SOUTH ASIA RISK REVIEW - MitKat · 2017. 2. 1. · membership of SAARC. This report does not cover...

SOUTH ASIA RISK REVIEW2016

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Chairman’s Message

Home to nearly one third of the world's population, and two belligerent nuclear powered states with an increasing trust deficit, South Asia is a complex dynamic region with immense potential for growth but beset with a high degree of geopolitical fragility. The eight countries that make up the region are all relatively newly independent countries with a shared colonial legacy. Democratic roots in most of them except India are not deep, and most have had experience of military coups or have military calling the shots to a varying degree. The three main protagonists India, Pakistan and Bangladesh have a large restive Muslim population, which is perceived by some as a fault line and fertile recruitment ground for radicals of all hues.

Afghanistan and Myanmar, and to an extent Iran, which are considered de facto part of the South Asian geographical narrative also bring on board their security baggage to the cauldron of instability, challenges and opportunities which the region represents. Whilst terrorism continues to be the dominant concern of most nations; in the coming years, non-traditional security challenges will start playing an increasing role in the security architecture of the area. Poor and weak governance, with huge and widening income disparities in a restive educated and social media savvy young population, is a recipe for instability. Pressure on scarce resources like water and energy on the galloping numbers exacerbate the situation. The population dividend, unless harnessed adroitly would soon become a liability. Unless tackled coherently, the momentum of non-traditional threats mentioned above may

South Asia Risk Review 2016 www.mitkatadvisory.com

Lt General Sudhir Sharma, (Retd)

PVSM, AVSM, YSM, VSMChairman, MitKat Advisory Services

ome to nearly one third Ho f t h e w o r l d ' s p o p u l a t i o n , a n d t w o belligerent nuclear powered states with an increasing trust deficit, South Asia is a complex dynamic region with immense potential for growth but beset with a high degree of geopolitical fragility

Chairman’s Message

become endemic and threaten the social fabric of some nations. In to differences in cultural orientation. Nepal will in all probability fact, some non-traditional security threats have already remain symbiotically attached to India and to South Asia, transformed to become traditional threats, with the dividing line economically and emotionally.between them blurring too rapidly for comfort.

US, Russia and China have huge stake in the region, and the oceans Whilst the direct threat of IS would be limited in the region due which the South Asian land mass straddles, besides the Malacca counter balance of the Taliban in Afghanistan and Iran to the west, Straits. China has invested heavily in the Gwadar port for an access the impact of lone wolf attacks by IS sympathizers is a probability to the sea, and has strategic interests and ports in Sri Lanka and and would be difficult to control or mitigate. Pakistan would Myanmar. USA while pivoting to West Asia, is in the process of continue to be a safe haven for terrorists of many shades, and building deep strategic and economic ties with a resurgent India, in would in all probability align ideologically with a Taliban dominated an attempt to check China and Russia on the geo-strategic chess Afghanistan post the full American withdrawal. India-Pakistan board of South Asia. relations are unlikely to mend anytime soon and a tense standoff casting its shadow on the region would continue. Bangladesh The region is evolving rapidly and has myriad security challenges, despite its inherent problems is attempting to reduce the influence both traditional and non-traditional. Its leadership has shown of extremists; a trend that is welcome and bodes well despite the reasonable maturity and sagacity, and this bodes well for the quagmire it finds itself in presently. Nepal is passing through a region in general. However the overall security scenario is fragile difficult transitory phase to full-fledged democracy, and is under and needs careful monitoring, and putting in place robust systems pressure to come under the influence of China due to economic to manage emerging threats in the coming years. incentives; but this relationship may not stand the test of time due

South Asia Risk Review 2016 www.mitkatadvisory.com

The term South Asia traditionally denotes countries located in the sub-Himalayan region. In the classical geopolitical context, South Asia has become synonymous with SAARC, and includes the countries of India, Pakistan, Afghanistan, Nepal, Bangladesh, Bhutan, Sri Lanka and Maldives. However for this report, Myanmar is also included as part of the region as it has strong linkages to the region, serves as the gateway to South-East Asia, and incidentally has applied for full membership of SAARC. This report does not cover India in detail, since MitKat Advisory Services publishes a separate, exhaustive India Risk Review annually.

South Asia is home to over one fifth of the world's population (the largest market), immensely diverse on all counts (geography, religion, ethnicity, and economy), rich in resources (human and natural), and dominates the Indian Ocean through which moves more than 80 per cent of the world's seaborne trade in oil. It is also the most 'consistently' turbulent region in the world, containing the Af-Pak region (the epicentre of terrorism), two hostile nuclear powers, multiple insurgencies, vast population of illiterate and unemployed youth, and potential for catastrophic

South Asia Risk Review 2016 www.mitkatadvisory.com[1]

Executive Summary

AFGHANISTAN

PAKISTAN

INDIA

MALDIVES

NEPAL

BANGLADESH

BHUTAN

MYANMAR

SRI LANKA

www.mitkatadvisory.com[2]

Executive Summary

natural disasters (earthquakes, floods and epidemics). Also Syria and Iraq, but also back home in South Asia. There has been significant in this context is internal political instability in most of either unwillingness or incapability on part of the governments and the countries (Afghanistan, Pakistan, Nepal, Bangladesh, Maldives security forces in these countries to undertake decisive actions and Myanmar) for its uncertain impact on the security against the terrorist groups operating on their soil. environment. The withdrawal of US troops from the region presents many uncertainties as regards security, economy, and India, after a period of stemmed growth, is steadily on a faster domestic politics. growth path. However major challenges relating to terrorism, both

transnational and domestic, sporadic instances of violence on However, it is Islamic terrorism that dominates the security religious and ethnic grounds, widespread poverty, unemployment concerns in the region. Taliban and Al Qaeda continue to have their and illiteracy need to be addressed in order to sustain the bases in Afghanistan and Pakistan. The upsurge of Islamic State (IS) momentum as also to make the growth inclusive to encompass a has ambitiously led the group to proclaim its sub-Caliphate in the wider cross section of the population. South Asian Region as 'Wilayat Khurasan'. In Afghanistan it has gained limited control of territory and is engaged in a turf war with Nepal's transition to a parliamentary democracy has been far from the Taliban. In Pakistan, the group has established links with being smooth. The opposition to the Constitution from various already established terrorist groups in the country and is ethnic minorities that live in the Terai (plains) region bordering coordinating attacks with them. In Bangladesh too, the group has India, and its adverse impact on Indo-Nepal relations, is a visible taken responsibility for some attacks including one on a foreign trend for 2016. China's attempts to capitalise on this instability will national. There is also the ever-increasing trend of South Asians further add to the power play and tensions within the country. travelling to Syria and Iraq to take part in the fighting. Although the number of foreign fighters from South Asia remains low as In Myanmar, the party of opposition leader Aung San Suu Kyi has compared to those from other parts of the world, the possibility won the largest share of votes cast by an electorate of about 30 remains high of South Asian fighters joining the IS's fight not just in million. The outcome of the elections will be the main determinant

