheinbaum has threatened retaliatory tariffs on U.S. goods if Trump imposes his tariff plans. Sheinbaum, who recently won an election and ran as a pro-business and pro-environmentalist candidate, has a large amount of political capital and seems willing to leverage it to challenge the rhetoric of a U.S.-imposed tariff. If the Trump tariff were to be implemented and the Mexican counter-tariff imposed, there could be severe economic repercussions for the U.S. and negative consequences for Mexico’s economy. To preempt Trump’s demands, Sheinbaum plans to increase local production and bypass supply chains to involve China, though it’s uncertain if this will maintain Mexico’s economic stability.

Canada has also emphasized that they will use counter-tariffs if the U.S. imposes a 25% tariff on Canadian goods. The Trump administration has labeled Canada as an undefended border, claiming it allows drugs and illegal migrants to cross into the U.S. Canadian officials, however, counter argue that their country is not the major source of illegal migration or the movement of illicit drugs into the U.S., and that implementing a large tariff will have major impacts on bi-lateral trade. Canada previously engaged in a series of retaliatory tariffs against the U.S. under Trump’s first term in office, when American tariffs on Canadian steel and aluminum were announced. Canada’s major imports of oil, electricity, steel, uranium and other metals would severely increase the price of energy in the U.S. and thus cause major inflationary pressures that could affect all goods and services if the 25% tariff is implemented.

MIDDLE EAST AND NORTH AFRICA (MENA)

Syria’s Government Collapse and the Risk of Terrorism
On November 27, Syria’s rebel factions broke a two-year ceasefire, launching a new offensive against the Syrian government and quickly advancing in the northeast. Within days, they seized Idlib province and Aleppo, Syria’s second largest city. Syrian government forces and allied forces hastily retreated south toward the cities of Hama and Homs, which were soon taken over by rebel forces. Subsequently, on December 8, the rebel forces were successful in overthrowing the Syrian government and ousting Syria’s leader, Bashar al-Assad, who reportedly fled to Russia. The anticipated resurgence of intense combat in the country threatens to create new security vacuums, posing significant risks for regional and international security. New battlelines could provide opportunities for Islamic State of Iraq and Syria (ISIS), al-Qaeda, and other Islamist extremist groups to destabilize the Middle East and launch attacks outside the region.

A major concern is that Hayat Tahrir al-Sham (HTS), who led the offensive, is now poised to seek a controlling stake in a new administration. HTS, originally formed as Jabhat al-Nusrah by former al-Qaeda leaders in Iraq (AQI) later evolved into ISIS. Although HTS cut ties with ISIS and al-Qaeda by 2017 and tried to position itself as a moderate force focused on Syria, doubts remain about its long-term intentions. HTS has advocated for a bottom-up approach to Islamic practices and laws to gain popular support before implementing a strict fundamentalist interpretation of Islamic law. It has also sought to coopt other Salafi-jihadi rebel factions and compete with ISIS for extremist fighters. With HTS having lead control of affairs internally in the country, this could present significant international terrorism concerns and potentially provide a haven for extremist groups to train and gather resources. Mufti Abd al Rahim Atun, head of the HTS Sharia Council, previously supported a Taliban-style jihad in Syria, raising concerns that HTS could tolerate allied extremists planning external attacks.

The potential resurgence of ISIS is another major risk with the promised removal of Syrian Democratic Forces (SDF) in the northern city of Manbij, a Kurdish stronghold. Turkish-backed Syrian National Army (SNA) rebels and United States (U.S.)-backed, Kurdish-led Syrian Democratic Forces (SDF) accepted a cease-fire early in December 2024, ceding control of Manbij. The SDF, key in countering ISIS in northwestern Syria, currently detains over 9,000 former extremists and holds over 43,000 ISIS family members in camps. Any escalation of violence and provocation between the SNA and SDF may force the SDF to reduce its security presence at detention facilities, making them more vulnerable to ISIS prison breaks.

