MS Risk Blog

US Presidential Elections: Donald Trump Outlines Plans for First Day at White House

On 21 November, US President-elect Donald Trump outlined his plans for his first day in office, including withdrawing from a major trade accord and investigating abuses of work visa programmes. Also on Monday, he met with Cabinet hopefuls at his Manhattan office tower.

Mr Trump met with Oklahoma Governor May Fallin, Democratic US Representative Tulsi Gabbard and former Texas Governor Rick Perry, however he announced no further appointments, in a move that will keep candidates and the public guessing about the shape of the administration, which will take office on 20 January 2017. Fallin, Gabbard and Perry are just the latest of dozens of officials who have travelled to New York for talks with the Republican president-elect in a relatively open, and unconventional, transition process since his election victory on 8 November. Mr Trump has so far picked two Cabinet members and three top White House advisers, with his aides stating that he was not expected to make further announcements on Monday.

While Mr Trump has not yet held a news conference since getting elected, on Monday evening he issued a video outlining some of his plans for his first day in office, including formally declaring his intent to withdraw from the Trans-Pacifi Partnership (TPP) trade deal, which he called “a potential disaster for our country.” The 12-nation TPP is Democratic President Barack Obama’s signature trade initiative and was signed by the United States earlier this year, however it has not been ratified by he US Senate. Mr Trump has disclosed that he would replace the accord with bilaterally negotiated trade deals that would “bring jobs and industry back onto American shores.” He went on to say “my agenda will be based on a simple core principle: putting America first. Whether its producing steel, building cars or curing disease, I want the next generation of production and innovation to happen right here on our great homeland, America, creating wealth and jobs for American workers.” There are however growing concerns for the future of the TPP agreement, with Japanese Prime Minister Shinzo Abe statin on Monday that TPP “would be meaningless without the United States.”

Mr Trump also indicated on Monday that he would cancel some restrictions on producing energy in the United States on his first day in office, particularly shale oil and “clean coal,” which he said would create “many millions of high-paying jobs.”

While eliminating regulations and withdrawing from the TPP were central to Mr Trump’s campaign, he sent mixed messages about his views on visa programmes, including the main H-1B visa for high-tech industry workers. On Monday, he promised to direct the Labour Department to investigate abuses of visa programmes for immigrant works. The main US visa programme for technology workers could face tough scrutiny under the new president. Furthermore, Mr Trump’s proposed attorney general, US Senator Jeff Sessions, has been a longtime critic of the programme.

Security Advisory: NATO Operation Ocean Shield Ends

Executive Summary

On 23 November 2016, NATO announced that it has ended Operation Ocean Shield after a sharp decline in attacks by Somali pirates. While there has been no vessel hijacked off Somalia since May 2012, the threat of piracy remains high despite no major incidents reported. This is due to the fact that pirate action group’s (PAGs) operating in the region continue to maintain the capability and drive to launch attacks in a bid to successfully hijack a merchant vessel.

Security Advisory

MS Risk advises all vessels transiting this region to remain aware that while NATO has ended its operations in the area, the threat remains high and continued vigilance and compliance with BMP4 procedures is necessary. The threat remains high in waters off the southern Red Sea/Bab el Mandeb, Gulf of Aden – including Yemen and the northern Somali Coast – Arabian Sea/Off Oman, the Gulf of Oman and off the eastern and southern Somali coast. In the past, incidents of vessels being attacked have been recorded in waters off Kenya, Madagascar, Mozambique, the Seychelles and Tanzania, as well as in the Indian Ocean and off the western and southern coasts of India and western Maldives. We advise that all vessels continue to maintain a 24-hour visual and radar watch. We further remind all Masters that fishermen operating in this region may try to protect their nets by attempting to aggressively approach merchant ships. Some fishermen may be armed and should no be confused with pirates.

MS Risk further advise merchant vessels transiting the Red Sea, Bab el-Mandeb Strait and the Gulf of Aden to also operate under a heightened state of alert due to increasing tensions in the region, which can escalate the potential for direct or collateral damage to ships transiting this area. We advise that all vessels transiting this region should report any incidents or suspicious activity immediately. The threat may come from a number of different sources including missiles, projectiles or waterborne improvised explosive devices. Houthi rebels have claimed responsibly for the 1 October 2016 attack on a UAE vessel.

