Overriding Legal Authority in Nation-Building Missions

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Journal of Political Risk, Vol. 3, No.3, March 2015.

A building is photographed with the words "New Kabul Bank" written on the side.

New Kabul Bank in Kabul, 2012. An Afghan tribunal convicted two top executives of the Kabul Bank, renamed the New Kabul Bank after the scandal broke, and sentenced them to five-year prison terms on Tuesday for their role in a massive corruption scandal that led to the collapse of Afghanistan’s largest bank and threatened the country’s fragile economy. The bank’s former chairman Sherkhan Farnood and former chief executive officer Khalilullah Ferozi were found guilty of theft of $278 million and $530 million, respectively. Farnood and Ferozi have also been ordered to pay back these funds. Source: Chuck Moravec via Flickr.

Thomas Buonomo
Geopolitical Risk Analyst

Throughout U.S. involvement in counter-insurgency (COIN) operations in Iraq and Afghanistan, rampant government corruption has driven continuing instability and hampered U.S. nation-building efforts.[1] Corruption was a major reason for the collapse of the Iraqi military in northern Iraq upon impact with the Islamic State.[2] It is also the reason why Afghans are turning to the Taliban for resolution of their legal disputes.[3]

These are profoundly tragic and frustrating outcomes that can only be precluded in the future in one of two ways: the U.S. must either obtain legal authority from the U.N. Security Council—or, in critical situations, through unilateral measures—to override a host nation’s legal system and hold corrupt actors accountable when local officials refuse. Alternatively, should this approach fail, the U.S. government should refrain from nation-building missions entirely and provide the U.S. military with a mission more closely aligned with its core competency: kinetic military operations.

Consideration must be given to contingencies in between these two ends of the spectrum that may call for foreign internal defense or limited counterinsurgency missions.  In cases where the U.S. military has overthrown an existing government or is ordered to intervene in a failed state—two scenarios that the U.S. should engage in only with the utmost reluctance and with the maximum application of resources once decided—long-term extra-national legal authority beyond the transition to nominal sovereignty is critical.

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Iran Interview: the Shia-Sunni Conflict, Israel, Nuclear Weapons, and Investment

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Journal of Political Risk, Vol. 2, No. 7, July 2014.

A crowd of conscripted Iranian soldiers pose in a large group.

Conscripted Iranian soldiers. Source: Wikimedia Commons.

In this July 20 interview with the Journal of Political Risk, Dr. Yeganehshakib discusses how the present conflict in Iraq will affect Iran’s role in the Middle East and its relations with the United States.

Reza Yeganehshakib  holds a Ph.D. in history with a specialization in World and Middle Eastern history at the University of California, Irvine (UCI). He received a B.S. degree in Chemical Engineering from Iran Azad University, and an M.A. in history from UCI, where he serves as a Research Associate at the Samuel Jordan Center for Persian Studies. Dr. Yeganehshakib is a member of the Middle East Studies Association and the International Society for Iranian Studies. He is affiliated with the Persian Language Institute at California State University, Fullerton and was previously affiliated with the National Iranian Oil Company. Continue reading →

Investment implications of President Rohani’s economic opening

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Iranian car workers assemble a car at the state-run Iran-Khodro automobile manufacturing plant near Tehran, Iran.

Iranian car workers assemble a car at the state-run Iran-Khodro automobile manufacturing plant near Tehran, Iran. Iran began exporting automobiles to Russia for the first time in five years on Sunday, after meeting upgraded emission standards, the country’s largest auto manufacturer said. Source: Wikimedia Commons.

Journal of Political Risk, Vol. 2, No. 7, July 2014.

Reza Yeganehshakib
University of California

After the election of Hasan Rohani as the president of the Islamic Republic of Iran, there has been hope among Iranians and the international community for change in Iran’s economy and foreign policy.[1] Hasan Rohani, who is known for being relatively moderate particularly in comparison with his conservative predecessor, made several promises during his campaign regarding his government’s efforts to lift foreign sanctions, restore Iran’s relationship with the West, and decrease inflation, for example. The supreme leader’s approval of Rohani’s election can also be interpreted as an indicator of a potentially major shift in Iran’s policies. Considering Iran’s economic and strategic massive capacities, the incorporation of Iran into the global market and the possibility of further security cooperation between the U.S. and Iran will contribute to a more secure Middle East that can be used as a safe pool for investments. As Iran already proved in the Afghanistan and Iraq wars, its cooperation with the U.S. could contribute to the security of the volatile Middle East and an increase in foreign investment in the region. Likewise, the Syrian conflict and recent turmoil in Iraq have shown that Iran and the U.S., as well as Israel and other U.S. allies, have one enemy in common, the jihadists and Islamist radicals.[2] It seems that if Rohani can overcome the obstacles to Iran’s entering the global economic system such as sanctions, lack of a sustainable relationship with the West, and unresolved nuclear issue, Iran could become an investment hub in the Middle East, especially in the oil and gas industry.