Freed fighters and their families could regroup with the remaining 2,500 ISIS fighters in Iraq and Syria. An influx of new fighters could allow the group to reconstitute itself and once again become a fighting force that threatens the stability of Syria, Iraq, Jordan, Lebanon, and Türkiye. ISIS has repeatedly tried to free its members from prisons and has maintained a shadow governance in parts of northeastern Syria. A revived ISIS could likely present an increased likelihood of major international terrorist attacks.

The coming months will be critical to not only Syria but countries regionally and worldwide. A destabilized Syria poses immense risks for increased international terrorism. With the topple of the Syrian government, Hezbollah’s deterioration due to its conflict with Israel, and Russia’s attention being focused on Ukraine, rebel groups, including HTS, could likely pave pathways for terrorist groups to reestablish their presence in the region due to the undetermined future of Syria’s new government.

ASIA-PACIFIC (APAC)

Surprise Martial Law Order Highlights Political Crisis
On December 3, the president of South Korea, Yoon Suk Yeol, declared martial law. President Yoon accused politicians aligned with the Democratic Party (DP) of collaborating with the Democratic People’s Republic of Korea (DPRK, North Korea). In his surprise address at 2230 (local time) on December 3, President Yoon stated that he was declaring martial law, using the apparent plot between the DP and DPRK as justification for imposing military rule. Under martial law, all political activities are prohibited, including political demonstrations and the normal operations of the National Assembly.

Shortly after the martial law declaration, soldiers surrounded the National Assembly building in the capital Seoul. Simultaneously, in violation of the martial law order, crowds of protestors began to materialize in front of the National Assembly building and confront the soldiers. While demonstrations continued, members of the National Assembly attempted to gather and vote to overturn the martial law declaration. In the event of martial law, the 300-member National Assembly can gather to overturn it with a simple majority vote. At around 0100 (local time), the National Assembly passed a resolution lifting the martial law order. Strikingly, all 190 members of the National Assembly present for the vote, favored lifting martial law. Furthermore, members of both the opposition DP and President Yoon’s own People Power Party (PPP) voted in favor of lifting martial law. However, even after the National Assembly’s vote, President Yoon kept martial law in place for an additional three and a half hours, finally lifting the order at 0430 (local time).

It is important to note that martial law declarations are not uncommon in South Korea’s history. In total, there have been 16 declarations of martial law since South Korea was founded in 1948. However, the last instance martial law was declared was in 1980. Historically, incidents of martial law in South Korea have served the purpose of suppressing protest activity or staging a military coup to seize control of the government. However, the exact motivations for President Yoon to declare martial law remain unclear.

Regional analysts suggest that Yoon’s decision was influenced by his declining approval ratings. Since taking office in 2022, Yoon has faced numerous political scandals, including accusations of corruption involving his wife. The opposition-controlled National Assembly has attempted to impeach Yoon 22 times over his handling of the economy, government, and various scandals. Yoon’s declaration of martial law has introduced rare political instability in South Korea. There are concerns that Yoon might attempt to impose martial law again, though it is uncertain if he has the political power to do so. Given the current political climate, nationwide demonstrations are likely in the coming months.

SUB-SAHARAN AFRICA

Arrest of Foreign National in Mali Underscores Arbitrary Detention Risks
In many countries, foreign nationals risk arbitrary detention and harassment by authorities. Depending on the country, this may apply to foreign nationals from certain countries, due to diplomatic conflicts, or there may be a more broad and general hostility towards non-citizens. Some governments will specifically target foreign nationals of particular citizenship in order to exert political pressure on the visitor’s home country, often for political or monetary gain. In some instances, such practices may target a particular company as a means of leveraging pressure. This occurred in November, when the government of Mali detained foreign nationals twice to pressure mining companies to pay additional taxes.

On November 8, Malian security forces detained the CEO and two other employees of an Australia-based mining’ company in Mali’s capital, Bamako. Initial statements released by the company on November 11 reported the detentions were unexpected, following a discussion on government claims made against the company. The claims were later revealed to be concerning increases in customs levies and taxes on mining operations. On November 18, the mining company announced an agreement to secure the release of the three employees for $160 million USD with $80 million USD being paid up-front from company cash reserves.