South Asia Risk Review 2016


Executive Summary

for the future of the nascent democracy in the country. Another debates in these countries, and this has created a sense of defining factor for the stability of the country is the future of the insecurity amongst the minority communities. In Myanmar, it has peace deal (signed in October 2015) between the government and intensified the crisis of Rohingya refugees, who are fleeing the various ethnic insurgent groups that have been fighting the country to escape persecution, whereas in Sri Lanka this government for long. phenomenon is further alienating the Tamils and the other

minority communities. In Maldives, the current President Yameen has been constantly attempting to undermine the popularity of former President The region is also acutely susceptible to natural disasters such as Nasheed; this conflict has led to the declaration of a 30 day earthquakes, floods, landslides, cyclones, tsunamis and epidemics. emergency. This political conflict is creating potential for The reality that the governments of the South Asian countries intervention by the religious extremist elements of the society. remain ill-equipped to handle such disasters both in terms of policy

direction and resource allocation, potential for catastrophic Bhutan remains an 'oasis' of peace in the volatile South Asian consequences to life and property remains high. region, owing to political stability, general peace and slow but study transition to a democratic form of governance. However, the In 2015, the security climate remained a cause for concern, and this country is dealing with some level of ethnic divide, issues of drug instability and uncertainty is likely to persist in the ensuing year. trade and presence of insurgent groups from neighbouring The security environment in the region has to deal with traditional countries, which seek safe havens there. security threats (inter-state conflicts) as well as multiple non-

traditional security threats (terrorism, floods, climate change, A distinctive trend for South Asia is the rise of Buddhist extremism. ethnic conflicts and separatist movements). The potential for In Sri Lanka and Myanmar, both majority Buddhist countries, external influence and intervention remains, if the South Asian Buddhist extremist groups have entered the political field. Such countries do not manage these challenges internally.groups have come to dominate the religious as well as political


Afghanistan

Afghanistan

Area

Population

GDP Growth Rate

GDP

652864 sq km

31.6 million

6.4 percent

23 billion USD

Herat

Mazar-e-Sharif Kunduz

Kabul

Kandahar

Internal Security

Political Stability

Economic Stability

Natural Disasters

Safety

Risk Rating

High risk

Medium risk

Medium risk

Medium risk

High risk

Afghanistan, a landlocked country that shares its borders with six about 5,500 into 2017 to support the ANSF has potential for countries, has witnessed large-scale political instability and increased destabilization, as this force, in view of limited capacity conflicts since the Soviet invasion of 1979. In 2001 NATO led by the of ANSF, may not be enough to halt the advance of the Taliban. The US, ousted the Taliban from power, but over the past couple of most critical challenge for the present Afghanistan government is years, the Taliban have regrouped and regrown, especially since to stop the Taliban from gaining more ground, maintain law and the withdrawal of the coalition forces in December 2014. Years order in the regions that are under its authority and control, while 2014 and 2015 saw a dramatic increase in the rise of terrorist forging and sustaining national unity among the various ethnic attacks inside the country. In September 2015, in a major attack, groups (Pashtuns being the largest, followed by Hazaras, Tajiks and the Taliban took control of the city of Kunduz, in northern Uzbeks).Afghanistan, thus demonstrating the group's capacity to launch attacks even out of their traditional bases of southern and eastern Afghanistan. The Afghan National Security Force (ANSF) has been unable to offer significant resistance to the Taliban's advance, and along with the increase in the number of civilian casualties, casualties as regards Afghan security forces have also increased significantly.

The government in Afghanistan has struggled to extend its authority beyond the capital, and the security situation in the country continues to remain volatile. The US announcement to keep a force strength of nearly 9,800 through 2016 and a force of


Afghanistan

Internal Security


www.mitkatadvisory.com[5]South Asia Risk Review 2016

Afghanistan

The pace of capacity building in respect of ANSF has been slower than what the US had hoped when it decided to end the American role in combat operations by the end of 2014, prompting the US to announce extension of its military involvement in Afghanistan till 2017. The political instability of the Afghan National Unity government stems from the arrangement where President Ashraf Ghani shares power with his political rival Abdullah Abdullah. Endemic corruption, weak leadership, political infighting, and ethnic tensions have allowed the Taliban to regain strength. In 2015, the Taliban have already managed to launch attacks on the Afghan Parliament and in the diplomatic areas of Kabul, thus demonstrating the group's capacity to launch attacks in any part of the country. The government does not hold complete authority over the entire country, has been unable to counter the progress of the Taliban in parts of the country, and has also failed to reach any peace deal with the group. The current political instability in Afghanistan is likely to continue into 2016.

In 2015, the Taliban formally announced the death of its leader Mullah Omar; and Mullah Mansoor took over as the leader of the group. The Kunduz assault was designed to bolster his leadership. Mansoor is likely to seek further territorial gains with a view to strengthen the Taliban position ahead of any talks with the Afghan government, as well as consolidate his own position in the group. The group's advances towards the northern border could spill over into the neighbouring countries that are already battling terrorist groups on their own soil.

Since 2001 Al Qaeda (AQ) has been based in the mountainous tribal regions of Pakistan. However, AQ and by extension, its local branch AQ in Indian Subcontinent (AQIS) had relocated a significant portion of its operations into Helmand province, in anticipation of the Pakistani military's Operation Zarb-e-Azb (an offensive that began in June 2014). Significant portions of the southern Helmand and Kandahar provinces currently fall under Taliban control. Reports also suggest that an AQ-linked group, the Indian Muhajideen, is also training in camps here.

The resurgence of Taliban, the regrouping of AQ and safe havens in Afghanistan for other terrorist groups, all together pose a significant security threat, not just for Afghanistan but for all of South Asia, especially India, Pakistan and Bangladesh.

Taliban and Al QaedaPolitical Instability

www.mitkatadvisory.com[6]South Asia Risk Review 2016

Afghanistan

Of late, adding to complexity is the emergence of Islamic State (IS) on the country's domestic terror scene. Afghanistan is projected as a part of one of the IS's provinces abroad, called “Wilayat Khurasan”, as declared in January 2015. The growing influence of the IS in Nangarhar province of Afghanistan has turned this region into the battleground of a “turf war” between Islamic State and Taliban. The group's offensive against Taliban might prevent the IS from replicating its breakthroughs of Iraq and Syria in Afghanistan. There appears to be little prospect of rapprochement between the Islamic State and the Taliban in view of Mullah Mansoor having publicly declared support for the AQ leader (Zawahiri) and the IS leader Abu Bakr al-Baghdadi's refusal to recognize Mansoor's title as emir al-mu'min and the possibility of “turf war” clashes between Taliban and Islamic State thus remains high. The two groups are likely to continue to fight for territorial gains, which are also linked to economic gains of controlling the lucrative opium and mining trade in the region.

Source: The New York Times and Independent

Taliban Versus Islamic State


The Afghan economy has been dependent on foreign aid for over a mining companies and providing services like security and decade. However, with the withdrawal of NATO forces, foreign transportation for unlicensed mines. In the absence of adequate investors are on tenterhooks, ready to pull out, affecting jobs and government measures to crackdown on the Taliban mining diminishing the country's future economic prospects. In this operations, the group will continue to reap the benefits of illegal faltering economy, joining the Taliban has become an attractive mining. option for unemployed youth. The heating up of war again and diminished prospects in terms of work or stability in Afghanistan, No significant dip in the opium cultivation and trade in 2016 and has forced many Afghans to flee the country. In the waves of near future is likely as opium trade and illegal mining are lucrative migrants flooding the gates of Europe, many are Afghans, a trend funding options for the Taliban as well as for the local mafia. The that is unlikely to change in the foreseeable future. security set-up in the region is not robust enough to counter illegal

trades. Rampant corruption means that authorities that might A major component of Afghanistan's economy is opium, the fuel for have the means to act would tend to look the other way. the heroin drug trade. Nearly 85 per cent of the world's black market opium is produced here and most of it finds its way to the One positive development as regards potential for foreign trade is international drug markets. Opium smuggling has profited not only the recent thaw in US-Iran relations and possible easing of the local warlords but also the Taliban. The rising level of opium sanctions on Iran, which may open up another avenue for production continues unabated, despite an $8.4 billion investment transportation of goods to and from the country through Iran, in counter-narcotics programmes in Afghanistan. which hitherto fore was limited to the passage through Pakistan.

