17 August 2020
Americas: Governor Vazquez loses primary vote to Pedro Pierluisi in Puerto Rico
Sectors:all
Key Risks: political instability; economic and political risks; civil unrest
In Puerto Rico, Governor Wanda Vazquez acknowledged losing the ruling New Progressive Party’s primary vote to Pedro Pierluisi after the postponed vote to cast gubernatorial candidates for the 3 November general election was concluded on 16 August. Preliminary results from over 78 per cent of electoral precincts reported that Pierluisi received more than 57 per cent of votes compared with Vazquez’s 42 per cent, while Carlos Delgado was the leading candidate for the opposition Popular Democratic Party. The primary vote was held after the chaotic primary on 9 August forced a second round of voting in nearly 50 of the island’s 78 municipalities. Political tensions are expected to increase ahead of the November elections amid ongoing debt restructuring efforts and heightened economic uncertainty exacerbated by the COVID-19 outbreak. Official results from the primary vote are expected over the coming days.
Asia Pacific: Thailand’s youth stages largest protest since 2014 military coup
Sectors: various
Key Risks: political instability; civil unrest
In Thailand, over 15,000 protesters gathered near Bangkok’s Democracy Monument, defying authorities who recently arrested pro-democracy activists and threatened to detain more as the police issued arrested warrants for additional 12 protest leaders. The protest that took place on 16 August was the biggest since the 2014 coup that saw incumbent Prime Minister Prayuth Chan-ocha take power. The movement, exacerbated by the economic hardship caused by the COVID-19 pandemic, demanded for the dissolution of the current government, reforms of the constitution and the monarchy, and an end to repression against opposition activists. There are growing fears that the latest protest could trigger a violent backlash led by Prime Minister Chan-ocha, a military loyalist.
Eurasia: Belarus on the edge; Afghan government delays crucial prisoner releases
Sectors: all
Key Risks: political stability; civil unrest
After at least 100,000 people protested in Minsk on 16 August, Belarus faces a week gripped by protest and strikes against President Alexander Lukashenko who continues to retain power after winning a suspected fraudulent election on 9 August. The week could see a sanctions response from the US, UK and the EU, though this is only likely to aim at the political elites. Whilst Lukashenko has spoken with Moscow regarding a potential intervention, Moscow is likely considering a Russia-friendly opposition candidate for possible transition. Lukashenko will likely hold out for as long as the elite and his security forces remain loyal. Meanwhile in Afghanistan, France and Australia voiced opposition to the government’s plans to release 400 Taliban militants some of which have been convicted of killing their respective nationals. A delay could collapse hopes for peace talks.
Europe: Kazakh leader’s grandson dies suspiciously in London; impunity for such actions likely to remain however
Sectors: various
Key Risks: targeting of political opponents, sanctions
Britain faces a potential crisis in relations with Kazakhstan, after reports emerged on 15 August that the 29-year-old grandson of Kazakh strongman, ‘leader of the nation’ Nursultan Nazarbayev, had died in London a week earlier of a reported heart attack. The grandson, Aisultan Nazarbayev (also known as Aisultan Rakhat), received asylum in the UK last year and was a critic of his grandfather’s regime. He was long known to have drug problems, however, and earlier this year denounced his own family as corrupt, among other more colourful claims. Aisultan’s own father, Rakhat Aliyev, fell out with the Kazakh government, and was ultimately found dead in a jail cell in Austria while awaiting extradition hearings, a suspicious incident which many suspected was a Nazarabyev-ordered murder. The UK recently introduced its first human rights sanctions but is unlikely to do so with regards to Kazakhstan.
MENA: UN tribunal delivers Lebanon Hizbullah verdict; UAE-Israel kick off official normalisation
Sectors: all
Key Risks: political instability; civil unrest; humanitarian crises
A UN tribunal in the Netherlands will deliver the verdict in the trial on 18 July of four Lebanese Hizbullah members allegedly involved in the assassination of former Lebanese prime minister Rafiq al-Hariri on 14 February 2005. Hizbullah said they will not recognise a guilty verdict. Amid multiple severe crises exacerbated by the 4 August Beirut Port blast, protests and violence would be expected, yet a state of emergency implemented on 13 August could deter these. Meanwhile, following the 13 August Israeli – Emirati accord towards normalisation of relations, Israeli President Reuven Rivlin invited UAE’s Crown Prince Muhammad Bin Zayad to Israel. Furthermore Prime Minister Benjamin Netanyahu said that the two are establishing direct flights between Israel and the UAE over Saudi Arabia. This presents numerous challenges. The accord has the potential to continue exacerbating protests in Jordan, Gaza and the West Bank.
Sub-Saharan Africa: Five killed in Cote d’Ivoire unrest over President Ouattara’s decision to seek third term
Sectors: all
Key Risks: civil unrest; political violence; political instability
Cote d’Ivoire was rocked by violent protests on 13 and 14 August in response to President Alassane Ouattara’s recent decision to stand for a legally contentious third term in the 31 October election. At least five people were killed in clashes with security forces and Ouattara’s supporters in Daoukro and Bonoua. In the economic hub of Abidjan, a bus was torched and roads were barricaded, though no casualties were reported. Ouattara backtracked on an earlier decision not to seek another term after Prime Minister Amadou Gon Coulibaly, the ruling Rally of Houphouetists for Democracy and Peace’s original candidate, died suddenly in July. He maintains that his two presidential terms do not count against the 2016 constitution’s two-term limit. There is a high risk of further unrest as tensions between Ouattara and supporters of his civil war-era opponents spike.