At the time the release was negotiated, reports indicated that the ruling military junta had imposed new laws on the mining sector and was attempting to force companies with existing contracts to accept changes retroactively. The changes permit the government to own up to a 30% stake of mining operations, up from the previous 20%. The government has used this new law to intimidate companies into selling portions of their ownership back to government, while also forcing higher tax payments.

On November 27, less than two weeks after the agreement between Mali and the Australian mining company was reported, four employees of a Canada-based mining company were also arrested. The company did not disclose what charges the employees were arrested for, although the four employees had been previously detained for several days in September.

These incidents have drawn backlash from the international business community, criticizing the military junta for using hostage-taking tactics in business negotiations. Since the military coup in 2020, the mining sector has faced increased scrutiny, with the military government seeking to maximize short-term profits. The Malian government is expected to continue using intimidation tactics against foreign-owned companies to force their compliance with new laws retroactively. These actions are likely to have severe long-term business consequences, as foreign companies will deem such circumstances as unsafe and unstable for companies to conduct business in the country.

EUROPE AND THE COMMONWEALTH OF INDEPENDENT STATES (ECIS) 

Widespread Protests Increase Across Region
Travelers are often advised to avoid protests and demonstrations due to the risk of violent escalations. Even if a demonstration starts off peacefully or perhaps in an area that has never had escalated demonstrations, the risk remains. The cause of violent escalation is most often fueled by demonstrators clashing with the police or between counterdemonstrators. The risk is becoming particularly notable in Europe, where a deepening ideological divide has recently led to increased violence during demonstrations.

On November 7, violent clashes occurred in the capital of the Netherlands, Amsterdam, following a Europa League football match between the Dutch Ajax team and Israel’s Maccabi Tel Aviv team. The confrontations between pro-Palestinian groups and Israeli football fans, who traveled to the Netherlands for the match, of both verbal and physical assaults. Authorities struggled to maintain order, and several arrests were made to control the situation. On November 30, pro-Israel demonstrators obstructed a pro-Palestinian march near Piccadilly Circus in the United Kingdom’s (U.K.) capital, London. Although demonstrators were kept apart by a line of police, the populated area became near impassable due to the heightened number of protesters gathered around the area.

Similarly, On October 7, pro-Palestinian and pro-Israeli protesters clashed in the German capital of Berlin, resulting in several arrests and injuries. Notably, at this demonstration, a woman wearing a Palestinian keffiyeh scarf was pushed to the ground by a pro-Israeli demonstrator. The video of the woman being pushed to the ground circulated on social media and prompted other pro-Palestinian supporters to report acts of violence they have experienced from police and counter protesters during recent demonstrations.

Meanwhile, during ongoing unrest in Georgia, pro-EU demonstrators have violently clashed with counter-protesters amid rising tensions over the government’s recent election and plans to suspend EU membership talks. Most clashes have occurred in the capital Tbilisi but have also been reported in Batumi (Autonomous Republic of Adjara) and Poti (Samegrelo-Zemo Svaneti region). The demonstrations have been marked by intense confrontations.

In August 2024, a plurality of protestor clashes occurred throughout the U.K. amidst nationwide unrest following a knife attack in Southport (North West region). False information about the assailant’s nationality led to widespread anti-immigration protests, often met by counter-protesters denouncing the narrative. This increased far-right groups targeting citizens and travelers with perceived South Asian backgrounds. The anti-immigrant protests during this unrest often resulted in property damage, injuries, and arrests, posing significant incidental risks to bystanders. Demonstrations and counter protesters occurred nationwide during the unrest and most often in the vicinity of major urban centers, including Birmingham and Stoke (both West Midlands region), Brighton and Portsmouth (both South East England region), Bristol (South West region), Liverpool (North West), Newcastle (North East region), and in the capital, London.

As societal, generational, and overall ideological differences increase across the region, the threat of violent demonstrations grows, with civilians themselves escalating the situation. The rise in violent protests underscores the importance of staying informed and cautious, especially in regions with known political or social tensions.

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