Reference no: EM133479135

Your client, International Bank ('International') is considering acting as a lender in a syndicated loan agreement financing the building of a highway by Mondovus, a consortium comprising three international construction companies. The highway will be built in the western part of Elbonia, a country in which an unsuccessful military coup against the government took place a year ago. Mondovus has procured all permits necessary for the first phase of the construction, which will take two years, following which Mondovus will need to apply for additional permits in order to complete the remaining two phases of the construction.

Part of the highway will go through a forest, which is a natural protected area in terms of amphibian and reptile diversity. In fact, a study prepared by a local environmental NGO has found that the construction of the highway could permanently destroy habitats of several endemic species. The government of Elbonia, on the other hand, has given the project a go-ahead on the grounds that, in addition to its benefits for the national transportation system, the new highway constitutes an opportunity for 28 million people to improve their living standards.

Question:

Critically analyse the Political risk 'International' must consider and advise on how they should mitigate the risk.