10 August 2020
Americas: Nationwide demonstrations, blockades to enter second week in Bolivia Sectors: all Key Risks: political instability; civil unrest; business disruption In Bolivia, nationwide anti-government protests and associated road blockades against the recent decision to postpone general elections are expected to enter their second week. The seventh consecutive day of protests, backed by the Bolivian Workers’ Central (COB) members and the opposition leftist MAS party supporters, followed another failed dialogue attempt called by interim President Jeanine Anez on 9 August. Five out of the country’s nine regions have reported disruptive unrest, with road blockades affecting some of the country’s main roads since 3 August, when the COB called a general strike to protest the postponement of the 6 September general elections to 18 October due to the COVID-19 pandemic. On 6 August the OAS and the UN issued statements condemning ongoing nationwide road blockades impeding trucks with medical supplies to access cities and urged protesters to lift them. The risk of disruptive unrest remains high over the coming days. Asia Pacific: Carrie Lam and senior Chinese officials sanctioned by US Treasury Sectors: various Key Risks: sanctions; political instability On 7 August, The US Treasury Department imposed economic sanctions on a number of senior Hong Kong (HK) and Chinese officials, including HK’s chief executive Carrie Lam and Lou Huining who is the most senior mainland official in the territory. The designations which seek to punish the officials for their suppression of HK’s autonomy follows the inauguration of the Hong Kong Autonomous Act in July. Under the economic sanctions brought by the US Treasury’s Office of Foreign Asset Control, the US-based assets of individuals are blocked and US businesses are prohibited from dealing with them. A US bank reportedly suspended accounts linked to sanctioned officials to avoid running afoul of US sanctions. In response, China has announced reciprocal sanctions against 11 US officials and heads of non-governmental organisations. Eurasia: Severe crackdown expected as opposition threatens Lukashenko’s authority Sectors: all Key Risks: political stability; civil unrest On 9 August, Belarus’ election commission announced incumbent President Alexander Lukashenko won the presidential election with 80 per cent of the vote, with main rival Svyatlana Tsikhanouskaya officially securing 9.9 per cent in figures which are all-but-certainly fraudulent. Following the announcement, thousands protested nationwide and clashed with riot police, with one protester reportedly killed. Minsk faces challenges in dealing with a new civic opposition, as a crackdown risks new European sanctions and loss of access to Western credit as it struggles with COVID-19 and tensions with Russia are high. The authorities are expected to arrest leading opposition figures to try and prevent protests from organising in the regions, which saw significant demonstrations. Further protests are expected this week. The risk of a violent response to any continued protests is very high. Europe: UK aims for Japan trade pact; political scandal over Norway’s oil fund Sectors: various Key Risks: trade disruption; political stability British Trade Secretary Liz Truss indicated a trade agreement for after the UK’s transition period from the EU ends on 31 December with Japan was nearly at hand and that a pact could be agreed by end of August. Tokyo has insisted the deal will be less beneficial than the access it has offered to EU members, while the UK has tried to ensure increased agricultural trade will be facilitated. The pact could serve as a template for Britain’s efforts to secure other similar deals ahead of the deadline. Meanwhile, Norway faces a potential rare political scandal after the government-appointed supervisor of its central bank announced on 10 August that its appointment of Nicolai Tangen as head of its US$1 trillion oil fund may have violated conflict of interest claims, which could result in turbulence for the world’s largest investment fund. MENA: Lebanon’s crisis deepens following Beirut port blast Sectors: all Key Risks: political instability; civil unrest; humanitarian crises Lebanon’s year-long political and fiscal crisis, which prompted its sovereign default in March, was compounded by the 4 August explosion of a storage of ammonium nitrate held at Beirut port. Thousands were injured, hundreds of commercial and residential buildings levelled, and over 150 died in one of the largest non-military explosions in recent history. Riot police cracked down on protests that broke out thereafter, reaching their most intense level yet with the storming of a number of ministries over the weekend of 7-9 August, but the crisis is likely to escalate further. An international aid effort organised by French President Emmanuel Macron raised EUR253m in aid – a drop in the ocean compared to the country’s larger fiscal woes. It is doubtful the current government has the legitimacy to reach an IMF deal, particularly if it included major devaluation of the lira and other austerity measures. Sub-Saharan Africa: Eight people, including French aid workers, killed in Niger militant attack Sectors: all Key Risks: terrorism; political violence; political instability; civil unrest On 9 August unidentified gunmen killed six French employees of non-governmental aid organisation ACTED and their local guide and driver in the Koure Giraffe Reserve, a wildlife park just east of Koure in Niger’s south-western Tillaberi region. While the identity of the gunmen remains unknown, militants affiliated with Islamic State (IS) operate throughout the area and regularly launch attacks on civilian and military targets in Tillaberi. The attack, the first in the country targeting such a large number of foreign civilians, is the latest sign of the militants’ continued encroachment into western Niger. The incident comes less than five months before potentially contentious presidential elections set for late December, in which ruling party candidate and current Interior Minister Mohamed Bazoum, a close ally of President Mahamadou Issoufou, is widely expected to win. |
2 August 2020
Americas: Opposition candidate Mohamed Irfaan Ali sworn in as president
Sectors:oil and gas; mining
Key Risks: political instability; policy continuity; civil unrest
In Guyana, Mohamed Irfaan Ali from the opposition PPP/C was sworn in as president on 2 August, exactly five months after the 2 March general elections. The political standoff over the results of the highly contested vote continues, with the outgoing ruling APNU+AFC alliance denouncing the result’s legitimacy. Ali took office shortly after the Guyana Elections Commission (GECOM) officially declared the election’s results according to the 33-day vote recount process that ended in June. Several legal challenges delayed GECOM’s declaration, which was accepted by outgoing president David Granger. Nevertheless, Granger stated that an election petition could be filed potentially further stoking instability risks, which Ali is likely to face throughout his five-year term. Although the declaration has somewhat mitigated the risk of major unrest, the risk of protests fuelled by Granger’s APNU+AFC alliance cannot be entirely ruled out.