All ships and patrol aircraft under NATO Operation Ocean Shield have now left the area off the Horn of Africa. The Royal Danish Air Force carried out the last Indian Ocean surveillance missions for NATO, with the commander of the Danish air force detachment disclosing that NATO can resume its anti-piracy efforts at any time – whether in the Somali basin or the Atlantic Ocean.

Ships and patrol aircraft operating under the mission had been patrolling waters in this region since 2009 as part of a broader international effort to crackdown on Somali-based pirates who were impacting world shipping. The Ocean Shield operation, as well as European Union (EU) counter-piracy mission, have significantly reduced attacks, with the last reported vessel hijacking off Somalia occurring in May 2012 – down from more than thirty ships at the peak in 2010 – 2011.

NATO is now shifting its resources towards deterring Russia in the Black Sea and people smugglers in the Mediterranean. Earlier this month, NATO broadened its operations in the Mediterranean Sea in a bid to help the EU stop criminals trafficking refugees from North Africa.

Latin American Consequences of the US Presidential Elections

The US presidential elections are already swinging the pendulum for Latin America in significant ways. The fear that the US will now revert to protectionism lead to a major sell off across different asset classes. The Mexican Peso tumbled to 20-years lows and has hardly recovered as of yet, pulling down the entire region. After an initial quick fall the Dollar bounced hard and is currently trading at multi-month highs. This has exacerbated the devaluation of Latin American currencies, which are traded against the Dollar.

Apart from the financial fallout, geopolitical consequences of Trump’s future policies have appeared as well. Now that Trump has confirmed he will not support the Trans-Pacific Partnership, potential members like Chili, Peru, Mexico and Colombia will likely beef up their bilateral economic relations in order to compensate for TPP. Peru already stated to foresee bilateral negotiations with Australia and New Zealand. Argentina, very open to free trade, will receive $4.1 billion in investments from Canada. This is about half the amount expected from US companies through 2019. A more protectionist approach by Trump could bring that amount down and leave the door open for Canadian companies to fill the gap. Withdrawal from NAFTA could exacerbate this and will constitute extra incentive for Latin American countries to strengthen bilateral relations with other geopolitical powers. Peru, which has strong historic ties with China, already trades more with China than with the US, a development that could potentially spill over to increased security and military cooperation. President Kuczynski’s pull to China is very clear: “We hope to tap into new markets in China, especially for agriculture. We are also interested in cooperation on science and technology. Furthermore, cultural exchanges and cooperation in archaeology and climate change are also very important for us.” It remains the question whether the US will look on from the sidelines if Russia and China increase their influence in Latin America.

Interregional relations are likely to strengthen as well, given Trump’s veiled threats to Central American countries on the topic of immigration. Whether the US will build a wall or will significantly increase deportations of immigrants, Honduras, Guatemala and El Salvador have said to form a bloc with Mexico to deal with the US under Trump leadership. However, with regards to Mexico, it is likely that organized-crime competition will increase, as a result of traffic restrictions and stricter border controls. In this scenario, conflict over control over the remaining open crossings would lead to increased violence. Violence in border cities like Ciudad Juarez and Tijuana is already on the rise. The second security consequence for Mexico stems from the influx of deportees, who would have few employment opportunities in Mexico. They could provide a ready pool of labour for criminal organizations. Central American cooperation is said to increase collaboration on jobs, investments and migration.

It remains to be seen as to which direction the pendulum will eventually swing, however, for the moment significant financial, economic and security consequences are already visible in Latin America.

Fillon & Juppe to go Head-to-Head for French Conservative Presidential Ticket

On Sunday 20 November, the French conservative party held its first-round voting to select its candidate for next year’s presidential election.   Francois Fillon will now head into a five-day runoff campaign for the presidential ticket. He is favoured over his opponent, Alain Juppe, after the first-round vote resulted in the ouster of ex-president Nicolas Sarkozy from the race.

