This week’s edition analyses power outages across Venezuela, farmers’ protests in Paraguay, and the Nicaraguan government’s pledge to free political prisoners.
United States & Canada
• United States – Google receives large fine from E.U. over antitrust violation
• United States – Kansas City authorities warn of water contamination risk
Mexico, Central America & Caribbean
• Costa Rica & Nicaragua – Costa Rica protests after imposition of vehicle duty
• Nicaragua – Freeing of opposition figures de-escalates political situation
• Brazil – Evacuations ahead of possible dam collapse in south-eastern state
• Colombia – At least nine dead in explosion in protest-affected department
• Paraguay – Farmers and indigenous groups’ protest in capital raises travel risk
• Peru – Amazon residents seize Canadian energy firm’s facilities
• Venezuela – New nationwide blackouts heighten business, travel risks
United States & Canada
United States – Google receives large fine from E.U. over antitrust violation
UNITED STATES – Political risk: Low
20 March: The European Commission (E.C.) imposed a EUR1.49 billion (USD1.69 billion) fine on U.S.-based technology company Google for breaking E.U. antitrust rules. In particular, the fine was imposed after it was found that the company unfairly promoted some of its online advertising services over those offered by competitors. According to Margrethe Vestager, the European Commissioner for Competition, this meant Google ‘shielded itself from competitive pressure’ and ‘cemented its dominance in online search adverts’, running afoul of E.U. antitrust regulations. In 2018, Google was fined EUR4.3 billion for abusing its market dominance for mobile devices, while in 2017 the company was fined EUR2.4 billion for manipulating online shopping searches; the company is appealing both decisions.
Why it matters: The latest action against Google means that its total fines for breaching E.U. rules amount to EUR8.2 billion since 2017. It also reflects concern in Brussels and increasingly among some governments in the bloc over the dominant market position large U.S.-based companies have in the E.U. technology market. Growing political pressure and scrutiny on these companies will likely mean that they will continue to face accusations of anti-competitive behaviour. Technology firms should monitor regulatory and legislative developments, and ensure they fully comply with E.U. competition regulations to mitigate any potential reputational or financial risks.
United States – Kansas City authorities warn of water contamination risk
UNITED STATES – Natural hazard risk: Elevated
23 March: KC Water, the municipal water service in Kansas City, Missouri, warned that record flooding has impaired operations at a nearby water treatment plant, and that drinking water supplies may pose an increased health risk to infants, elderly people and those with weakened immune systems. The warning came after flooding at a wastewater plant in Leavenworth, Kansas, approximately 48km north of Kansas City. KC Water has asked residents to conserve water while repair work is ongoing. While the authorities state that no biologic or virus contamination has been found in the water, residents may notice a change in the taste and colour of tap water.
Why it matters: Individuals in the impacted area should monitor announcements from KC Water and conserve water. Until further notice from KC Water, infants, elderly people and those with immune systems conditions should drink bottled water; tap water remains safe to drink for other groups. Tap water is also safe for cooking and bathing. Water-intensive industries in the area should anticipate reduced water supply and review contingency planning and service availability accordingly.
Mexico, Central America & Caribbean
Costa Rica & Nicaragua – Costa Rica protests after imposition of vehicle duty
COSTA RICA – Travel risk: Medium
NICARAGUA – Travel risk: High
21 March: Costa Rica’s finance ministry announced that it has requested that Nicaraguan customs officials stop charging haulage vehicles a USD50 import charge when they enter Nicaragua. The measure, which Nicaragua has imposed for ‘temporary import services’ and that Managua claims is applied reciprocally, has been rejected by Costa Rica, which claims that it does not charge vehicles for entering its country. On 20 March, Costa Rica reportedly denied entry at its northern border to Nicaraguan-registered cargo vehicles over the dispute.
Why it matters: Until both countries reach an agreement on the charge, there is likely to be continued friction at the shared border. This could include Costa Rica resuming its denial of entry to Nicaraguan-registered cargo vehicles, or protests on either side of the frontier. A2 Global advises logistics managers to monitor updates, inform drivers of potential delays while crossing the border, and factor these into drivers’ schedules.
Nicaragua – Freeing of opposition figures de-escalates political situation
NICARAGUA – Travel risk: High
20 March: The Organization of American States’ (OAS) special envoy to Nicaragua, Luis Ángel Rosadilla, announced that the government of President Daniel Ortega has agreed to release all opposition political prisoners, thought to number around 700, within 90 days. In a joint statement with opposition groups, the government also called for the lifting of U.S. and E.U. sanctions, which have been in place since civil unrest erupted in April 2018, over Ortega’s botched pension reform.
Why it matters: The announcement has facilitated the resumption of peace talks between the government and the opposition, which could lead to an eventual agreement and de-escalation in hostilities. The resumption of peace negotiations lessens the protest risk, especially in central areas of the capital Managua, lowering the travel risk. While there has yet to be a decision on the lifting of sanctions, companies with interests in Nicaragua should monitor the talks and follow statements from U.S. and E.U. commerce departments. Until a peace agreement is reached, A2 Global advises against all non-essential travel to Nicaragua, where the risk of violent confrontations in urban areas remains high.