Asia Pacific: Pakanstani separatist groups unite to sabotage Chinese assets
Sectors: BRI projects
Key Risks: business; insecurity
Pakistan’s Baloch and Sindi separatist groups formed an alliance aimed ostensibly at targeting Chinese assets, nationals and the development of China Pakistan Economic Corridor (CPEC). The founding declaration expressed resentment toward China’s alleged expansive and oppressive policy to secure resources in the provinces of Sindh and Balochistan. Baloch insurgents were responsible for the attack on the Pakistan Stock Exchange in June. While the new alliance will significantly increase security costs for CPEC initiatives, it is unlikely to halt the flagship project of China’s Belt and Road Initiative. As China’s global footprint extends, its economic activities are to directly impact, sometimes adversely, local communities. The pushback is inevitable. Yet, local resistance presents an opportunity for CPEC to become more inclusive in an effort to gain support from communities by giving them an economic stake in the projects.
Eurasia: Belarus’ most dramatic election yet prompts major risks for government stability
Sectors: all
Key Risks: political stability; civil unrest; economy
On 9 August Belarus is scheduled to hold its presidential election, in which President Alexander Lukashenko, in office since 1994, faces his greatest-ever public opposition. Svyatlana Tsikhanouskaya, the only registered opposition candidate, has organised major rallies in the capital and smaller cities. Her popular blogger husband was jailed when declaring his run for the presidency, as were other would-be opposition candidates. Rallies may grow in the run-up to the vote and there are rampant local rumors it could be delayed. Despite Tsikhanouskya’s unprecedented protest movement, the election is unlikely to be fair and independent observers have been barred. How the government chooses to handle any post-election protests will remain crucial to its long-term stability. Furthermore, Minsk’s recent fallout with Moscow over the arrest of suspected Russian military contractors it claimed colluded with Tsikhanouskaya’s husband further raises the risks to Lukashenko’s regime.
Europe: Q2 GDP contractions worst-ever, political risks remain to EU’s new debt and grant
Sectors: all
Key Risks: economic recovery; EU cohesion
Figures released over the last week showed Eurozone GDP shrank by a record 12.1 per cent quarter-on-quarter in Q2 2020. Across the EU as a whole GDP shrank 11.9 per cent. Spain reported the largest contraction – 18.5 per cent – and France, Germany and Italy all shrank more than 10 per cent. The EU imposed strict lockdowns following COVID-19, collapsing production and consumption. There are some signs of a potential recovery, although with COVID-19 cases rising, any recovery will be shallow. Brussels’ and EU heads of states agreement in July to raise joint debt and finance grants to poorer and more affected member states should temper market jitters. However, significant risks remain and related political spats, such as France’s 3 August proposals for more sanctions over rule of law concerns in member states, could still cause turbulence.
MENA: Lebanon’s foreign minister resigns; Iraqi elections announced for 2021, 11 months early
Sectors: all
Key Risks: political instability; civil unrest; humanitarian crises
On 3 August Lebanon’s Foreign Minister Nassif Hitti resigned, citing a lack of political will to reform and warning of a “failed state”. Hitti’s departure is the third high level resignation since June. The move is also thought to be over differences with Prime Minister Hassan Diab following his criticism of erstwhile ally French Foreign Minister Jean-Yves Le Drian during a recent visit. Hitti’s replacement is expected to be announced imminently. Sources indicate that Charbel Wehb, advisor and close acquaintance of President Michel Aoun, may be selected. Iraqi Prime Minister Mustafa al-Kadhimi announced elections for June 2021, 11 months early amid dire civil, economic and political crises exacerbated by the oil price crash and COVID-19. Civilians have demonstrated since October 2019 over dire social, political and economic conditions. However, without deep-rooted constitutional overhauls, corruption and cronyism will continue hindering progress.
Sub-Saharan Africa: Cote d’Ivoire’s opposition FPI names former PM N’Guessan as presidential candidate
Sectors: all
Key Risks: political instability; civil unrest
In Cote d’Ivoire, the opposition Ivorian Popular Front (FPI) named former prime minister Pascal Affi N’Guessan as its candidate for the 31 October presidential election. N’Guessan will face former president Henri Konan Bedie and, potentially, former rebel leader Guillaume Soro and incumbent President Alassane Ouattara, who has not said whether he will stand for a controversial third term. N’Guessan’s nomination comes as Ouattara’s predecessor and FPI founder Laurent Gbagbo, recently acquitted by the International Criminal Court from charges of crimes against humanity allegedly committed during the 2010-2011 civil war, is unable to return as Ivorian authorities are yet to issue him a new passport. N’Guessan’s nomination risks alienating the FPI’s pro-Gbagbo camp, which has called on Gbagbo to launch his own bid. An increasingly crowded field of candidates further increases Ouattara’s chances should he decide to run for re-election.
27 July 2020
Americas: Chile’s President Pinera signs early pension withdrawals into law; shocks expected
Sectors: all
Key Risks: financial market disruption; economic risks; civil unrest
In Chile, on 24 July President Sebastian Pinera signed into law a bill allowing citizens to withdraw 10 per cent of their pension savings, a move that officials estimate could have a fiscal cost of US$6bln or 2.5 per cent of GDP. The central bank announced that it was ready to mitigate possible financial market disruption stemming from the law. The proposal, presented by the opposition, had been approved by Congress the day prior amid efforts to mitigate the economic impact of the COVID-19 pandemic. Pinera had almost no choice but to support it to avoid an extremely high political cost and a likely resumption of the violent anti-government protests that erupted in October 2019. The reform of the controversial pension system is one of the main demands of the protest movement, which is likely to reignite once the pandemic eases.
