Every member of the Organisation of the Petroleum Exporting Countries (OPEC) is judged to be either an 'extreme risk' or a 'high risk' in Maplecroft's Rule of Law index
LONDON (TrustLaw) - Respect for the rule of law is weakest in countries with plentiful oil and gas resources, such as Myanmar, Turkmenistan, Libya, Angola and Iraq, according to an index published on Wednesday by risk analysis and mapping firm Maplecroft.
Maplecroft’s Rule of Law Index, developed to help multinational corporations evaluate risks to global investments, ranks 197 countries on the independence and efficiency of their judiciary, and transparency of policy implementation. Myanmar is judged to have the lowest respect for the rule of law (ranking first) and San Marino, a tiny republic surrounded by Italy, the highest (ranking 197th).
“Organisations investing in lucrative energy markets, such as Myanmar, Turkmenistan or Libya need to be extremely cautious,” said Maplecroft Associate Director Mandy Kirby in a statement.
“The rule of law serves as a check on abuses of private and state power and is important in the oversight of business regulation, including contract enforcement and competition laws,” she added.
The index is compiled from three separate Maplecroft indices: the Judicial Independence Index, the Judicial Effectiveness Index (which measures contract enforcement) and the Efficacy of the Regulatory System Index.
Those indices, in turn, are a distillation of reports and indices from international organisations, non-governmental organisations (NGOs) and governments.
In the Rule of Law ranking, 19 countries were rated as an extreme risk, 72 were categorised as a high risk, 65 as medium and 41 as low.
Every member of the Organisation of the Petroleum Exporting Countries (OPEC) is judged to be either an extreme risk or a high risk.
And with the exception of Trinidad & Tobago (medium risk), every member of the Gas Exporting Countries Forum (GECF) - which controls nearly three-quarters of the world's proven gas reserves - is also categorised as an extreme risk or a high risk. The GECF’s 12 members are Algeria, Bolivia, Egypt, Equatorial Guinea, Iran, Libya, Nigeria, Oman, Qatar, Russia, Trinidad & Tobago and Venezuela.
Russia, the world’s biggest producer and exporter of natural gas, ranks 58 in the index.
The top ten countries, with the weakest rule of law, are Myanmar and North Korea (joint first) followed by Somalia, South Sudan, Turkmenistan, Cuba, Cambodia, Afghanistan, Syria and Libya.
Countries in sub-Saharan Africa dominate the upper reaches of the ranking, but there are some notable exceptions - South Africa (157), Namibia (158) and Botswana (167) are classified as low risk.
Botswana, for example, actively promotes a favourable business environment for investors, and is reaping the reward for its efforts, Maplecroft said. The southern African country’s gross domestic product per capita rose from $1,774 in 1980 to an estimated $16,280 in 2011, the risk analysis firm said.
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