The economic outlook for Afghanistan in the near future thus While the large scale mining projects of the government have remains anything other than bright. Any significant change in the either failed or stalled, the Taliban is profiting off smaller mines in situation is unlikely till such time there is significant improvement the country. Minerals are the Taliban's second-biggest income on the security front coupled with the capacity of the Government source after narcotics. The group earns from mining in three ways, to effectively administer the country. directly extracting resources such as marble, extorting money from

Afghan Economy


Afghanistan

Pakistan

Area

Population

GDP Growth Rate

GDP

796095 sq km

190.24 million

4.5 percent

264 billion USD

Pakistan

Internal Security

Political Stability

Economic Stability

Natural Disasters

Safety

Risk Rating

High risk

High risk

Medium risk

Medium risk

Medium risk


Domestic Terrorism

Pakistan

Pakistan despite having made gains on the Jhangvi (the largest anti-Shia terror group a Pakistani Air Force base in Peshawar, political front, continues to be one of the in Pakistan). At least six senior leaders of killing at least 17 people. In the past too, countries worst affected by terrorism. the Tehrik-e-Taliban Pakistan (TTP) have the group has attacked Pakistani armed Terrorism in Pakistan is an immensely pledged their allegiance to IS. Pakistan and forces including the September 2014 complex multi-dimensional phenomenon Afghanistan are part of Islamic State's attack on a Pakistani naval base in Karachi, with many sub-texts to include the impact “Wilayat Khurasan”. The Central Asian and the attack on the Peshawar Army of what goes on in the Af-Pak region, the terrorist group, Islamic Movement of School in December 2014. internal Sunni-Shia fault line and rise of IS. Uzbekistan (IMU), which has its base in the

Pakistani tribal region, is also now affiliated This situation in Pakistan is likely to persist, Incidents of sectarian attacks on the to the IS. and in fact US withdrawal from Afghanistan minority Shia community continue to may make matters worse for the security dominate headlines. In Karachi, an attack The Pakistani Taliban or TTP (the faction led establishment. IS's growing influence on bus full of Ismaili Shias killed nearly 43 by Mullah Fazlullah which is not loyal to IS) increases the possibility of sectarian people; responsibility of which was continues to launch attacks on the attacks on the Shia and Christian claimed by loyalists of the Islamic State (IS); Pakistani state, and retains the capability communities, particularly in Karachi, with thus signalling that the group has found a to mount devastating attacks despite the direct consequences for the business foothold in the country's business capital. military offensive, Zarb-e-Azb (the strike of climate. 2016 thus appears to be another A lethal attack on the home minister of the Prophet's sword) in June 2014, in the year of challenges for the government in Punjab province, Shuja Khanzada and 17 North Waziristan tribal region; the heart of general and the military and intelligence others is bel ieved to have been TTP's operations. In a brazen attack in establishment in particular. coordinated by the IS and Lashkar-e- September, the group's militants stormed



Baloch Insurgency


Pakistan

Balochistan, the largest but the least The insurgents carried out several attacks and activists mysteriously disappearing, populated province, has been facing in the province in 2015 through bombings the case of missing persons has added to insurgency, in various phases, since 1948. and armed assaults. Though most of these list of grievances that the Baloch The demands of the Baloch insurgents attacks targeted security personnel, heavy population has with the Pakistani state. include greater autonomy, increased civilian casualties were witnessed in two revenue from natural resources in the significant attacks carried out by the Development in this resource-rich region region, and in some cases secession from Baloch insurgents. In one attack in October (including international business interests) Pakistan. The latest phase of the 2015, 11 civilians were killed and 22 will continue being impacted due to the insurgency that gained momentum in wounded in a bomb explosion in a bus in unrest. Significantly, the Pak-China 2006, has been the deadliest so far and Quetta, while in May 2015, 34 people were Economic Corridor, which aims to connect lasted longer than the previous waves. The kidnapped by the separatists, of which 14 Pakistan's port city Gwadar (located in Baloch insurgents groups are organised were killed. While the main target of the Balochistan) to China's northwestern along their tr ibal identit ies. The Baloch insurgents remains the Pakistani autonomous region of Xinjiang, passes Balochistan Liberation Army, labelled as a security forces, they have in the past, through the restive areas of Balochistan. terrorist organization by Pakistan and UK, is attacked ethnic Pashtuns and Punjabis the most widely known Baloch separatist working in Balochistan as well. group. Since 2008, it has conducted numerous attacks on Pakistani security The insurgency continues to rage with no personnel and civilians. Other separatist resolution currently in sight, with no real groups include the Lashkar-e-Balochistan commitment from either party to the and the Baloch Liberation United Front conflict to find a long-term peaceful (BLUF). solution. With several Baloch nationalists

Insurgency Count - 2015

AttacksCivilian fatalities Security personnel killedTerrorists

9122482250

Source: SATP


Pakistan has been for long beset by multiple Islamist militant groups operating. Al Qaeda was founded here in 1988 and Quetta Shura of Afghan Taliban is based in Pakistan. Anti-Pakistani state militants groups such as TTP and LeJ also have their bases on Pakistani soil. India-centric terrorist groups like the Lashkar-e-Taiba (LeT), Harkat-ul-Mujahideen (HuM) and Jaish-e-Mohammed (JeM) have also affected the internal security of Pakistan itself. To add to the complexity of the matter, the security leadership in Pakistan has chosen to differentiate between various terrorist groups as “good” and “bad” terrorists (those that serve the Pakistani state's like LeT; and the ones that don't such, as TTP).

Islamist Extremism


Pakistan

Infrastructure Challenges

Physical infrastructure development has been slow in the past two decades, with transportation infrastructure suffering from government neglect. Both the quality and quantity of public rail and bus services have declined. As a result, private buses, taxis, auto-rickshaws, and horse-drawn carts often meet the demands of urban transportation; these vehicles are unregulated, and safety issues abound. The country's truck fleet is mostly made up of obsolete and polluting vehicles that are often overloaded and slow moving, thus increasing transportation timings. Recent government measures have improved performance of port operations. The customs clearance time has been reduced from 4-5 days to less than 24 hours at the Karachi International Container Terminal (KICT), however, dwell times for containers remain much above the international standard of 3-5 days.

Although cell phone connectivity has increased over the last five years, loss of cell phone reception is frequent when travelling out of the main city areas. Planned shutting down of cell networks in the major cities in Pakistan is also commonplace, especially during Muharram when there is a greater risk of terror attacks and breaking out of sectarian violence. These shutdowns result in restricted access to medical services, as citizens are unable to call hospitals, police, or fire fighters in case of an emergency. The disruption to mobile services also inhibits business operations.