Asia Pacific: Singapore’s new cabinet unveiled as government prioritises continuity
Sectors: all
Key Risks: political stability
On 26 July Singapore’s Prime Minister Lee Hsien Loong introduced the post-election reshuffle that kept his core team largely intact as his government tackles an unprecedented economic crisis stemming from the COVID-19 pandemic. The new cabinet will have 37 members, with seven new office holders. Deputy Prime Minister and Finance Minister Heng Swee Keat, widely seen as Lee’s heir apparent, retained his post. Lee’s ruling People’s Action Party won a parliamentary supermajority in the 10 July general election, although the opposition Workers’ Party made significant gains by winning a record 10 seats. The ruling People’s Action Party had been expected to promote a leadership transition to its fourth generation politicians after the election, but shaky election performance and ongoing battle to contain COVID-19 raised questions over the timeline. For now, the priority appears to be continuity.
Eurasia: New ceasefire in Ukraine; Russia’s launches North Sea LNG exports to Japan
Sectors: various
Key Risks: political stability; war; economy
A new ceasefire between Ukrainian forces and Russian-backed separatists came into force on 27 July in Donetsk and Luhansk Oblasts. The ceasefire, agreed by the trilateral contact group in accordance with the separatists, came into force hours after a phone call between Russian President Vladimir Putin and Ukrainian President Voldoymyr Zelensky, marking the first major resumption in the peace process since December 2019. There is yet no indication that the current deal will be more likely to hold than previous attempts. Elsewhere, on 24 July Russia’s LNG producer Novatek announced its first liquefied natural gas (LNG) shipment to Japan via the North Sea route. The development marked a positive step for Russia’s LNG industry and its interest in developing the Japanese market, with Japanese firms co-investing in the Sakhalin-2 and Arctic LNG 2 projects and expanding Sakhalin-1 to produce LNG as well.
Europe: UK’s Spain quarantine highlights continued travel risks; calls for new investment restrictions
Sectors: various
Key Risks: travel; economic recovery; frustration of process
The UK announced on 25 July that it was re-imposing quarantine requirements from travellers returning from Spain beginning on 26 July, even as the country’s own transportation secretary was on holiday there. The move highlights the risk of renewed closures. Several other countries have removed fellow EU member states added to their travel corridor lists in recent weeks, potentially putting further strain on tourism and travel markets. Britain is also due to consider a new sanctions’ regime after the publication of a scathing intelligence committee report last week on Russian intelligence actions in the country, which will likely include a US-style foreign investment committee, something various EU member states are considering as well and which would also likely look critically at Chinese and potentially Middle Eastern investments.
MENA: Tunisia interior minister to build government; Israeli PM to dismantle his
Sectors: all
Key Risks: political instability; civil unrest; humanitarian crises
On 25 July Tunisia’s President Kais Sa’id appointed Interior Minister Hisham Mechichi to form a new government, succeeding Elyes Fakhfakh as prime minister after he resigned on 15 July amid political tension with the major parties as well as popular unrest aggravated by the COVID-19 pandemic. Mechichi has one month to have his cabinet approved or parliament will be dissolved and new elections organised within three months, the second bout of elections in a year. The same day, reports emerged that Israeli Prime Minister Benjamin Netanyahu was examining ways to dismantle his unity government and engage other right-wing parties to oust coalition partner Blue and White, led by prime minister alternate Benny Gantz. Netanyahu may also attempt to trigger snap elections for November by delaying passing the 2020 budget. Amid widespread civil unrest, further such reports are likely.
Sub-Saharan Africa: Surge in violence threatens Darfur peace process in Sudan
Sectors: all
Key Risks: internal conflict; civil unrest; political instability
Over 80 people were killed and at least as many were injured in a weekend of violence in western Sudan’s restive Darfur region. On 25 July over 60 people were killed in an attack on Masteri, West Darfur, apparently targeting the local Masalit community. Gunmen also killed at least 20 villagers in the Aboudos areaof South Darfur. On 26 July three people were killed during a clash over resources in Al Jarf, North Darfur. Prime Minister Abdalla Hamdok deployed additional security forces to the region in response to the violence. Escalating attacks risk undoing recent progress in the Darfur peace process. Reduced patrolling and community outreach, the impending exit of the UN’s UNAMID peacekeeping mission, though delayed to 2021, and the government’s lack of legitimacy among parts of the Darfuri population threaten a further deterioration of the security situation.
20 July 2020
Americas: Landslides continue to affect oil pipeline operations in Ecuador
Sectors: oil and gas; power generation
Key Risks: business interruption; force majeure
In Ecuador, erosion in part of the riverbed of the Coca River continues to affect strategic infrastructure in the area. On 18 July pumping operations were suspended at the privately-held Heavy Crude Pipeline (OCP) as a preventative measure following a landslide in the Alto Coca River in Napo province, Amazon region. OCP stated that exports were not expected to be affected. Landslides have recently affected OCP, state-owned Petroecuador’s SOTE pipeline and the Coca Codo Sinclair hydropower plant. The pipelines were halted for almost a month following a landslide in April which forced the government to declare force majeure on oil exports, lifted on 9 May. SOTE once again stopped pumping in early June, prompting authorities to declare force majeure on oil exploration and production. Although pipeline variants are under construction, further operational difficulties should be expected.
Asia Pacific: Cabinet reshuffle likely after finance minister resigns and protests in Bangkok
Sectors: all
Key Risks: political stability
In Thailand, on 19 July thousands of mainly young demonstrators gathered at Bangkok’s Democracy Monument to denounce Prayuth Cha-ocha’s administration. Protesters also called for the abolition of the country’s strict royal defamation law while laying out three demands to dissolve parliament, end harassment of dissidents and re-write the 2017 constitution. The country is currently facing an unprecedented dual shock of economic free fall due to the COVID-19 pandemic and political instability following the 9 July resignation of the government’s economic team, including the finance minister. The resignations will most certainly spark a cabinet reshuffle expected to take place in September, when the US$103bln budget bill for FY2020-2021 is expected to be passed by parliament before spending starts on 1 October 2020.
