Latin America: conflict and energy

 


Latin America is affected by remote conflicts. The region also has its own conflicts, but they are not as affected by this as conflicts in regions that sell or consume raw materials. These are the Middle East and Asia.

Verisk Maplecroft says that conflict-affected areas have grown by 65% since 2021. They now cover 4.6% of the world's land, up from 2.8% three years ago. That's almost twice the size of India. The upsurge in conflict is having a significant impact on people, migration, geopolitics, the economy and international trade. More people are dying in violence. By the end of the year, there will be more than 200,000 deaths from conflict, which is 29% more than in 2021. The Middle East and Ukraine are the most intense war zones. Both could get worse.

Twenty-seven countries, including Ecuador, Colombia, India, Indonesia and Thailand, have seen a big rise in risk since 2021. But sub-Saharan Africa has seen more conflict than any other region. The Indo-Pacific region is a potential flashpoint for conflict. The consultancy's Interstate Tensions Model says that China-Taiwan, North Korea-South Korea and China-Philippines are very high risk.

The top 10 riskiest jurisdictions include several major mineral and oil and gas producers that have long pursued nationalist resource policies. These are Venezuela (first), Russia (second), Mexico (third), Kazakhstan (fourth), Zimbabwe (sixth) and Iraq (ninth). There is no sign that the recent rise in armed conflict will end by 2025. It might get worse before it gets better.

The biggest risk for Latin America is the geopolitical imbalance in the Asia-Pacific. If the EU and Mercosur agree soon, they can plan alternative supply chains in case of conflict, especially if Trump makes things worse. If there is a conflict in the Asia-Pacific, India will be the main buyer with secure supply chains and lower prices for Latin America.

A low probability event could have a big impact on the region, especially on Brazil, Argentina, Chile and Peru. The latter could find substitutes in other latitudes if relocation processes are accelerated in the West.

There will be more conflict in Ecuador, Colombia and Mexico on the Pacific coast because of the fighting between criminals and irregulars. In Venezuela, the military high command must break down, but only for a short time. This will have less impact on Brazil, which is stable.




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