Marsh & Eurasia: Social Media = Higher Political Risk

Mar­ket lead­ers Marsh and Eura­sia, in polit­i­cal risk insur­ance and advis­ing respect­fully, have released a report about increased social media usage dri­ving higher polit­i­cal risk.  Here are some of the highlights:

  • 1.73bn peo­ple will use social net­works in 2013; 2bn in 2015; and 2.5bn w/in 5 years
  • Major instances of social media affect­ing polit­i­cal risk: Libya, Syria, Brazil, Turkey
  • In Brazil, for exam­ple, more than 80% of the par­tic­i­pants in a recent major polit­i­cal rally learned about it via social media, accord­ing to research firm Datafolha.”
  • The report draws up that four rea­sons will exac­er­bate polit­i­cal risk from social media:
    • Accel­er­ate: While pre­vi­ous civil unrest and protest move­ments took heaps of leg­work and orga­ni­za­tion, social media allows for the logis­tics to be quickly proliferated.
    • Spread: Sin­gle coun­try to regional events can be trans­formed via social media (although how that hap­pens isn’t explored).
    • Tar­get: Those seen as pli­able to tar­get gov­ern­ments can become the ful­crum of events via social media.
    • Deflect: Gov­ern­ments may use social media to cre­ate con­fu­sion over and divert the atten­tion of protestors.
  • The deflec­tion approach I can see hap­pen­ing in more sophis­ti­cated oper­a­tions (think China deflect­ing atten­tion to Japan) but will likely come across as pathetic and inau­then­tic in less advanced oper­a­tions (think, say, if Zim­babwe has operations).

Points not mentioned:

  • The effects of Sina Weibo in China has been much more per­va­sive than most west­ern media out­lets report (sans BBC).
  • The use of social media was par­tic­u­larly effec­tive in Iran.  So much so that it has been shut­tered until only recently.
  • India’s infa­mous cor­rup­tion has been pub­li­cized with the efforts of social media.  I’d say the truest co-culprit is the rise of cell phones, not social media per se. 
  • Many coun­tries have used social media to crack down on inde­pen­dent media.  That’s some­thing that will have indi­rect con­se­quences on investments.

To access the full report go here.

The National: Turkey counts cost of political risk

The supreme irony of this sit­u­a­tion, to me at least, is that Turkey just had its rat­ing upgraded by Moody’s.  This can be seen in dif­fer­ent ways.  I see it as either one of the following:

  1. The fun­da­men­tals of the Turk­ish econ­omy are strong enough to merit the rat­ing upgrade and this is just an aber­ra­tion; if any­thing, it strength­ens the cre­den­tials of Turkey by show­ing that civil soci­ety and unrest can be con­tained and may even strengthen the state; or
  2. This was a mis­take on the part of Moody’s and how Erdo­gan and the AK party approach the pro­tes­tors will show either the folly or fore­sight of their move.

Clearly some of the move­ment on the Istan­bul stock exchange is being caused by the unrest at Tak­sim Square.  How­ever, the fluc­tu­a­tions of stock mar­kets are too mul­ti­far­i­ous to pin down to any spe­cific event or events.  In ret­ro­spect it always comes out that other fac­tors were inte­gral to these fluc­tu­a­tions (e.g. cur­rency fluc­tu­a­tions, dis­ap­point­ing eco­nomic reports, weather, etc.) as well.  Here at iPo­lit­i­cal­Risk we are evi­dently on the side of the argu­ment that polit­i­cal risk mat­ters, but ascrib­ing any eco­nomic event solely to polit­i­cal risk shows that a true appre­ci­a­tion of polit­i­cal risk has not been taken.  (The National)

Bremmer In Today’s FT

The FT, which remains my paper of record because come on, fea­tures an edi­to­r­ial today by EG’s Ian Brem­mer.  It focuses on the race between states and tech­no­log­i­cal change and the dialec­tic between the two.  It piqued my inter­est because I had just been read­ing the recent For­eign Affairs issue that focuses on “big data,” which sup­port­ers and detrac­tors alike think will have pro­found impli­ca­tions to how gov­ern­ments and cit­i­zens interact.

Our use of online tech­nol­ogy – whether for stor­age, com­mu­ni­ca­tions or com­merce – reveals more of who we are, what we think and what we want. Pro­vid­ing those who treat us as con­sumers with so much data can com­pro­mise our pri­vacy. As the 2012 US pres­i­den­tial elec­tion proved, when both sides used it to iden­tify poten­tial vot­ers, big data has now become an essen­tial ele­ment of sophis­ti­cated polit­i­cal cam­paigns. (FT)

To see the arti­cles in For­eign Affairs I’d go here.