Eurasia: Armenia-Azerbaijan border risks escalation; Moldova likely to face no-confidence vote Sectors: all
Key Risks: political stability; civil unrest; war
On 19 July Armenian Prime Minister Nikol Pashinyan called for a new international ceasefire monitoring mission after Azerbaijan accused Armenian forces of resuming attacks along the countries’ border between their respective Tavush and Tovuz provinces following clashes earlier in the week. The accusations could signal another round of clashes, but the Azeri government may be weary to consider an escalation as military setbacks could foment political instability. On 20 July Moldova’s legislature will decide when a no-confidence vote in the government will be held. The opposition ACUM bloc last week announced it would back a vote of no confidence in the Socialist Party (PSRM)-led government, but the party currently has several members in quarantine after testing positive for COVID-19, which could make passing the vote against the government unlikely if held too early. A political crisis is likely.
Europe: Negotiations continue over EU pandemic fund
Sectors: various
Key Risks: sovereign debt; economic recovery
Negotiations continue over a proposed EU-wide pandemic recovery fund, having begun on 16 July. The proposal involves the creation of the ‘Next Generation EU’ through providing member states EUR440bln grants, EUR60bln guarantees and EUR250bln loans. The immediate impact of the fund will be modest – EUR750bln over three years accounts for only 1.8 per cent of EU GDP – but if its shape will play a significant role in the structure of EU sovereign debt markets going forward. Austria, Denmark, the Netherlands, and Sweden are pushing to scale back grants. Hungary and Poland have threatened to veto a deal if funds are contingent on respecting the rule of law. A potential landing zone is grants of under EUR400bln, with budget rebates for states opposed to them. Failure to agree a fund structure could risk a new EU-debt crisis.
MENA: Kuwait to pass debt amendment law; likelihood of battle for Libya’s Sirte increases
Sectors: oil and gas; all
Key Risks: war on land; civil unrest; humanitarian crises; terrorism
On 26 July Kuwait’s parliament will vote on proposed amendments to a debt law which, if approved, will enable the Gulf nation to issue up to US$85bln debt in maturities longer than 10 years. Kuwait’s 2020 budget deficit is estimated at 11 per cent and the General Reserve Fund usually used for deficit spending is running dry. Nonetheless, with a debt-to-GDP ratio of around 15 per cent, the amount of debt issued in FY2020/2021 will not exceed US$16bln. Economic weakness is not expected. The Libyan Government of National Accord (GNA), supported by Turkey, moved troops eastwards towards the strategic oil terminal of Sirte, held by the Libyan National Army. GNA troop presence is increasing near the line dividing territorial control, about 15 km east. Cairo has threatened to deploy to support the LNA to counter any GNA operations to take Sirte. Escalation is expected.
Sub-Saharan Africa: Mali impasse to protract after opposition rejects ECOWAS proposal
Sectors: all
Key Risks: civil unrest; political instability; terrorism
On 19 July the influential opposition M5-RFP coalition rejected a proposal by the Economic Community of West African States’ (ECOWAS) which laid out a roadmap to end Mali’s political and civil crisis. At least 11 people have been killed so far in July in violent protests against President Ibrahim Boubacar Keita. ECOWAS proposed the formation of a national unity government headed by Keita and ruled out Keita’s removal from office but appeared keen to continue negotiations. M5-RFP said the proposal would only embed Keita’s rule further. Protesters took to the streets of Bamako in June and July calling for Keita’s resignation over his failure to resolve simultaneous political, security and economic crises. A breakdown in talks could result in more unrest. A protracted political impasse will only deepen the restive security environment and hinder international security operations against Islamist militancy.
13 July 2020
Americas: Suriname’s National Assembly to elect the country’s president
Sectors: oil and gas; mining
Key Risks: political instability; policy continuity; legislative gridlock
In Suriname, the National Assembly is set to vote to elect the country’s next president on 13 July, with the incoming administration scheduled to take office on 17 July. The transition of power was meant to take place by mid-August. The decision to speed up the process indicates awareness of the need for the next government to promptly address pressing economic, financial and COVID-19-related issues, as well as to put an end to an electoral process that will end President Desi Bouterse’s decade-long rule. Opposition leader Chan Santokhi is expected to become the country’s next president. Santokhi’s Progressive Reform Party (VHP) secured 20 seats in the 51-seat legislature following the 25 May legislative and municipal elections, meaning that a coalition government will have to face the aforementioned pressing issues amid a heightened risk of political instability and potential legislative gridlocks.
Asia Pacific: Singapore’s ruling party retains Parliamentary supermajority; election rallies suspended in Sri Lanka
Sectors: all
Key Risks: political stability
Singapore’s ruling People’s Action Party (PAP) secured 83 of 93 parliamentary seats in the 10 July general election. While the election result gave the PAP a clear mandate, it showed an overall swing in votes as the opposition won an unprecedented 10 seats. The PAP’s unexpected setback could lead to tighter rules on foreign employment and policy changes to mitigate concerns raised by the opposition parties. Meanwhile, in Sri Lanka the current government cancelled all rallies ahead of the parliamentary election on 5 August after a surge in COVID-19 cases. Elected in November 2019 and without a majority in Parliament, President Gotabaya Rajapaksa dissolved the legislature on 2 March and scheduled a general election for 25 April. However, due to the COVID-19 pandemic, the election has already been rescheduled twice, effectively allowing Gotabaya to govern without parliamentary oversight.
Eurasia: Kazakhstan’s government faces dismissal; protests in eastern Russia; clashes in Nagorno-Karabakh
Sectors: all
Key Risks: political stability; civil unrest; war
Kazakhstan’s President Kassym-Zhomart Tokayev warned his cabinet that they faced being sacked if the situation regarding the resurgence of COVID-19 cases was not improved. Kazakhstan continues to face a surge in confirmed cases despite reintroducing lockdown restrictions in June. In Russia’s eastern Khabarovsk, protests numbering at least 10,000 at the weekend over the arrest of the local governor on potentially politicised charges are unlikely to lead to his release, but could lead to further anti-government protests. Rare industrial unrest was reported on 13 July in neighbouring Amur in a strike over unpaid wages. Meanwhile, a fresh clash in the Tavush/Tovuz regions on the border ofAzerbaijan and Armenia led to the killing of at least four Azerbaijani soldiers and the injury of two Armenian border guards. There is a continued risk of escalation.