Brazil – Evacuations ahead of possible dam collapse in south-eastern state
BRAZIL – Travel risk: Elevated
23 March: Brazilian mining giant Vale announced that communities close to the Sul Superior dam in Barão de Cocais municipality, in the south-eastern state of Minas Gerais, had been ordered to evacuate ahead of a likely imminent rupture of the dam. The evacuation orders came after the company raised the level of risk at the dam to three – the highest grade – on 22 March. Level three means a rupture is imminent or already occurring, and the increase follows an elevation of the level of risk to level two in February, which prompted evacuations in the surrounding area. This comes after a similar dam collapsed in the town of Brumadinho in January, leading to over 300 deaths and causing significant environmental damage.
Why it matters: Individuals in the surrounding area should follow all evacuation orders immediately. Firms with operations in the impacted area of Minas Gerais state should monitor local updates and review contingency plans ahead of a possible collapse. Avoid all non-essential travel to the area while the level of risk remains at three.
Colombia – At least nine dead in explosion in protest-affected department
COLOMBIA – Security risk: High
21 March: At least nine people were killed in an explosion at a house in a mountainous area of the south-western department of Valle del Cauca. The explosion in the predominantly-indigenous Dagua municipality occurred as a blockade by members of the indigenous community of the region’s main highway, the Pan-American highway, entered its tenth day. The cause of the explosion and identities of those killed are as yet unknown, however media reports have suggested that it was either an accident related to mining or caused by an accidental detonation of explosive devices.
Why it matters: While details on the explosion are scarce, it is likely to be related to ongoing protests due to the location and timing. Indigenous groups, together with local farmers, are demanding rights to land and funding for social programmes. A2 Global advises firms with interests in Valle del Cauca and Cauca departments, particularly logistics firms which use the Pan-American highway, to factor the ongoing protests into security assessments. Managers should monitor local updates, re-route drivers away from roadblocks, and where necessary consider alternative means of transport, such as air cargo.
Paraguay – Farmers and indigenous groups’ protest in capital raises travel risk
PARAGUAY – Travel risk: Elevated
26 March: Farmers and indigenous groups linked to the CNI union will demonstrate in the capital Asunción on 26 March. Protesters began to gather at 0900 local time at Plaza de Armas, a main square in the central Catedral district, located approximately 7km west of the business district. Demonstrators will remain based at Plaza de Armas until 1900. Throughout the day, protesters will march through the streets of Asunción, particularly in the Catedral district, demanding land access, subsidies for small producers and that government programmes are applied to indigenous peoples. Further protests in the city are also likely in the 48-hour outlook.
Why it matters: Today’s protest follows a large demonstration on 21 March, and signals increased activism among farmers and indigenous groups in the two-week outlook. Individuals in Asunción should monitor local updates, avoid the protest location and allow additional time for travel. Exercise heightened vigilance and follow instructions from local law enforcement authorities.
Peru – Amazon residents seize Canadian energy firm’s facilities
PERU – Security risk: Elevated
25 March: The Peruvian Society of Hydrocarbons (SPH) announced that on 24 March, approximately 70 residents of the village of Brena in the Amazonian region of Loreto seized control of a small oil installation operated by Canadian company PetroTal Corp. Residents, who seized the 2,000 barrel per day Block 95 installation, are demanding electricity and other government services. The company has reportedly offered talks and to donate an electric generator to the community.
Separately, Chinese mining firm MMG Ltd on 25 March confirmed it expects to declare force majeure on contracts for copper at its Las Bambas mine in the south-central Apurímac department. The mine, one of the biggest in Peru, has been blockaded by indigenous communities since early February. The communities want the company to pay for the use of a road on their farmland.
Why it matters: Both developments highlight the importance for extractives companies of maintaining buy-in from local communities in rural areas to mitigate the risk of disruption. Companies can mitigate risks of civil unrest by consulting with a broad range of stakeholders on their concerns, and by developing tailored and comprehensive community engagement programmes. In the immediate term, firms whose supply chains include copper from the Las Bambas mine should factor the likely force majeure announcement into operational planning, and consider possible alternative suppliers.
Venezuela – New nationwide blackouts heighten business, travel risks
VENEZUELA – Travel risk: Extreme
25 March: Two power outages hit the capital Caracas and 17 of the country’s 23 states. These are the second and third outages to affect the country after a week-long outage which began on 7 March. The first outage occurred at approximately 1320 local time, and lasted for around four hours. A second outage was reported at 2150, and was still ongoing as of 0648 on 26 March. The government blamed the outages on an ‘attack’ on the electricity system’s load and transmission centre.
Why it matters: Despite the government’s claims, the outages are most likely a result of technical problems, likely caused by shortages of essential parts or lack of routine maintenance, at the Guri Dam, a hydroelectric power station which supplies approximately 70 per cent of Venezuela’s electricity requirements. Monitor local updates, anticipate significant business disruption while the blackouts continue, and enact contingency plans. Staff in the country should postpone planned travel until power supplies are restored. Anticipate significant disruption to public and private health centres, as well as metro and airport services.