3500

3000

2500

2000

1500

1000

500

0

2013 2014

3001

1781

2015

1702

3182

841

2194


The monsoon season that lasts from June to August, results in In contrast, severe heat wave conditions persisted throughout June massive disruption to normal life in Pakistan. In 2015, nearly 1.2 2015 in the southern parts of Pakistan. The heat wave took 1,200 million people had to be evacuated from Sindh and Punjab lives, mostly in poor neighbourhoods of Karachi; with its multitude provinces, and about 200 were killed when the major rivers in the of concrete buildings and the absence of aqueducts exacerbating region (Indus, Sutlej and Ravi) broke their banks and flooded entire the condition. The situation was further complicated by frequent villages and towns. With every flood, there is destruction of crops power outages, sparking protests in several parts of Karachi, a over thousands of acres of prime agricultural land. Pakistan is also populous city of over 20 million. vulnerable to abrupt changes in weather patterns due to global warming. Geographically, Pakistan overlaps two tectonic plates - the Indian

and the Eurasian. This makes the region susceptible to regular Three of the world's great mountain ranges intersect in Pakistan's earthquakes. Since 2005, Pakistan has witnessed seven north, the Himalayas, the Hindu Kush and the Karakoram, forming earthquakes with an average intensity of about 7 on the Richter the largest reservoir of ice outside of the polar region. Temperature scale. Recent seismic research indicates that the regularity of fluctuations are causing the melting of the glaciers that supply the occurrence and intensity of seismic events is also expected to Indus River and its tributaries that irrigate the Pakistani agricultural increase; which is especially of concern to important cities like heartland. These fluctuations are expected to continue and Karachi, Islamabad and Lahore, which are all located in high-risk flooding of these rivers is expected to be an annual event. As past seismic zones. events demonstrate, the government's disaster management plans to minimise impact on life and property in the affected regions are not yet effective.

Environmental Hazards


Pakistan

Area

Population

GDP Growth Rate

GDP

3.1 million sq km

1280 million

7 percent

2118 billion USD

India

Internal Security

Political Stability

Economic Stability

Natural Disasters

Safety

Risk Rating

Medium risk

Low risk

Medium risk

Low risk

Medium risk

New Delhi

Mumbai

Hyderabad

BengaluruChennai

Kolkata


India


One key impediment to India's growth remains its internal security emerging threat of Islamic militancy with groups like Jamat-ul-situation. India lies, in what one would consider, a hostile region, Mujahideen Bangladesh (JMB) increasing their presence. The both physically and geopolitically. Terrorism remains a serious NSCN(K) remains the most active insurgent group in Nagaland and geopolitical challenge to India's growth and stability. Cross-border if the government brings the group the negotiation table in 2016, it terrorism showed no signs of abating in 2015 with the northern will go a long way for the peace and stability of the region.border state of Jammu and Kashmir worst affected. In the year gone by, due to sustained efforts of the security forces, the state witnessed a drop in infiltration bids. However, terrorist violence in Jammu and Kashmir in 2015 surpassed the levels recorded in 2014. In a significant incident, terrorists, launched an attack in Punjab, the first such major attack since the end of militancy in the state.

Another worry is the spread of radical ideology of the terrorist group, Islamic State (IS). A survey by a national intelligence agency has shown that the second-largest volume of Internet traffic related to IS was from Assam, after Jammu and Kashmir. Islamic Militancy remained an area of concern not just in the northeast of India but is a pan-India threat.

In the northeast part of the country, the decades long insurgency has showed no signs of coming to a logical conclusion; in spite of a landmark peace accord signed with the NSCN (IM). Six of the seven states are affected to varying degrees by active insurgencies of various hues and capabilities. Northeast India also faced a new and

Terrorism and Insurgency

Maoism remains the biggest threat to India's internal security. Sustained operations by the security forces, coupled with government policies, has meant that states like West Bengal, Odisha, Andhra Pradesh, Telangana and Bihar have seen reduction in the Maoists' activities. However, the movement remains active in parts of Jharkhand and Chhattisgarh. Security forces operating in this region remained on the top of the group's target list. 2015 saw a reduction in Maoists-related fatalities as compared to the previous year. As the security forces look to intensify their anti-Naxal operations in the core operations areas of the group, the Maoists will look to regroup in urban centres of the country as well as in southern states of India, especially in the Kannur-Palakkad corridor in Kerala. This trend of Maoists movements to newer and safer locations is likely to continue into 2016, as it fits into the group's strategy for a pan-India presence.

Maoist Extremism


India


India- Conflict Map


India


India's history is no stranger to communal conflicts; the country has witnessed large and many times violent communal clashes, which have had a domino effect on the peace and harmony of the country. In 2015, the state of Maharashtra witnessed the highest number of communal clashes in the first six months of the year. In the country, incidents of communal violence, especially between Hindus and Muslims, increased by 25 percent; and the early part of the year 2015 saw a number of attack on churches.

Throughout October, public unrest prevailed in Punjab as several rallies and demonstrations were organised across the state to protest against the desecration of the holy book (the Guru Granth Sahib) of Sikhs. Given the current political situation of the country where vested interests often tend to play the communal card their limited political gains, communal tensions could easily escalate with a minor incident. Statistics released by the National Crime Records Bureau show that crime against Scheduled Castes rose up by about 40% from six years ago. Law and order is a state subject, and the rise in caste-based violence shows that state governments might be an unwilling party in crimes against discriminated castes. Groups with political affiliations often stoke tensions and incite rioters, to further their own agenda.

Communal Conflicts and Caste Violence

Incidents Related to Communal Violence

Incidents Deaths Injured

0

500

1000

1500

2000

2500

2010 2011 2012 2013 2014

Source: Lok Sabha


India


Environmental Hazards

Natural hazards such as earthquakes, floods, heavy rains, cyclones and droughts remain a major threat to India's economy and the life of its people. Approximately 85% of India is vulnerable to some environmental hazard – not only earthquake, but also cyclones, tsunamis, floods, heat and cold waves, drought and landslides, apart from chronic urban stresses like traffic snarls, unbreathable air and waste accumulation in some cities. Some of India's largest cities, home to the densest concentration of humans on the planet (like Delhi, Varanasi, Lucknow, Patna, Srinagar) fall in seismic zones 4 or 5. Drought-like situations have triggered many farmer suicides; such numbers have only increased in the past few years despite relief packages from the governments. Disaster Management in India requires constant updating and capacity building, without which India will continue to suffer due to natural hazards.

Religion has dominated the public discourse in India not only due to militant activities, but also because of the growing religious intolerance among various sections of the society. This year witnessed numerous incidents related to religious intolerance, especially over the issue of consumption of beef, conversions and inter-faith marriages. India witnessed a near 25% increase in incidents of communal violence in 2015. These worrying signs of religious intolerance are likely to continue into 2016. Such incidents don't just hamper India's image, but also pose a threat to the country's internal security.

Corruption in India is a problem endemic across all government machinery; and in 2015, India was ranked 85th out of 175 countries in Transparency International's Corruption Perceptions Index. Even essential services, needed for the country's security, have been marred by corruption. This affects the country's global image and its propensity to do business. Despite that, the long-term outlook for India remains positive, with investors expecting the country to be among the world's top three growth economies by 2020.

Religious Intolerance

Corruption


India

The lack on compliance to laid-down safety standards takes a toll on individuals and organisations, since not all of Indian industry really follows such directives in letter or spirit. Fire and structural safety, and inadequate emergency response continue to remain areas of concern. Numerous incidents of gas leakages, fires, blasts, building collapse, etc. kill around 1,500 workers annually in the organised sector and injure far more. The need for structural safety gains even more importance as almost 60% of India's land area is vulnerable to moderate to severe earthquakes.