Europe: Poland’s Duda re-elected; Bulgaria’s anti-corruption protests; EU-US sanctions standoff may loom
Sectors: all
Key Risks: political stability; corruption; sanctions
Andrzej Duda was re-elected as president of Poland in the 12 July run-off against Rafal Trzakowski, of the main opposition Civic Platform, with 51.2 per cent of votes. Duda’s re-election will see the ruling Law and Justice Party push ahead with its controversial judicial overhaul and ‘Polonisation’, essentially populist economic moves to advantage domestic firms with measures such as lower tax rates for smaller domestic retailers. It will also continue to clash with Brussels, albeit primarily over social and cultural issues. Denmark’s approval of Russian state gas giant Gazprom’s plans to build Nord Stream 2 means an EU-US standoff over Russia sanctions policy later this year is increasingly likely. Meanwhile, Bulgaria’s capital Sofia has witnessed days of protests over alleged connections between the government and oligarchs. These networks are deeply entrenched and have overcome such challenges before.
MENA: Ennahda leader may be ousted from Tunis; security deterioration further expected in Iraq
Sectors: oil & gas; all
Key Risks: war on land; civil unrest; humanitarian crises; terrorism
On 12 July reports indicated that at least five Tunisian political parties plan to launch a vote of no confidence against Ennahda leader and Parliament Speaker Rached Ghannouchi after Ghannouchi accused Prime Minister Elyas Fakhfakh of conflict of interest, calling for his resignation and threatening Ennahda’s defection. The move could see Ennahda defect anyway, which would severely weaken Tunis’ ability to support the populace economically as dissent and unrest rises in Tataouine. In Iraq, on 11 July a US Army convoy carrying logistical and military vehicles from Kuwait to Camp Taji was captured at gunpoint and set alight by militia believed to be Iran-affiliated. Amid escalating protests, a deteriorating economy, rampant COVID-19 and Islamic State attacks, this incident could signal a shift in militia strategy to oust the US from Iraq. Further such attacks and US retaliation may occur.
Sub-Saharan Africa: Mali impasse continues as thousands demonstrate in Bamako
Sectors: all
Key Risks: civil unrest; political instability
At least four people were killed in Mali’s capital Bamako on 10 July as thousands gathered outside the National Assembly to demand President Ibrahim Boubacar Keita’s resignation. On 12 July protesters ransacked an office belonging to Keita’s ruling Rally for Mali. Since June Bamako has been hit by intermittent protests over disputed parliamentary elections in March and April, as well as over the government’s failure to curb widespread insecurity and revive the economy. In response to the protests, Keita dissolved the constitutional court and announced a re-run of parliamentary elections originally held in March and April in several contested constituencies. Regional bloc ECOWAS has called for the formation of a unity government. However, despite Keita’s concessions, the opposition M5-RFP coalition maintains its demand for his resignation. With no compromise in sight, protests will continue and could again turn deadly.
6 July 2020
Americas: Argentina presented improved debt offer to in last move to avoid unruly default
Sectors: all
Key Risks: sovereign default; protracted litigation
In Argentina, the government unveiled an improved debt restructuring offer to its private creditors raising the chances of reaching a deal that would prevent protracted litigation in courts, although the latter still remains a high risk. The new offer came after more than two months of tough negotiations to restructure US$66.2bln of foreign bonds. The latest proposal reduced creditor losses on the bonds’ principal, increased coupons and shortened bond maturities, as demanded by most creditor groups. An undisclosed minimum participation threshold was included. The deadline to accept the offer was extended from 24 July until end-August, although given that the country has already defaulted on its debt creditors could resort to litigation at any time, although most creditors have stated that they would not do so while the talks continue.
Asia Pacific: China sees more global backlash amid growing assertiveness
Sectors: all
Key Risks: economic risk; frustration of process
In Canada, Prime Minister Justin Trudeau announced plans to halt all exports of sensitive military items to Hong Kong (HK) and suspend its extradition treaty with the territory, becoming the first country to do so. The announcement followed China’s imposition of a national security law that has drawn international condemnation for threatening HK’s autonomy. In addition, Trudeau hinted at additional measures, including changes related to immigration policy towards Hong Kongers. Meanwhile, Power Minister R.K. Singh indicated that India would restrict Chinese imports of power equipment and components amid a tense border dispute with Beijing. The changes will require Chinese companies to obtain advance permission for all power gear imports. New Delhi has also banned 59 Chinese mobile applications while restricting Chinese investments in India’s micro, small and medium enterprises.
Eurasia: Kiev risks new crisis; Moscow to adjust spending plan; Baku may look for new ‘fall men’
Sectors: hydrocarbons; banking
Key Risks: recession; political score settling
Ukraine is at risk of yet another major crisis after Central Bank governor Yakov Smolii resigned on 1 July citing political pressure. If a non-independent successor is nominated, the IMF may withdraw support. President Volodymyr Zelensky’s dogged pursuit of predecessor Poroshenko could also lead to a withdrawal of Western support. On 3 July Azerbaijan arrested its foreign ministry’s chiefs of administration and finance. President Ilham Aliyev may be looking to cast the blame of the upcoming economic slowdown on other officials. There is a risk businesses connected to individuals the government uses as ‘fall men’ will be negatively impacted. Russia is also beginning to show signs of economic strain from COVID-19 and the hydrocarbon collapse. It is now widely expected that Putin’s US$420bln national priority spending programme that was due to run between 2018-2024 will be extended to 2030.
