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Published: January 18, 2013
The situation in northern Mali has increasingly impacted on the region’s business environment. As events in Algeria recently illustrated, escalating French involvement in Mali is likely to lead to blowback both in the immediate area and beyond. This is likely to affect international companies and organisations operating in the Maghreb and Sahel especially.
This development is not new, certain groups have long held grievances against international, particularly Western, companies and corporations operating in the Maghreb and Sahel, whether those organisations are for-profit or not. What the current situation has highlighted, however, is the varying impact on business of the international involvement in Mali.
There can be no doubt that the terrorist groups involved in the recent – and indeed past – events have certain business aims: principally to attain funding in order to continue and expand their operations. Their vehicle for achieving this has primarily been through weapons, people and narcotics smuggling, in addition to kidnapping for ransom. Indeed, Al-Qaeda in the Islamic Maghreb (AQIM), for example, has a history of conducting kidnap and ransom of Westerners. They have kidnapped over 50 Westerners in the last ten years, earning a reported USD 100 million in the process.
In addition to considerable finance, terrorist groups in the region have also had their assets – in this case, weapons – increased over the last 18 months. The flood of weapons into the area, facilitated by the departure of Muammar Gaddafi from power in Libya, has arguably proved to be a boon for terrorists and militants across the Sahel. Libya’s preoccupation with managing its own internal affairs has led to zones of instability being created in the south of the country especially. Indeed, control over smuggling routes – of people, weapons and narcotics – has been a cause of conflict in recent months. Recently, in December 2012, the Fezzan region in southern Libya saw increased unrest.
Clearly, then, the terrorist groups in the region have the financial and material clout to attempt to further their aims. In the case of Algeria, it is unclear at the time of writing whether the group intended to negotiate a ransom for the hostages and thus bolster their balance sheet, or whether they were seeking to make a political and ideological point – as was initially argued by a spokesman claiming to be from the rebel group holding the hostages – regarding the presence of Westerners on certain lands. There can be no doubt, however, that the occurrence of the attack itself – bold, brazen and well-planned – was a direct result of the successes of the terrorist group in procuring arms and money.
But what does this mean for other businesses in the region? The threat of kidnapping and terrorist attacks is likely to continue. There is little doubt that increased Western involvement in the area will increase the threat level posed to Western personnel across the Maghreb and Sahel, a threat level which has been simmering since the Libyan revolution but in reality has been a concern for much longer. The natural resource industry in particular and its associated wealth will likely continue to be a notable target. Indeed, Mokhtar Belmokhtar, the former AQIM commander whose group was apparently responsible for the recent Algerian attack, pledged to attack ‘Western and Jewish interests – economic and military – that plundered the riches of our Ummah [global Muslim community]’.
Algeria will, however, continue to be an attractive business destination for many companies; it has the third largest proven oil reserves in Africa and the second largest proven gas reserves. Preliminary reports indicated that the Algerian base was relatively well secured, at the behest of the Algerian government, who were concerned over possible damage to the country’s reputation. Maintaining robust security and harnessing accurate local intelligence which allows business operations to continue without posing an undue risk to staff will be crucial in the coming months. This will be the balance that needs to be struck to allow businesses to continue to operate without themselves becoming a source of revenue for terrorist and militant groups.