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Oil-producing countries see heightened political risks

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LONDON — Falling oil prices are increasing political risks in some emerging market countries, according to Aon P.L.C.'s 2015 political risk map, published Wednesday.

The biggest political risk facing investors in emerging markets is the increasing instability in already fragile oil-producing economies such as Iran, Iraq, Libya, Russia and Venezuela, said Matthew Shires, head of political risk with Aon in London.

For its 2015 map, Aon said there were 19 countries that experienced a change in their political risk rating — and 12 of those saw their level of political risk increase, according to Rachel Ziemba, a London-based senior director for emerging markets at Roubini Global Economics L.L.C., which worked with Aon to produce the map.

Those 12 countries were downgraded, reflecting deterioration in their political risk for investors, she said. They are Angola, Central African Republic, Burkina Faso, Ghana, Guinea Conakry, Haiti, Libya, Mozambique, Oman, Pakistan, Sierra Leone and Uganda.

Meanwhile, seven countries were upgraded because of an improvement in their political risk profile, Ms. Ziemba said. They are Dominican Republic, Ecuador, Georgia, Lao PDR, Panama, Swaziland and Zimbabwe.

The fall in global oil prices has put pressure on the balance sheets of many emerging market economies, said Ms. Ziemba, despite a seeming stabilization in recent weeks. And in many cases this has been compounded by other developments such as sanctions against Russia, she said.

Only two countries covered by the map currently are at risk of a sovereign crisis: Ukraine, because of the current restructuring; and Venezuela, which has been hit by falling oil prices among other things, Ms. Ziemba said.

Aon's political risk map won a Business Insurance Innovation Award in 2014.