Europe: UK no longer likely to pursue China free trade deal; new sanctions regime imminent
Sectors: all
Key Risks: frustration of process; trade frustration; sanctions
The UK is no longer likely to be able to strike a free trade agreement with China for the foreseeable future following last week’s announcement by Prime Minister Boris Johnson that he considered Beijing in violation of the 1997 Sino-British Agreement on Hong Kong. This is made all the more clear by reports that Britain plans to move to expel Huawei from its 5G network development despite Johnson agreeing to retain it earlier this year. Also later on 6 July Foreign Secretary Dominic Raab is due to announce the UK’s first human rights sanctions under its version of the so-called Magnitsky Act, which is expected to target Chinese businesses linked to the internment camps in Xinjiang. Russian, Saudi and other officials will also likely be blacklisted.
MENA: Tunisia’s government looks increasingly fragile; Lebanon’s government asserts stability
Sectors: oil & gas; all
Key Risks: war on land; civil unrest; humanitarian crises; terrorism
Ennahdha, Tunisia’s largest political party, said that it would review its position in supporting the country’s fragile coalition government over an alleged conflict of interest involving Prime Minister Elyes Fakhfakh. Reports indicate that it could withdraw some of its seven ministers from the government. This came as a general strike began in the oil and gas rich province of Tataouine on 4 July, increasing pressure on the Fakhfakh government to hold to a previous 2017 promise of job creation in the oil and gas sector. Both moves could destabilise the government, which was only confirmed in February 2020. The Lebanese government also refuted reports of instability Prime Minister Hassan Diab’s cabinet after rumours emerged that some parties had discussed the possibility of a unity government with former prime minister Sa’ad al-Hariri amid an accelerating economic crisis, which could fuel violent unrest.
Sub-Saharan Africa: Cameroon government, rebel leaders meet for ceasefire talks
Sectors: all
Key Risks: internal conflict; terrorism; civil unrest; political instability
On 2 July representatives of Cameroon’s government and nine leaders of the self-proclaimed interim government of Ambazonia, which calls for an independent state composed of the country’s English-speaking Northwest and Southwest regions, met for the first time since violent conflict erupted in 2017 to discuss the possibility of a ceasefire. All nine leaders currently serve prison sentences on terrorism charges. Swiss-mediated talks between the government and a group of exiled, less influential separatist leaders in July 2019 did not produce any results. A national dialogue in October was dismissed as a farce as the main rebel leaders were barred from participating or boycotted the talks. The 2 July meeting marked a departure from President Paul Biya’s refusal to negotiate with the key rebel leaders and could pave the way for a cessation of hostilities, though any truce will be unstable.
29 June 2020
Americas: Dominican Republic to head to the polls amid COVID-19
Sectors:all
Key Risks: political stability; election-related unrest
In the Dominican Republic, general elections are expected to take place on 5 July amid the COVID-19 pandemic. The vote, originally scheduled for 17 May, was postponed due to the spread of the virus. According to the latest available poll, opposition Modern Revolutionary Party’s (PRM) presidential candidate Luis Abinader continued to lead the race with 53.7 per cent, significantly ahead of ruling Dominican Liberation Party (PLD) candidate Gonzalo Castillo, who was polling at 35.5 per cent. Although centre-left Abinader seems likely to win outright, a second-round that would take place on 26 July cannot be ruled out. Protests against the government and electoral authorities have recently been reported at Plaza de la Bandera to demand transparency in the upcoming vote. Heightened security force presence should be expected nationwide. Unrest could erupt should irregularities be observed.
Asia Pacific: Anxin county in Hebei under strict lockdown; protests continue in Hong Kong
Sectors: all
Key Risks: economic risks; political stability
On 29 June health officials in China announced a strict lockdown in Anxin county in Hebei province, about 150 km south of Beijing, to contain the COVID-19 outbreak in the capital and surrounding Hebei province. Anxin officials claimed the stricter measures were adopted out of precaution, not because the outbreak was severe. The lockdown will likely loosen if no COVID-19 cases are reported in the coming weeks. Meanwhile, more than 53 demonstrators were arrested and charged with unlawful assembly in Hong Kong after scuffles broke out during a demonstration against the planned imposition of the national security law by the central government. Authorities in Beijing are currently reviewing the law’s draft, which is likely to be passed by parliament prior to 1 July. Some protesters are likely to gather and protest against the central government despite the ban to do so.
Eurasia: Russia’s Norilsk Nickel faces further environment questions; Kyrgyzstan media ban
Sectors: all
Key Risks: reputational risks; political instability; civil unrest
On 28 June Russian metals giant Norilsk Nickel admitted that employees of the Talknakh enrichment plant near Norilsk accidentally pumped out wastewater from one of its reservoirs into the Arctic tundra, following a report by investigative journalists. The incident came recently after an oil spill from a Norilsk Nickel subsidiary. Investor confidence could be affected by Norilsk Nickel’s continued negligence, which could also lead to a rift between Norilsk’s controlling shareholder, influential oligarch Vladimir Potanin, and the Kremlin. From 29 July Kyrgyzstan’s President Sooronbai Jeenbekov is set to sign a controversial law which will allow websites to be blocked without a court order amongst other powers. The law could force websites deemed to contain inaccurate or false information to hand over data or risk being shut down. Jeenbekov will likely continue to increase his influence and control of the political system.
Europe: Polish election heads to runoff; stability expected in Ireland following new coalition
Sectors: all
Key Risks: political stability
Incumbent Andrzej Duda will face Warsaw mayor Rafał Trzakowski in Poland’spresidential runoff on 12 July. Duda won 43.7 per cent of votes to Trzakowski’s 30.3 per cent. The election is likely to be extremely close with third-place candidate Rafal Holowina’s 14.9 per cent of votes but the 6.75 per cent of voters who backed right-wing Krysztof Bosak’s candidacy likely to back Duda. Ireland welcomed a new government on 27 June led by the centre-right Fianna Fail in coalition with traditional rival Fine Gael and Greens. The coalition sees the first-ever Irish agreement to share the taoiseach post, or premiership, with Micheal Martin of Fianna Fail holding it for the two years before Leo Varadkar, Fine Gael’s leader. Policy continuity is broadly expected given Varadkar’s outgoing Varadkar minority government was reliant on Fianna Fail’s support.