Fillon is up against another former prime minister, Alain Juppe, in a second round of the primaries, which will be held on 27 November. Juppe now has a week to turn around his momentum-sapped campaign and win over the supporters of the other candidates. However this may be a difficult task for Juppe, as Fillon was only six points short of the 50-percent threshold needed in the first round, and has Sarkozy on his side. Sounding downcast late on Sunday, Juppe told his supporters that he would “carry on fighting” and billed himself as the best option to defeat far-right party leader Marine Le Pen, whom polls predict will make it to the second round of the presidential election.

Any French voter can take part in the run-off election next Sunday. Furthermore the views of pollsters and commentators have been much confounded in popular votes worldwide this year, including Brexit in the UK and the US presidential election, not least Sunday’s vote in which Fillon did far better than expected.

What is at stake is an almost certain place in the second round of next May’s presidential election. It is likely that the conservative challenger will face National Front party leader Marine Le Pen. Market analysts have said that the outcome of Sunday’s vote opens up new uncertainty about the result of next year’s presidential election and may increase what is still a remote risk that far-right leader Marine Le Pen can win it. A BVA poll in September indicated that Fillon would beat Le Pen by a margin of 61 percent of votes to 39 percent however recent opinion polls scenarios have not pitted him against her – in what is further evidence of how unexpected his top spot on Sunday was. More recent polls have consistently shown that Juppe would easily beat Le Pen. Polls have also indicated that Fillon is much less popular than Juppe amidst left-wing voters, which could make it harder for him to get their vote versus Le Pen.

Whatever the out come will be of Sunday’s election, next year’s presidential and legislative elections are already shaping up to be another battle of strengths between mainstream parties and rising popularist forces. The ruling Socialist party and its allies will hold their own primaries in January 2017. French President Francois Hollande, whose popularity ratings are abysmal, has yet to announce whether he will stand again, however polls have already indicated that it is unlikely that he would win in the primaries.

Colombian Government and FARC to Sign New Peace Deal

President Juan Manuel Santos disclosed on 22 November that a new peace accord between the Colombian government and Marxist Revolutionary Armed Forces of Colombia (FARC) rebels will be signed on Thursday 24 November, effectively bringing a formal end to the 52-year civil war ever closer.

The revised document will be signed in Bogota between FARC leader Rodrigo Londono and President Santos, who won the Nobel Peace Prize last month for his efforts to end the conflict with the insurgent group.   During a televised address on Tuesday, President Santos stated, “We have the unique opportunity to close this painful chapter in our history that has bereaved and afflicted millions of Colombians for half a century.

Over the last four years, the Colombian government and the FARC have been in talks in Havana, Cuba in a bid to agree on a peace deal to end a conflict that has killed more than 220,000 and displaced millions in the Andean country. In a bid to build support, after the original draft was rejected in a 2 October referendum amidst objections that it was too favourable to the rebels, the government published the revised version last week. The expanded and highly technical 310-page document appears to make only small modifications to the original text, such as clarifying private property rights and detailing more fully how th rebels would be confined in rural areas for crimes committed during the war.

President Santos and London had signed the original deal two months ago in a ceremony before world leaders and United Nations Secretary General Ban Ki-moon. This time however it has been decided that the revised accord will be ratified in Congress instead of holding an other referendum – a move that will likely anger members of the opposition, particularly former President Alvaro Uribe who spearheaded the push to reject the original accord. The former Colombian leader wants deeper changes to the new version and he has already criticized it as just a slight altered version of the original. Furthermore, he wants rebel leaders to be banned from holding public office and for them to be jailed for crimes. In his televised address, President Santos stated that “this new accord possibly wont satisfy everybody, but that’s what happens in peace accords. There are always critical voices; it is understandable and respectable,” warning that another plebiscite could divide the nation and put in danger the bilateral ceasefire.

The FARC, which began as a rebellion fighting rural poverty, has battled a dozen governments as well as right-wing paramilitary groups. An end to the war with the FARC is however unlikely to end violence in the country as the lucrative cocaine business has given rise to dangerous criminal gangs and traffickers that operate throughout the country.