Tranquillity, Turmoil and Chaos for International Business

News and Analysis32 Scientific American February 1999

found, even though their habitats stillappeared healthy. Three years later R.aurora was added to the list of endan-gered species.

Whatever exterminated those squat,brown frogs with rosy legs and softchurr remains unknown and at large.And it now seems to pose a globalthreat. Fellers discovered that all seven

species of frog and toad that lived in theSierras 80 years ago had declined pre-cipitously by 1993; three species hadvanished altogether from the survey ar-eas. Similar catastrophic collapses havebeen observed over the past decadethroughout North America, CentralAmerica and Australia. (As have eerilydeformed frogs, but scientists are un-

certain whether the declines and themutations are connected.)

“Biologists are so concerned becausethese frogs are disappearing from ourlargest parks and protected wilder-nesses—land that we thought we weremanaging well,” Fellers says. Recentlytoxicologists placed a fungus at the topof the list of suspects. But Karen Lips, a

When the internal affairs of a country reach a certain levelof tumult, they cease to be a purely domestic problem

and become a concern to the international business community.The PRS Group in East Syracuse, N.Y., which specializes in politicaland economic intelligence, measures and forecasts domestic tur-moil based on reports from more than 200 area specialists. Itsforecasts through May 2000 are shown on the map.

The term “turmoil” as used by PRS includes large-scaleprotests, general strikes, riots, terrorist acts, guerrilla warfare, warsbetween states and disorder caused by government reaction tounrest. It excludes crimes that do not directly affect business,such as spousal abuse. The PRS classifies countries into four cate-gories that measure the risk for international business and do notnecessarily coincide with impressions from daily news reports.

“Low” turmoil indicates that violent discontent is unusual. InWestern-style democracies, that means opposition is expressedpeacefully; however, in authoritarian regimes, such as those ofSaudi Arabia, Cuba and Vietnam, force or the threat of force prin-cipally keeps order. Repressive regimes also try to mollify oppo-nents: for instance, Saudi Arabia gives economic rewards to itsShiite minority to discourage antiregime violence.

A rating of “moderate” turmoil indicates that internationalbusiness is sometimes affected by expressions of discontent. TheU.S. is given a moderate rating for many reasons, including thethreat of racial riots (such as those in St. Petersburg, Fla., in 1996),terrorist acts (such as the bombing of the federal building in Ok-lahoma City in 1995), continuing drug-related violence, and at-tacks on abortion providers. China, also classified as moderate,uses the threat of force to keep order but also prevents unrest by

trying to keep living standards from plummeting. Russia isplagued by crime, which rose fivefold from 1989 to 1997.

Countries labeled “high” suffer from violence that could seri-ously affect international business. Included in this group is In-donesia, which has been plagued by food riots, violent studentprotests, the lynching of ethnic Chinese, and separatist move-ments. Pakistan is destabilized by conflicts between Sunni andShiite Muslims, ethnic violence, continuing tensions with Indiaover Kashmir and threats against U.S. businesspeople. Nigeriasuffers from severe deterioration of its infrastructure and from vi-olent conflicts between Muslims and Christians and betweenethnic groups. Guerrilla groups in Peru still pose a substantial riskto stability. “Very high” risk of turmoil indicates near-warlike con-ditions. Of the four countries in this group, three—Colombia, Su-dan and Congo (Kinshasa)—were at press time contending witharmed insurrection. The fourth, Haiti, has a government seem-ingly powerless to stop the high level of violence there. (The PRSgroup lacks data for the former Yugoslav republic, but theprovince of Kosovo would probably also be in this group.)

Because turmoil springs largely from economic, ethnic, racialand religious discrimination, it is not surprising that democra-cies typically enjoy greater tranquillity than dictatorships.Among the few with high ratings are South Africa, which is deal-ing with millions of unemployed illegal immigrants, and CostaRica, where disturbances have grown because social serviceshave deteriorated as a result of inflation and inadequate re-sources. Although a few repressive governments are likely tomaintain a low level of turmoil, most such regimes will havemoderate or high levels. —Rodger Doyle (rdoyle2@aol.com)

HONG KONGSINGAPORE

ISRAELKUWAITQATARUNITED ARABEMIRATES

CUBAHAITIGUATEMALAHONDURASEL SALVADORNICARAGUACOSTA RICAPANAMA

TURMOIL RATINGLOW

SOURCE: Political Risk Letter, the PRS Group, East Syracuse, N. Y.

MODERATE HIGH VERY HIGH NO DATA

B Y T H E N U M B E R S

Tranquillity, Turmoil and Chaos for International Business

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Copyright 1999 Scientific American, Inc.