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GLOBAL RISK BULLETIN | MARCH 2020

In this edition of the Global Risk Bulletin, we look at the growth of the far-right terror threat in the US, examine how the COVID-19 pandemic has impacted protests and violence in the lead up to the US presidential elections in November, and explain how a protest over a gas pipeline caused widespread commercial disruptions in Canada.

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More than three weeks of anti-pipeline demonstrations and rail blockades in February not only caused significant commercial disruptions but also highlighted some of the complexities relating to undertaking major energy projects through indigenous territories, writes SAIF ISLAM.

In early February, a police raid on indigenous Wetʼsuwetʼen First Nation protesters – who were blocking the construction of the Coastal GasLink pipeline through their traditional territory in British Columbia (BC) province – sparked a countrywide civil unrest campaign that took many by surprise. After security forces started enforcing a provincial government injunction to remove protest camps and roadblocks, solidarity protest activities began across the country. More than three weeks of public demonstrations and rail blockades caused considerable commercial and supply chain disruptions, paralysing parts of the Canadian economy.

In early March, Wetʼsuwetʼen hereditary chiefs, and federal and provincial government officials, reached a tentative agreement – the terms of which have not yet been released – which gradually ceased protests and resumed pipeline construction activities. Even if a lasting solution to this crisis is found, which is not certain by any means, this episode is a reminder that even stable commercial jurisdictions such as Canada are not immune from major disruptions stemming from popular unrest.

Background

The 670 km Coastal GasLink pipeline would supply natural gas from north-eastern parts of BC to a terminal in Kitimat, also in BC, from where liquefied natural gas would be exported to Asia. Both Prime Minister Justin Trudeau and BC Premier John Horgan support the pipeline. 20 First Nations’ elected councils along the proposed route also approved the USD 5 billion project by signing benefit agreements with the operators. Furthermore, five of the six elected band councils in the Wetʼsuwetʼen First Nation support the pipeline. However, Wetʼsuwetʼen hereditary chiefs say they never consented to its construction through their traditional territory, claiming they have authority and jurisdiction over the 22,000 square kilometres of land – not the elected councils. They also expressed concerns regarding the pipeline’s negative environmental effects. While protesters have long-established camps along the proposed pipeline route to prevent access to construction sites, it was the one raid in early February that inspired countrywide solidarity protests and blockades. Opposition to the pipeline became a proxy for wider grievances relating to indigenous rights and environmental protection.

PROTESTS, RAIL BLOCKADES AND COMMERCIAL IMPACT

The solidary protests – organised by indigenous and non-indigenous activists – quickly expanded from BC to other parts of the country. In addition to large demonstrations and sit-ins in public places, small groups of protesters blocked roads and rail lines in many key locations, halting rail service across eastern Canada. They also prevented access to the Port of Vancouver and the Port of Delta, both in BC. Considering rail is effectively the backbone of Canadian transport infrastructure – used for moving raw materials and finished products across vast distances – blockades and the consequent cancellation of 460 freight trains was extraordinarily disruptive for the economy. Stranded shipments and halted supply chains in major economic corridors impacted businesses of all sizes and in multiple industries including agriculture, construction, forestry, mining, manufacturing and transport.

The blockade not only stopped deliveries from coast to coast but also curtailed certain exports, as goods could not reach key ports where thousands of containers piled up and an increased number of ships sat idle. Canadian Manufacturers & Exporters (CME), the country’s largest trade and industry association, estimated that goods worth more than USD 300 million were being stranded each day of the shutdown. Companies that could rely on alternative modes of transport, mainly trucks, had to do it at a significant mark-up. The cancellation of more than 900 passenger trains also affected at least 164,000 people, many of whom could not travel to work for most of February.

Security forces occasionally intervened to remove blockades and arrest dozens of protesters, although there were no reports of clashes or violence. Some reports estimate the three weeks of protest in February cost the Canadian economy USD 5 billion.

KEY TAKEAWAYS

The crisis offers several valuable lessons to companies operating in Canada. It demonstrates how a small group of protesters in a remote part of BC inspired countrywide civil disobedience that crippled parts of Canada’s economy and global supply chain. The activists’ rail blockades, and their effectiveness in terms of garnering the attention of politicians, business leaders and wider citizenry, pose a major concern for commercial operators – similar tactics may be adopted by other activists in future protests. Following its efficacy, similar tactics may be adopted by other activists. Some commentators believe that due to the threat of more civil unrest in the future, energy companies could be spending many years getting First Nations and environmental approvals, finding themselves in increased regulatory uncertainty.

The crisis also exposed underlying and longstanding grievances relating to indigenous rights and governance in Canada, which remain unresolved. In addition to tensions between government authorities and indigenous communities, there can be major disagreements within a First Nation. The Wetʼsuwetʼen leadership and the broader community are evidently split on the pipeline – and the interpretation and application of indigenous laws and traditions – which has partly fuelled the crisis. The rules of consultations and land rights are complex and far from settled. These complexities, in turn, impact the effectiveness of companies’ consultations with indigenous stakeholders.

These factors, if left unresolved, could not only affect other similar projects in future, but also seriously challenge Canada’s reputation of being a stable operating environment for energy production and other commercial activities.

S-RM is a global risk consultancy providing intelligence, resilience and response solutions to clients worldwide. To discuss this article or other industry developments, please reach out to one of our experts.

Saif Islam
Saif Islam Senior Analyst, Crisis Management Email Saif

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