Road accidents also cause an annual economic loss of 3 per cent of the GDP. The lack of footpaths, service lanes, cycle tracks and non-motorised mode of transport sharing tarmac with motorised traffic, increases the risk of accidents. The Indian Rail network, one of the world's largest railway networks, continues to be plagued by ageing infrastructure; according to a Railways Safety Review Committee Report, nearly 25 per cent of the total railway track in India is over-aged and is due for replacement. Added to this is the lack of foresight from policy makers, resulting in regular accidents that damage its credibility.

Despite the various challenges to the business-operating environment, investor confidence remains high; and the Indian diaspora abroad too lends support in assuaging their concerns.

Safety Risks


Health Hazards

Over dependence on fossil fuels has also contributed to India's high air pollution levels. The air quality in most Indian cities fails to meet WHO guidelines for safe levels, and health hazards due to poor air quality remain a major concern for India's population living in metros. According to a World Bank report, Delhi topped the list of 381 most polluted urban settlements from developing countries worldwide. A shift towards renewable energy is part of the plan to reduce dependency on fossil fuels, as well as provide clean energy to households, which are currently using kerosene for cooking/ lighting.

Communicable diseases like malaria, tuberculosis, dengue, and other vector borne diseases continue to be a major health problem in India; along with the threat of new emerging or re-emerging infectious diseases like Ebola, Avian Influenza, SARS and H1N1 influenza. The government's health care schemes have yet to reach backward areas, tribals, and poor and marginalised communities. India's healthcare challenges are exacerbated by shortage of medical staff, inadequate facilities, untrained paramedics and midwives, unaccredited labs and high cost of advanced diagnostics. Such challenges require sustained, long-term solutions and hence will continue to be a cause of concern for the coming year.


India


Women Safety

In spite of enactment of tougher laws; harassment, assaults, molestation and rape remain a real threat for women in India; yet government measures to ensure women's safety have ensured a greater deal of police accountability and public awareness. However, the conviction rate of perpetrators of crimes against women remains low. As per data from the Delhi police, this year 7,124 FIRs were lodged of atrocities on women till August 2015, out of which only one case was decided. Cyber-crimes such as harassment and blackmailing, against women are on the rise.

Street Protests

Public Protests are a common phenomenon in India, however, 2015 witnessed numerous such large-scale public protests, which had strong political undercurrents to them. The protests for reservation by the Jat and Gujjar in the North, to the Patel community's protests for reservations in the West, and the Inner Line Permit protests in the Northeast are some. How the government approaches the sensitive matter of reservations, will determine the intensity and occurrence of protests in 2016. Across the country, there were multiple instances of transport strike as well, with severe disruptions to transport in urban centres.

Increasing violence against women (% increase in last five years)

Source: National Crime Records Bureau, India

Area

Population

GDP Growth Rate

GDP

141181 sq km

29.18 million

2.26 percent

20.08 billion USD

Nepal

Internal Security

Political Stability

Economic Stability

Natural Disasters

Safety

Risk Rating

High risk

High risk

Medium risk

Medium risk

Medium risk

Pokhara

Kathmandu

Biratnagar

Bhimdatta


Nepal

Nepal's struggle for transition to democracy seems to far from over as yet. The much-awaited promulgation of a new Constitution in September 2015 has resulted in another round of political instability, with many ethnic groups, especially in the Terai region that borders India, opposing the new Constitution that divides the country into seven provinces. The agitations have heavily disrupted normal life in the southern regions in the country and have the potential to further impact business operations and investment sentiment in the region.

The new Constitution divides the Madhesi homeland geographically as part of two separate provinces. Madhesis (Maithili, Bhojpuri, Avadhi and Hindi-speaking Nepalis) have accused the major political parties of disregarding the interests of the marginalised groups and has demanded a separate province of 21 Terai districts bordering Indian states of UP and Bihar.

The protests took the form of blockades of incoming cargo from India, which has resulted in severe shortage of fuel and critical supplies across Nepal. Over 40 protesters were killed in police actions across the southern Terai districts. Tourism, which is one of the main sources of the Nepalese economy, has been affected; a sector that was already suffered a setback due to the massive earthquake earlier in 2015.

Political Instability


NEPAL - PROVINCES ACCORDING TO NEW CONSTITUTION

Secularism Versus Hinduism

Another tension in the political dynamics after the new draft Constitution is the question of whether Nepal should be a Hindu state or a secular nation. Nepal was a Hindu kingdom, but post the Constitutional reforms, Nepal was declared a secular state. Religious groups would like Nepal to be declared again a “Hindu state,” whereas the liberal, Maoists and groups belonging to other religions (Buddhism and Christianity) would like Nepal to have a secular identity.

Nepal witnessed two major earthquakes in April and May 2015 that killed nearly 8000 people and brought life in the country to a grinding halt. Alongside the huge loss of lives, there were significant damages in the Kathmandu valley and the hill regions of the country. According to government estimates, it will cost over $6 billion and at least five years to re-establish public infrastructure and rebuild the country. Communication networks in mountainous regions in the country were heavily damaged in the earthquake and the subsequent landslides. The Nepalese economy will continue to suffer the after-effects of the damage of the earthquake in 2016 and the government efforts to rebuild and restore normalcy may not be enough, especially in the remote mountainous regions.

Landslides are a major hazard in mountainous Nepal during the monsoon season, which begins in June and ends in September. Heavy rainfall usually triggers landslides that have swept away entire villages and affected business operations, such as manufacturing and power generation plants located in the hills. Landslides have assumed greater proportions in the country following the two earthquakes, since majority of landslides since then have been the result of over 200 aftershocks in the subsequent months after the earthquakes. Such landslides and earthquakes will continue to cause immense stress on the economy with possible loss of lives, and damage to infrastructure.


Environmental Challenges


Nepal

22,493Number of people injured

8,702Number of people killed

Big brother – India or China?Nepal is a buffer between the two regional giants - India and China. Nepal has traditionally maintained warm cultural and economic relations with India. However, in the last couple of years it has turned to China to seek aid in its development; and also to balance the influence of India in the country. The trade blockade over the new Constitution has put a strain on Indo-Nepal relations. India has already lost its long-standing status as Nepal's sole fuel provider, when Nepal signed an agreement with China for the supply of petroleum products; after shortages caused by the blockade of land routes from India.

Bangladesh

Area

Population

GDP Growth Rate

GDP

143998 sq km

164.13 million

6.5 percent

187 billion USD

Bangladesh

Internal Security

Political Stability

Economic Stability

Natural Disasters

Safety

Risk Rating

Medium risk

Medium risk

High risk

High risk

High risk

Rajshahi

Dhaka

Sylhet

Chittagong

Barisal


Bangladesh


A full-scale political confrontation between the ruling Awami League (AL), headed by Sheikh Hasina (in office since 2009), and the Bangladesh Nationalist Party (BNP) leader, Khaleda Zia, has meant that the country remains in a state of political lock down. While in the opposition, both the leaders have used violent protests, including general strikes (known locally as “hartals”) and blockades (“oborodhs”), to undermine the other. Early in 2015, the BNP led a 19-party alliance in a nationwide general strike that resulted in a transport blockade and violent unrest. Political protests turning violent has been a trend in the past history of Bangladesh, and in 2016 the possibility of such protests taking place and turning violent remains high.

