NEW YORK--Insurance for political risk will rise in cost andbecome more difficult to obtain as industries such as oil arethreatened with nationalization, according to Aon brokerageanalysts.

Roger Schwartz, senior vice president of Aon trade credit andpolitical risk practice, said the net result of the nationalizationthreat is that coverage for political risk will become moreexpensive or capacity could dry up for industries that are underdirect threat.

"The inclination of the underwriting market is to shut down, atleast in the near term," he said during a press conference heldhere yesterday to discuss the release of Aon's fourth annualPolitical and Economic Risk Map for 2007.

Bryan Squibb, managing director, Aon Trade Credit, noted thatnot all products would be affected and the application of politicalrisk coverage will vary from product to product. He said the riskis not limited to nationalization, but could also includediscriminatory taxes, such as a windfall profit tax, on selectproducts.

"Certain industries in certain countries have differentvulnerabilities," added Mr. Schwartz.

Seventeen countries on the Aon map showed a decrease inpolitical risk and received upgrades this year, but there are moreappropriation icons on the map to reflect the new reality, said SamWilkin, senior consultant for Oxford Analytica, a geopolitical riskconsulting firm working with Aon.

Two countries, Libya and Sudan, received downgrades. Thedecreases in risk areas, Aon said, were the first in threeyears.

Mr. Wilkin said the most surprising thing about 2006 was thereturn of nationalization over oil commodities. The prime exampleis Venezuela and Bolivia, where the nation's presidents recentlymoved to take state control of multinationals' assets.

He called it a return to the Cold War era, with calls for areturn to socialism after decades where many corporations hadthought the practice had disappeared, surprising them.

"Nationalism was once a threat to multinational investors," saidMr. Wilkin, noting that nationalization claimed 20 percent of U.S.direct investment during the 1970s.

The reason for the development of nationalization today istwofold, he pointed out. One, commodity prices are high; and two,new global players allow for governments to seize the assets andfind their own markets and managers to run those assets.

What is different this time around, he noted, is talk aboutcompensating those companies for the seizure of their assets,though questions remain if that compensation will amount to a fairmarket price for those assets.

He noted that should the price of oil drop, it would probablyend the desire to nationalize the oil companies.