Election time: a year of political change

At the end of January, Sri Lanka’s president looked set to be re-elected in the first election since the end of the 25-year civil war with Tamil Tiger rebels. But Sri Lanka is just one of many countries to hold elections this year.

The people of Iraq, Sudan and Cote d'Ivoire will get their say after years of war, while elections are also planned in politically sensitive countries such as Venezuela, Columbia and Ukraine.

Democracy in action

Developed countries, too, will go to the polls. The UK is due a general election, while voters in the US and Italy will also be given a chance to show their leaders what they think of their administrations.

In total there are some 15 national elections ranging from Africa to Western Europe that will influence political and violent risks in 2010, according to Mike Simms, director of Global Forecasting at political risk experts Exclusive Analysis.

Africa

In Africa, two war torn countries are trying to heal old wounds. Presidential and parliamentary elections, to be held in Sudan in April, could spark a return to the north-south civil war, which officially ended with the Comprehensive Peace Agreement of 2005, said Simms. A return to conflict may disrupt oil operations in contested central parts of the country, he added.

Another oil producing African state, Cote d'Ivoire, has elections scheduled for this year. Following a 2007 peace deal, fighting has ended, but until the elections are held, a unified government is unlikely to emerge, said Simms. Cote d'Ivoire is the world's largest cocoa producer and Abidjan port has, in the past, been one of the most significant cargo entry points into West Africa, according to Exclusive analysis.

Americas

Voters will decide who will lead Brazil and Columbia - two countries that have enjoyed greater political and economic stability under their current presidents - into the next decade. And while President Chavez’s grip on power in Venezuela is not under threat, the global downturn, macroeconomic mismanagement, power shortages and surge in crime have taken a serious toll on his popularity. This has given the opposition an opportunity to make significant gains in September's congressional elections, said Simms.

Asia and Eurasia

A second round of presidential elections in Ukraine in early February will see the current Prime Minister, Yulia Timoshenko and the pro-Russian opposition candidate Viktor Yanukovich go head to head. President Viktor Yushchenko, who led the pro-West revolt just over five years ago, was eliminated in the first round.

In addition to Sri Lanka's presidential election in January, there are also notable elections in the Philippines in Asia and Hungary in Europe.

Middle East

Iraq's political parties will be competing in elections scheduled for March. Delays and paralysis have accompanied all government decision, said Simms. Given the failure to reach consensus on the electoral law, it is likely that key legislation will remain stalled when a new government is formed in 2010, he said.

Egypt is set to hold parliamentary elections in November 2010, ahead of presidential elections in 2011, that could help a stable transition of power after 82 year old President Hosni Mubarak steps down.

Elections were also due to be held in Palestine in January, but despite on-going Egypt-mediated talks, no reconciliation has been reached between Fatah and Hamas that would enable elections to go ahead or allow the formation of a national unity government comprising all Palestinian factions that governs the West Bank and Gaza.

Challenging times

2010 will be an incredibly important year for the political risk market, said David James, executive underwriter responsible for political risk at Ascot Underwriting. “The market needs to demonstrate that it can respond to the trials that it experienced in 2009 with the well-publicised losses following the credit crisis in areas as diverse as Ukraine and Bahrain. It also needs to show that it can successfully manage the claims process in these territories.”

“With regards to elections in Western Europe, terrorists may feel that they can influence the results in elections by staging high profile attacks in the run up to the poll, said Michael O’Connor, terrorism underwriter at Ascot. This was evidenced in the Madrid bombings, he said. There are also concerns for political risk underwriters surrounding civil commotion issues during elections in countries such as Colombia, Sri Lanka and the Philippines, he added.
 
The political risk market must show that it has the ability to respond strongly to the full range of issues that can appear over the next year, O’Connor concluded.