The on-going political conflict between the ruling Awami League and BNP opposition threatens not just the economic and social progress, but also opens the door for Islamist extremists to spread their influence in the country. The continued use of protests and blockades could seriously undermine the democratic systems of checks and balances, if not controlled by the parties involved; thus providing a fertile ground for terrorist groups to breed and develop. The garment industry, one of the main industries in the country, has been a victim of the political instability with manufacturers exploring alternate markets.

Political Instability Natural Hazards

Bangladesh is one of the most disaster-prone countries in the world, exposed to a variety of natural disasters including cyclones, floods, earthquakes, landslides and drought. Bangladesh ranks first in the world in terms of vulnerability and sixth in terms human exposure to floods and cyclones. A very high population density exacerbates the impact of localized disasters.

Bangladesh also faces extreme risks from climate change and ranks second on the Climate Change Vulnerability Index. Being mostly a low-lying area, situated at the confluence of two large Asian rivers (the Ganges and the Brahmaputra), much of the country is prone to widespread seasonal flooding. The frequency, unpredictability and severity of these disasters is likely to be adversely affected by global warming, population growth, environmental degradation, and ill-maintained infrastructure.

Natural disasters disrupt the nation's food supply and the livelihoods of the many Bangladeshis who work in agriculture. Besides triggering flooding, severe weather frequently causes environmental damage by eroding riverbanks. Contributory factors such as poor town planning, overcrowding and weak infrastructure amplify the threat of disasters to urban communities, particularly in cities vulnerable to earthquakes. Dealing with these many hazards is a major challenge for the Bangladesh government.


Bangladesh


Flood Prone Area Cyclone Affected Area

The Bangladeshi government has banned several organisations The main Islamist political party, Jamaat-e-Islami (JeI), is currently suspected of terrorist activities, and early deterrence efforts have banned from participating in elections. Many of its top leaders have contributed to a general reduction in terrorist activities since 2010. either been executed or have been sentenced to death for their However, with the current political instability, hardliner factions of roles in war crimes during Bangladesh's war for independence in Islam are already in revival mode. Earlier in 2015, three secular 1971 by the International War Crimes Tribunals established by the bloggers were murdered after writing against Islamic current Awami League government. How the current government fundamentalism. Extremist elements within Islam have been handles the voices of opposition in the country, in 2016 and ahead linked to all three killings. The Islamic State (IS) claimed until the next elections in 2018, will determine political stability responsibility for a bomb attack (October 24th, 2015) on Shia and internal security of Bangladesh. Muslims, the first time the community has been targeted in the country. In just a month, the terror group claimed three attacks including two separate attacks on foreigners (one Italian and one Japanese) in the country. The threat to foreigners and secular elements of the Bangladeshi society from extremists is likely to increase. A banned domestic radical Islamist group, Ansarullah Bangla Team (ABT) that is allied to Al Qaeda in Indian Subcontinent (AQIS), draws inspiration from the global jihadist movement, and has further raised concerns that AQ is seeking to exploit the increasingly volatile politics in Bangladesh. ABT, on behalf of AQIS, had claimed the killing of a secular/atheist blogger in May 2015.


Bangladesh


Terrorism

Terrorist Attack Casualties - 2015

Foreign nationalsCivilians fatalities Security personnel TerroristsLeft Wing Extremists

2812213

Source: SATP


Road accidents in Bangladesh claim on average 2529 lives every year. Road accident analysis shows that vulnerable road users are pedestrians, bicycle and motorcycle riders and those who travel via public transport. The main causes for road accidents are over-speeding, overloading, overtaking by motor vehicles; and the unregulated movement of non-motorised vehicles along with motorised vehicles on the same route. Lack of safety awareness and reckless driving also result in frequent accidents, claiming lives and causing anguish and grief to the affected families. The road safety problem has become one of the major issues for the transport regulators and traffic law enforcers.

Road Safety

Bangladesh


Bhutan

Area

Population

GDP Growth Rate

GDP

38364 sq km

0.75 million

4 percent

2 billion USD

Bhutan

Internal Security

Political Stability

Economic Stability

Natural Disasters

Safety

Risk Rating

Medium risk

Low risk

Low risk

Low risk

Low risk

Thimphu

Phuentsholing


Bhutan is currently in the middle of transformational socio-economic and political changes, involving among democratization, modernization, marketization, urbanization, and progression toward balanced and sustainable development. Bhutan is officially a Buddhist state where power is shared by the king, Head of the Monastic Body and the government. Despite its increasing living standards, the country remains largely closed to the outside world.The government's policy of careful centralized case-by-case visa issue and allowing tourism to expand at only a slow rate is intended to protect the country's values. This point is relevant in the context of a region which claims a strong association between increased tourism and a rise in the drug problem. Neither drugs nor crime appear, at present, to be significant problems facing Bhutan. A systematic assessment of the extent and nature of the situation in the country is, however, hampered by the absence of data in either area.

Political and Economic Reforms

Bhutan

The geo-physical location of Bhutan makes it one of the most seismically active regions in the world. A strong earthquake on 21 September 2009, the most devastating in Bhutan's recent history, killed 12 people and damaged a large number of houses, public buildings, and cultural and religious monuments. Given that parts of Bhutan lie in “very high” and “high” seismic zone belts, the possibility of earthquakes remains high for these areas. Bhutan also faces potential threats from glacial lake outburst floods. Climate change is causing glacial lakes to recede by 30 to 40 meters every year, and the risk of glacial lake outbursts increases as global warming progresses.

Natural Hazards

Bhutan: Seismic Hazards



Located between the two most populous countries in the world, of the 12 universal instruments related to the prevention and India and China, Bhutan has till date resisted the temptation to play suppression of international terrorism, including the 1999 these two regional superpowers against one other, and has International Convention for the Suppression of the Financing of remained closely tied to and dependent on India. Three-quarters of Terrorism.Bhutan's foreign trade is with India; and the Indian Rupee is legal tender in Bhutan. India is tapping Bhutan's hydro power potential, Internally, the top-down approach to democracy has been smooth and is funding and building additional power plants. Indian officers and successful to date. But the growing number of first- and are training the Bhutanese army, and there have been joint efforts second-generation educated urbanites must find jobs outside to flush out Indian insurgents from safe havens in Bhutan. Indo- agriculture and the government sector. Creating such jobs is Bhutan relations will remain stable and engagement of these two problematic. The welfare system is becoming more expensive for countries will continue positively, as has been seen in the past. the government, and hence more financially unsustainable.

Bhutan's public and external debt levels are not yet alarming. In the previous decade, anti-India insurgent groups maintained a Whether investments in infrastructure and human capital are presence in Bhutan where they sought safe havens. In December being well made will be evident only once the new power plants 2003, a military campaign by the Bhutanese army resulted in the come online, and when today's students are able to find expulsion of these groups from their camps. Bhutan is a party to six employment.

