How contagious is the Malian conflict?

By Reuters Staff
February 6, 2013

By Dasha Afanasieva

Security risks, shoddy governance and black markets have propelled West African countries up the risk rankings of consultancy Maplecroft’s annual Global Risks Atlas, released today.

As the French continue to battle Mali rebels in the Sahara, how big is the risk of the trouble spreading to Mali’s already fragile neighbours?

According to Maplecroft, Mali is an example of how

the security situation in one country can significantly increase the risk of violence and instability in the surrounding region, with implications for the operations of foreign firms

Refugees fleeing the Malian conflict have added extra pressure to already-stretched food resources in next-door states and may add to tension, Maplecoft says. In fact, the estimated 30,000 people who returned to Mali from Libya because of the war there were

a key factor in prompting the Tuareg uprising and the subsequent coup and annexation of the north

An additional pressure in the region is a controversial kind of South-South trade – drugs making their way to Europe through West Africa. As “conventional” routes become more challenging, the use of Guinnea-Bissau and Mali as stops on cocaine export routes from Latin America has increased, providing additional funding for militants and criminal groups. Maplecroft warns –

An increase in the funds available to these groups significantly increases the viability of the threat they pose to mining and oil and gas interests across the region

But according to a report from Standard & Poor’s, it is Mali’s economic isolation that will insulate its neighbours’ creditworthiness, unless the fighting is not great.

The rating agency’s view is that the the risk of fighting spreading into neighboring Senegal and Burkina Faso is currently very low for three reasons:

1)       Mali’s unrest is for the time being concentrated to the north – far from Senegal and Burkina Faso – but political risks in Mauritania, Algeria, and Niger could rise

2)       the core of the rebels are Tuareg secessionists with no historic grievances against nearby rated sovereigns – not including Niger and Mauritania, where Tuareg separatists have been active

3)       the separatists, 2,000-4,000 in number, probably do not have the capacity to spark conflicts elsewhere

However Burkina Faso may be an exception – it is serving as a base for French air attacks against the rebels and is contributing troops to the ECOWAS mission to Mali and is particularly in danger of retaliatory attacks, Standard & Poor’s says.

Mali’s economic isolation may also serve to protect its neighbours, S&P adds:

Foreign direct investment flows between Mali and its neighbours are small in comparison with investment from outside the region, and portfolio investment flows are negligible, owing to the underdeveloped nature of capital markets in the region

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