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Nationalism, Pastoral Nomadism, and Political Risk to Natural Resource Investments in Mongolia: Case Studies of the Aluminum Corporation of China Limited (Chalco) and Rio Tinto

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Journal of Political Risk, Vol. 2, No. 6, June 2014.

From right to left, Shaft #1, #2, and #5 at Oyu Tolgoi, a copper mine in extreme southern Mongolia photographed from afar.

From right to left, Shaft #1, #2, and #5 at Oyu Tolgoi, a copper mine in extreme southern Mongolia, 2013. Oyu Tolgoi, also known as Turquoise Hill is a combined open pit and underground mega mine project in Khanbogd in the south Gobi Desert. The site was discovered in 2001 and is being developed as a joint venture between Ivanhoe Mines, Rio Tinto and the Government of Mongolia. The mine is scheduled to begin production in July 2012. The Oyu Tolgoi mining project is the largest financial undertaking in Mongolia’s history and is expected upon completion to account for more than 30% of the country’s gross domestic product. Copper production is expected to reach 450,000 tonnes annually and Gold production is estimated to reach 650,000 ounces per year. Source: Wikimedia Commons.

Jamian Ronca Spadavecchia [1]
Founder and President of Oxbow Advisory

Mongolia stands at a critical juncture between the rewards of natural resource development and the challenges of modernization. On the one hand, it offers abundant opportunities in the natural resources sector and is located near growing and resource-starved industrial nations of East Asia. At the same time, the presence of autocratic neighbors impose international instability on this democratic and market-oriented economy.

This article considers two underanalyzed political risks that are necessary for understanding the future of the Mongolian economy: nationalism and pastoral nomadism. In doing so, it proffers an improved analytical framework for resource investors to better assess and mitigate their Mongolia risk.

Finally, the analysis uses selected case studies to demonstrate how nationalism and pastoral nomadism might impact natural resource investment. For nationalism, a study of the proposed acquisition of SouthGobi Resources (SouthGobi) by the Aluminum Corporation of China Limited (Chalco) is offered. The Chalco study is emblematic of the link between nationalism and two dominant trends in Mongolia: resource nationalism and increasing geopolitical risk in the natural resources sector. The section also looks at how pastoral nomadism poses a risk to Oyu Tolgoi, Mongolia’s premier copper and gold mining project, by examining a dispute between Rio Tinto and indigenous communities of Gobi herders that threatened Oyu Tolgoi’s project financing. Continue reading →

The New Face of Russia’s Relations with Brazil

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Journal of Political Risk, Vol. 2, No.5, May 2014.

Defense Minister of Brazil, Celso Amorim, receives his counterpart from Russia, Sergei Shoigu, during bilateral meeting in Brasilia.

Defense Minister of Brazil, Celso Amorim (L), receives his counterpart from Russia, Sergei Shoigu, to bilateral meeting at the Defense Ministry in Brasilia, capital of Brazil, on October 16, 2013. Shoigu’s visit included an attempt to win a $4 billion deal to supply 18 fighter jets.

Matthew Michaelides
Editor of the Journal of Political Risk

Abstract

Bilateral trade, high level personal communication, and military-technical relations between Russia and Brazil have all grown significantly over the past decade. Recent weapons sales to Brazil include a $150 million contract for MI-35 helicopters in 2009 and a 2012 deal for seven Ka-62 helicopters. Moreover, the Russian defense ministry has indicated its intention to increase Russian military capacity in Brazil and Latin America more broadly. This paper examines the causes for the increasing depth of Russian-Brazilian military-technical relations and concludes that informal patronage politics play an essential role in understanding Russian actions. A detailed analysis of contemporary Russian-Brazilian relations and existing theoretical perspectives is provided, as well as a thorough examination of recent Russian arms and equipment sales from the informal patronage politics perspective.

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