Socio-economic Outlook


Bhutan

Myanmar

Area

Population

GDP Growth Rate

GDP

676552 sq km

55.21 million

8.3 percent

68.7 billion USD

Myanmar

Internal Security

Political Stability

Economic Stability

Natural Disasters

Safety

Risk Rating

Medium risk

Medium risk

Medium risk

Low risk

Mandalay

Nay Pyi Daw

Bago

Yangon

Medium risk

Myanmar is a key apex of the Golden Triangle, which is one of Asia's two main opium-producing areas. It is an area of around 950,000 square kilometres that overlaps the mountains of three countries in Southeast Asia: Myanmar, Laos and Thailand. The region was originally the world's largest producer of heroin until the early 21st century when this dubious distinction passed on to Afghanistan. As of now, Myanmar is the world's second largest producer of illicit opium, and has remained a significant part of transnational drug trade since World War II. Its opium poppies are grown mostly in Kachin and Shan states, where the government has long fought rebel groups. The ethnic insurgent group United Wa State Army (UWSA), with estimated 20,000 to 30,000 fighters exercises total control over a strip of land that borders China, operates its drug trafficking along the country's eastern border with Thailand. The country is also one of the largest exporters of Jade, an ornamental rock which is extracted from mines in Kachin state that borders China. Reportedly, most of the mining companies operating in the region are either directly owned by the Army or operated by those with close ties. A few mines are run by those connected to the armies of ethnic militants such as the Kachin Independence Army (KIA), in return for them maintaining a cease-fire. This also explains why the resolution to the armed conflict in Kachin state is not very forthcoming, as legal and illegal export of jade is a key source of finance for both the ethnic militant groups as well as the military.

Illegal Mining and Drug Trade


The initial slew of economic, social and political reforms in Myanmar, which began in March 2011, surprised the international community with their pace. However, most of these appear to be stalling and many of the reforms, which were implemented, do not appear to be working well. Some challenges to good governance, such as land reforms and judicial system reforms, have not yet undergone significant changes. In that sense, the result of general elections that were held on November 8th, 2015 have proved to be a key determinant for the further grounding of democracy in the country. Among those excluded from voting were around a million Rohingya Muslims who are effectively stateless in their own land. The outcome of the elections that were held peacefully will also influence the decision of Western nations to ease the current sanctions on Myanmar. The party of opposition leader Aung San Suu Kyi has won the largest share of votes cast by an electorate of about 30 million, who chose from among thousands of candidates standing for parliament and regional assemblies. This landmark electoral result will prove to be a major factor in the progress of the country’s growth.

Reforms Process

Myanmar



Ethnic Insurgency

Myanmar


There has been an active armed insurgency by various ethnic groups based in the border regions of Myanmar, since its independence in 1948. The insurgents' demand is that of self-rule and autonomy in governance; while they continue to exploit natural resources (especially minerals and precious stones) in the country for financing their operations. The major armed groups currently operating in Myanmar are Karen National Union (KNU), Karen National Liberation Army (KNLA), Kachin Independence Organisation (KIO), Kachin Independence Army (KIA), and the Arakan Army.

The insurgency has displaced nearly 1 million people in Myanmar. Significantly, in October 2015, the government of Myanmar and eight armed ethnic insurgent groups signed the “Nationwide Ceasefire Agreement” (NCA) after nearly three years of negotiations. This sets the first step in a process to establish permanent peace throughout the country and includes several time -bound commitments to establish a monitoring mechanism and political dialogue. The NCA also removes the signing ethnic groups from Myanmar's list of illegal organizations; and allows its members to freely move in the country and pursue political activities.

The progress of the peace-building program is far from complete, as 7 out of 15 active armed groups have decided not to sign the agreement. Most significant among them is the Kachin Independence Army (KIA) which is at least 10,000-strong. The peace could be short lived, since not only are the insurgent groups known for violating ceasefire deals, the Tatmadaw (Myanmar Armed Forces) has in the past ignored government orders to stop fighting. Elections will not be held in areas outside government control in parts of Kachin and Shan states either.


The Rohingya Crisis

Myanmar


The Rohingyas are a Muslim ethnic minority living in northern Arakan and Rakhine State in western Myanmar, and parts of Bangladesh. This community has faced severe persecution and violence for decades. About one million Rohingyas live within Myanmar's borders, but are not recognised as a legitimate ethnic group and are denied citizenship of the country. Many citizens of Buddhist-dominated Myanmar regard Rohingyas as illegal immigrants from Bangladesh. According to amendments in Myanmar's citizenship laws in 1982, the Rohingyas are defined as Bangladeshi migrants.

Following widespread clashes in 2012, over 140,000 Rohingyas were left homeless, surviving in displaced-persons' camp within Myanmar, where they live in deplorable conditions. Deprived of basic amenities and no citizenship rights, thousands have attempted to flee persecution in rickety boats , often cast adrift by human-traffickers. Their situation received widespread international attention in 2015 when several south-east Asian countries, namely Malaysia, Indonesia, and Thailand, denied asylum to these migrants and passed on the responsibility to other countries. According to an Amnesty International report, traffickers kill many refugees when their families failed to pay ransom, while many have been beaten, shot dead or thrown overboard.

Since the gradual transition to democracy began in 2011, anti-Muslim and especially anti-Rohingya sentiment in the country has flared. There is little or no prospect for the exiled Rohingyas to return to Myanmar. The exodus of the community is set to continue until a solution to the real problem of the Rohingya national identity is arrived at.


Buddhist Hardliners

Myanmar


Radical Buddhists nationalism has been on rise in Myanmar The government was also forced to cancel several high-profile real especially in the post-reforms, political liberalisation period and estate development projects worth hundreds of millions in Yangon the scenario in 2015 has been no different. The influence of these following pressure from Buddhist groups. The projects were being groups is now clearly visible in business policies formulated by the planned near Shwedagon Pagoda, the country's holiest Buddhist government. The nationalist Buddhist group Ma Ba Tha group, also site, and had been facing heavy opposition from Buddhist known as the Association for the Protection of Race and Religion, is communities. Buddhist monks had also threatened to launch at the forefront of the rising wave that does not look favourably nationwide rallies if construction in the area was not ceased upon practitioners of other faiths, especially Islam. It crusades for immediately.Buddhist supremacy and Buddhist-Muslim apartheid.

Ma Ba Tha is growing increasingly influential, and remains close to In July, the Buddhist Women's Special Marriage Act, also popularly the ruling UDSP party. Due to the perceived influence of the group known as the Interfaith Marriage Bill, was passed by the among Buddhists in the country, even Aung Sang Suu Kyi has Parliament. This bill is one of four controversial laws, brought refused to outright condemn the group's propaganda and forward by the Ma Ba Tha group. According to the bill, Buddhist activities. Especially in an election year, no political party has women would require to get approval from authorities in order to wanted to court opposition from the group. marry a man of different faith; and discriminates against ethnic and religious minorities. This law is understood to be targeting inter-faith marriages between Buddhists and Muslims.

Sri Lanka

Area

Population

GDP Growth Rate

GDP

65610 sq km

21.01 million

6.97 percent

80.09 billion USD

Sri Lanka

Internal Security

Political Stability

Economic Stability

Natural Disasters

Safety

Risk Rating

Low risk

Low risk

Low risk

Low risk

Low risk

Colombo

Jaffna

Hambantota

Kandy

Galle

Anuradhapura

Vavuniya


Sri Lanka is undergoing a period of re-stabilisation following the official conclusion of the civil war in 2009 between the government and the Liberation Tigers of Tamil Eelam (LTTE), an insurgent group which was pressing for an independent state for Tamil people in the North. There are significant issues, such as economic and social marginalisation of Tamils in the north, that could still serve as motivators for civil unrest and low-level terrorist activity in the future. The Sri Lankan government is moderately stable, though in the former rebel-controlled areas there is the possibility of civil unrest quickly turning violent. The Tamil cause also enjoys significant support from the Tamil diaspora in the West. These interest groups are bound to continue their anti-government protests against the Sri Lankan government in 2016 as well. Such opposition is bad publicity for the government of President Maithripala Sirisena, which aims to project itself as working for development and justice of the Tamil population at home.

