Militant Islam’s recent action signals increased threat of political violence in Middle East and beyond

This week saw the second US journalist brutally murdered by Islamic State, the latest escalation in the radical Islamist threat now affecting an increasing number of countries in the Middle East and north Africa. The Sunni jihadi organisation Islamic State, formerly the Islamic State of Iraq and the Levant (ISIL) or the Islamic State of Iraq and Syria (ISIS), now holds sway over some eight million people in the territory it controls in Iraq and Syria. Worryingly, an Islamist-linked militia captured the Libyan capital of Tripoli last week, forcing the government to relocate 1,000km away to Tobruk. "Militant Islam has ultimately benefited from the Arab Awakening," said Anthony Skinner, Head of Political Risk at Maplecroft. "Uprisings in Tunisia, Egypt, Libya and Syria have given rise to greater regional turmoil and greater regional political polarisation," he added.hideAccording to Mr Skinner, Militant Islamists have benefited from the lack of, or limited, central authority in certain countries such as Libya, Iraq and Syria. They have also used sectarianism and the significant failings of the authorities to perpetuate divisions and find new recruits. Mr Skinner believes that Islamic State is an even more formidable force than core al-Qaeda. The group is well funded and is largely self-financed. It controls oil fields in north-eastern Syria and has looted cash and gold reserves from banks in Mosul. It also generates earnings from smuggling, kidnap-for-ransom, extortion and protection fees, explained Mr Skinner. The influence of Islamic State has increased as a result of its successes on the battlefield, as well as the fact that it administers large swathes of territory in Syria and Iraq and has employed savvy PR and social media campaigns, according to Maplecroft. As a result, other countries in the region-including Jordan, Turkey, Saudi Arabia, Tunisia, Morocco and Algeria-have all become more vulnerable to militant Islam, said Mr Skinner. "The risk that militant Islam will be strengthened further in Libya is real and has serious implications for neighbouring states. Egypt's Western Desert has become a flashpoint as fighters and weapons cross over from Libya," he said. Islamic State is likely to remain resilient, according to Maplecroft. "Islamic State will not be knocked out through US air strikes alone," said Mr Skinner. "Although Iraq's Kurds are receiving training and arms from the west, they are not in a position to land Islamic State a heavy blow," he said. "The best case scenario-one which does not look particularly likely in the short or medium term-is for Islamic State to suffer a series of defeats in Syria and Iraq. It would then be forced to melt away and increasingly resort to asymmetrical warfare. But we are a long way from that," said Mr Skinner. The violence perpetrated by Islamic fundamentalists in Syria, Iraq and other neighbouring countries plays on sectarian divides between Sunni and Shia Muslims in the region. However, the sectarian violence should also be seen alongside the interplay of the two big regional powers-Sunni Saudi Arabia and predominantly Shia Iran-and their relationships within the Middle East and with the rest of the world. “ "The interplay between Saudi Arabia and Iran is hugely important in determining the course of developments across the region," explained Emma Whiteacre, Country Risk Analyst at Beazley. "At a time when Iran's geopolitical fortunes appear to be in the ascendant, the Saudi monarchy is hyper-alert to the prospect of its historic rival gaining influence over the future direction of Iraq," she said. However, the risk posed by militant Islam today does not derive solely from Islamic State. Radicalisation is already a global issue, according to Tim Holt, Head of Intelligence at Alert:24, Willis's risk and crisis management consultancy. "Islamic fundamentalism is seen by many as an 'Arab' problem. However, witness the Bali, Bulgaria and London bombings, the Tiananmen Square suicide bomb of 2013, the attack on Mumbai, the insurgency in southern Thailand, the activities of al-Qaida and Boko Haram in Africa's Sahel region and al-Shabab's assaults in Somalia, Kenya and Uganda, to name but a few," said Mr Holt. "Wherever young Muslims feel themselves to be excluded from opportunity, where poverty co-habits with wealth and where hope of personal progress appears absent, the narrative of a return to the roots of Islam, free of the intrusions of the west becomes seductive," explained Mr Holt. NGO and multinational companies are naturally concerned with the worsening situation in the Middle East and north Africa, according to Mr Holt. "Companies that could be perceived as iconic western institutions may be threatened in certain territories including their home HQs," he said. "The threat is not confined to any particular sector. However, those with installations or people in areas where state structures are fragile, outposts are isolated or where there is a pattern of kidnapping of foreign workers may be particularly exposed," he added. Depending on activities and geographical spread of supply chains, companies will continue to be affected by Islamic fundamentalist violence, according to Mr Holt. However this is only one of many potential threats to business in parts of the Middle East and Africa, he added. "Companies should constantly monitor all threats from natural catastrophe to kidnapping, political violence and terrorism-whether Islamic fundamentalist or political-before, at entry to and during their presence in such territories," he advised. Lost among the dire headlines of bloodshed and regional strife, parts of the Middle East offer attractive investment opportunities, according to Roddy Barnett, Political Risk Underwriter at Beazley. "Undoubtedly there are opportunities in the midst of the destruction and devastation in the heart of the Middle East. Identifying them, and mitigating the acute risks, remains a challenging process," said Mr Barnett. According to Mr Barnett, there has been an uptick in enquiries for political risk and trade credit cover across north Africa and the Middle East, in particular Iraq, Israel and the Gulf States. However, the complexity of the environment means that underwriters are being 'highly selective' on the political and credit risks they are prepared to accept, he said. "Although the sustainability of Islamic State is questionable, its territorial gains across Syria, Iraq and to an extent Lebanon and Jordan are making the placement of risks in the region more challenging in an area that already had limited appetite from insurers," said Mr Barnett. "The rise of Islamic State has not yet, to our knowledge, created losses in the market. But its rapid progress and acquisition of sophisticated weaponry from fleeing Iraqi forces have certainly focused the mind of underwriters," he said.

Militant Islam’s recent action signals increased threat of political violence in Middle East and beyond

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