Sunday, July 23, 2017

Philippines terrorist threat remains high

A loud-mouthed populist president with a volatile personality, authoritarian leanings and a penchant for violence is hardly the recipe for calming political risks. Yes, we’re talking about the Philippines, of course.

Under Rodrigo Duterte, the country’s controversial but popular president, the terrorism and political violence risk level is likely to remain high in the Philippines during 2017, according to Aon’s latest global report on exposures to such risks.

While an improved economy has reduced the ranks of unemployed people for terrorist groups to recruit from, issues in the southern parts of the country continue to pose a significant risk and the political environment in general under Duterte has added to concerns.

On both fronts — terrorism and civil unrest — risks are concentrated in city centres and insurance buyers in the Philippines have demonstrated an appetite for a range of solutions, including peril coverages of terrorism and sabotage; strike, riots, civil commotion and material damage policies; and full political violence cover.

“Underwriter appetite for Philippines risk continues, with capacity increasing accordingly over the last few years,” says Aon. “Pricing is expected to remain competitive over the next year and dependant on the industry, the location and the risk of the insured.”

The principal sources of terrorism come from communist insurgents such as the New People’s Army and extremist Islamic groups such as Abu Sayyaf and the Moro separatist groups.

Almost 100 people were killed in attacks last year and roughly 250 wounded, including a bombing in Davao in September that killed 15 people and was the deadliest attack in the country since 2003. Officials linked it to Islamic extremists belonging to the Maute group, which was also responsible for a double bombing at a boxing match in Leyte province that injured at least 35 people.

In November, a street sweeper in Manila discovered a bomb close to the US Embassy. Police disarmed it and anti-terrorism officials linked it to another extremist cell.

Several groups based in the south have pledged allegiance to Islamic State in recent years, says Aon, but direct connections became more evident during 2016 after IS propaganda named an Abu Sayyaf factional leader as head of “the Caliphate in the Philippines” and promoted the country as a focal point for regional militants not able to travel to Syria and Iraq.

The escalation of violence by IS-linked groups “suggests that they are increasingly intent on attacks outside of core operating areas in western Mindanao and the Sulu Archipelago, including in the capital”, warns Aon.

Terrorism is by no means the only risk. As well as encouraging vigilante violence against drug users, Duterte has also extended his strongman routine to foreign policy. Just this week he ordered the country’s military to deploy to disputed islands in the South China Sea in an apparent reversal of his earlier rapprochement with China and distancing from the US. Whatever the president’s intentions, the threat of a miscalculation by either side has raised concerns about a possible clash with Chinese military vessels in the region.

All in all, risks in the Philippines are among the highest in the whole region and unlikely to improve any time soon. Like his American counterpart, Duterte has a long way to go to make his country great again.

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