While various development, resettlement, and reconstruction projects have been undertaken in former war zones in the north and east, government pledges to address the fundamental grievances of the ethnic Tamil population remain largely unfulfilled. With a new panel being drafted for the investigation on war crimes, the government will be under the scanner when the verdict of the probe is announced.

Ethnic Tensions in the North

Sri Lanka

Infrastructure outside of the capital Colombo is relatively poor, particularly in the northern and eastern areas formerly controlled by the LTTE. The central parts of Sri Lanka also lack adequate infrastructure in terms of roads and housing.

The lack of infrastructure has worsened with the impact of the monsoon rains at the beginning of the year 2015. Severe flooding and landslides occurred, caused by heavy rains and high winds which affected 22 out of 25 districts in Central, North Central, Uva, and Eastern provinces. 660 houses were fully damaged and over 3,500 houses were partially damage; 39 people were killed and 15 others injured, and two people are missing. As has been seen in other parts of South Asia, natural disasters can potentially cause further loss of life and property in the areas affected; as the state machinery may not be fully able to cope with it.

Natural Disasters & Underdeveloped infrastructure



Buddhist monks enjoy a prominent position in Sri Lanka, a country where majority of the population is Buddhists; and state policies are biased towards Buddhism. The Bodu Bala Sena (BBS) and Sinhala Ravaya (SR) are viewed as main ethno-religious forces that have been displaying increasing intolerance towards the Muslims and Christians in Sri Lanka. Foreigners too have been targeted for displaying Buddhist symbols (especially in the form of tattoos on their person).

The ultra-nationalist BBS was involved in violent protests in 2014, resulting in the death and injuries to at least 80 people, and the destruction of numerous Muslim homes and businesses. The recent anti Muslim campaigns in many part of the Island, conducted through protests over mosques of historical importance, has created uncertainty among the Muslims of the island nation. One possible fallout of marginalization of the Muslims, is that terrorist groups such as Islamic State or Al-Qaeda, may exploit this vulnerability for potential recruitment of fighters. The rise of Buddhist extremism in post-war Sri Lanka and the way in which Sri Lankan Muslims will react to their marginalisation, will determine the future of the relations between the majority and minority communities in Sri Lanka.

Religious Extremism

Sri Lanka


Maldives

Area

Population

GDP Growth Rate

GDP

298 sq km

0.33 million

4.48 percent

3.2 billion USD

Maldives

Internal Security

Political Stability

Economic Stability

Natural Disasters

Safety

Risk Rating

Medium risk

Medium risk

Medium risk

High risk

Medium risk

Fuvahmulah

Male

Hithadhoo


Maldives

Maldives has undergone considerable political turbulence ever since it transited from an autocratic leadership under Mamoun Abdul Gayoom to a democratic one under former President Mohamed Nasheed. With a shift to democracy in 2008, the Muslims in Maldives could not adopt to the changes that democracy brought. They blamed the MDP (Maldivian Democratic Party) of Nasheed for ruining the Islamic identity of the state, by bringing in Western ideology and culture. In the Presidential elections in September 2013 Abdulla Yameen, half-brother of Abdul Gayoom, took office. Since taking office, Yameen has made efforts to undermine the popularity and legitimacy of Nasheed.

The coalition partners of the current administration have started to fragment. An attack on President Yameen (September 2015) led to the arrest of the country's Vice President. The Maldives President Abdulla Yameen has recently declared a state of emergency for a month, giving sweeping powers to security forces to arrest suspects ahead of a major anti-government protest rally. This means several provisions of the constitution would be suspended and prevent lawmakers from impeaching the president.

With no political solution to the current crisis in sight, the political instability between the ruling political party and the opposition parties led by Nasheed is bound to spill over into 2016.

Political Instability


In July 2015, the Maldives government passed a law, which allows for foreign ownership of land. The law allow foreigners who invest more than US$1bn to purchase land within the project site (at least 70 per cent of the area of the completed project must be reclaimed land). The Constitution previously prohibited foreign ownership of any part of Maldivian territory, but allowed leasing of land for up to 99 years.

This move is being viewed with scepticism in India as it might enable vested interests to buy islands and build strategic assets in the Indian Ocean nation. Maldives is already a partner in China's maritime silk route. China's involvement in the economic projects in Maldives and growing strategic relationship with Maldives, will be on an upward swing in the near future. Such a shift might come at the cost of Maldives' relations with the other South Asian countries.

Government's Land Policy


Maldives

Political instability, on its own, may not possess a security threat to From this tiny island nation, many nationals have travelled to Syria Maldives but combined with the growing radicalisation among to join terrorist groups like Al-Nusra and the IS; a number which has certain sections of the society; it is a serious security concern not almost doubled in the last year. Maldives continues to face the just for Maldives but also for its immediate neighbours. Since the problem of unemployed youth joining gangs, and it is these gangs rule of Gayoom, the government has either not been in control, or that terrorist groups such as Islamic State have looked to recruit. In has turned a blind eye to the spread of radicalisation in the country. 2015 the number of Maldivians travelling to Syria nearly doubled The number of madrassas and students attending them continues from 2014. The numbers might look small as compared to that of to grow. the foreign fighters travelling from Saudi Arabia or Tunisia to the

Syrian battlefield, but for nation of a size of Maldives it is significant. In the absence of a well-developed formal education sector, the As has been the case in Europe, these returning foreign fighters madrassas education system, which is well funded by countries like pose a security threat especially to an already politically unstable Saudi Arabia, remains the primary means for education (and hence country. With the government not taking in adequate measures to religious indoctrination). Students not only study at madrassas in control the flow of foreign fighters or the growth of radicalisation, Maldives but also travel to countries such as Pakistan and Saudi Maldives will continue to reel under the influence of religious Arabia, thus bringing back the teachings of some of the radical extremism. madrassas there. Such radicalised individuals may continue to pose a security threat to Maldives.

Growth of Radicalisation and Extremism


AFGHANISTAN

PAKISTAN

INDIA

MALDIVES

NEPAL

BANGLADESH

BHUTAN

MYANMAR

SRI LANKA


South Asia


Population: 40% of Asia’s and 25% of world’s population (India,

Bangladesh and Pakistan comprise of 92.2% of

South Asia’s population)

Military Power (Standing Army)

Pakistan - 612,000, India - 1,500,000,

Bangladesh - 156,000

Muslim Population: 500 million

(1.5 billion in Asia by 2050)

Growth Rate: 7.5 %

Area: 5.1 million sq km (12% of Asia)

GDP: 2.9 trillion nominal

and 9.9 trillion PPP

NuclearWarheads: 250


Risk Matrix


Disclaimer: MitKat's risk ratings are a quantitative and qualitative product of the likelihood of risks and their impact on the conduct of business. This rating may differ significantly from the national average, for specific regions within countries.

InternalSecurity

Political Stability

Natural Disasters

SafetyEconomicStability

Afghanistan

Pakistan

India

Nepal

Bangladesh

Bhutan

Myanmar

Sri Lanka

Maldives

High Medium Low


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