MENA: Battle for Sirte appears imminent; West Bank annexation can start from 1 July
Sectors: oil & gas; all
Key Risks: war on land; civil unrest; humanitarian crises; terrorism
The Libyan National Army (LNA) are rallying allied forces from eastern Libya to fight an impending battle defending control of the strategic city of Sirte. Military reinforcements are being drawn from Benghazi and reportedly include Sudanese and Chadian militia and Russian mercenaries. The LNA took Sirte from the Government of National Accord (GNA) in January, but since April have lost ground to the GNA which is backed by Turkey. Egypt has threatened to deploy its army should the GNA attack Sirte. Separately Israel is in final discussions on how to begin annexation plans over Jewish settlements in the Palestinian West Bank from 1 July. Protests have erupted in Palestinian territories and Israel alike. As security concerns escalate dramatically, Tel Aviv may have to dilute, delay or amend plans. Despite this and international condemnation, annexation of some territory is likely imminent.
Sub-Saharan Africa: In historic first, Lazarus Chakwera wins Malawi election rerun
Sectors: all
Key Risks: political instability
In a historic victory, the Malawi Electoral Commission declared Lazarus Chakwera of the opposition Malawi Congress Party winner of the 23 June presidential election rerun, defeating incumbent Peter Mutharika with nearly 59 per cent of the vote. Chakwera was sworn in hours after the results were released. The constitutional court had nullified the original election held in May 2019, won by Mutharika with a narrow plurality of votes, citing widespread irregularities. Mutharika attempted to frustrate the rerun several times. Chakwera’s victory marks the first time an opposition candidate won a presidential election in sub-Saharan Africa following a court-ordered rerun. Though a baseline risk of protests by Mutharika’s supporters remains, the judiciary’s show of strength and Chakwera’s win signal a maturing democracy with increasingly entrenched norms and institutions.
22 June 2020
Americas: Chile facing tightened lockdown, Codelco suspends projects over COVID-19
Sectors: all
Key Risks: business interruption; economic risks
In Chile, lockdowns and associated enforcement measures to try to contain the spread of COVID-19 are expected to continue to heighten. Although the government was initially reluctant to impose a mandatory national quarantine, full lockdowns have recently been put in place in several locations including Santiago, with restrictions on movement reportedly affecting around half of the country’s population and likely to continue to expand. On 20 June state-run miner Codelco announced plans to suspend construction projects in the northern regions following the second COVID-19-related death amongst its workers. The firm stated that efforts would be made to maintain production at its flagship Chuquicamata facility, although disruption cannot be ruled out. Unionised workers have continued to demand the firm improve its health protocols against the virus, threatening to take “further measures” which could include strikes.
Asia Pacific: Details of planned national security law unveiled, undermine Hong Kong’s autonomy
Sectors: all
Key Risks: political stability
On 20 June China’s National People’s Congress revealed details of the national security law that will allow Beijing to markedly expand its power and tighten its control over Hong Kong. According to the national security law, a national security commission is to be established in the city to analyse the security situation and to support the local government. Chinese agents will also be stationed in the city to deal with relevant cases directly. Moreover, Hong Kong’s Chief Executive will be granted the power to appoint judges to hear trials, sparking fears over the city’s judiciary independence and impartiality. China’s top legislature is expected to impose the new law when it congregates again on 28 June. Beijing’s determination to press ahead with the law will likely trigger an upsurge of civil unrest and associated disruption.
Eurasia: Baku and Nursultan reinstate lockdowns; Minsk sees protests
Sectors: all
Key Risks: trade disruption; political instability
Azerbaijan and Kazakhstan reinstated COVID-19-related lockdown measures in major cities over the weekend with measures likely to remain in place until August. Both countries have experienced a surge in confirmed cases since lifting lockdown measures at the end of May. Travel disruption is expected in both countries with travel restrictions reimplemented and shopping malls and restaurant access banned across large cities. Nur-Sultan’s and Baku’s reintroduction of lockdown measures could be emulated throughout Central Asia and the South Caucasus as governments hope to prevent a second wave of COVID-19 infections from damaging recovery. Meanwhile, in Belarus at least 2,000 protested in Minsk against the recent arrest of opposition candidates attempting to contest the 9 August presidential election. At least 270 were arrested on 20 June. There is a growing risk of a security service crackdown in the coming weeks.
Europe: Trump to boost Polish president before 28 June vote; Italy considers Autostrade license
Sectors: transport infrastructure; defence
Key Risks: various
The Italian government has until 30 June to decide whether it will revoke significant toll and road concessions held by Autostrade d’Italia over the 2018 collapse of Genoa’s Monaldi bridge. The coalition of the populist Five Star Movement (M5S) and centre-left Democrats has toned down such threats compared to Prime Minister Giussepi Conte’s previous coalition between M5S and the far-right League, but passed a law to limit recompense to Autostrade. Autostrade has indicated it would challenge any such move at EU-level. Meanwhile, Poland’s president Andrzej Duda is due to visit Washington DC to meet with US President Donald Trump on 24 June. A shift of US forces from Germany to Poland will likely be announced at the meeting. Duda, a close ally of the right-wing Law and Justice government, is up for re-election on 28 June and is expected to win.
MENA: Socotra dragged into Yemen’s war; Egyptian military could enter Libya
Sectors: oil & gas; all
Key Risks: war on land; civil unrest; humanitarian crises; terrorism
The Arabian Sea island of Socotra could be the next flashpoint in Yemen’s war after the separatist Southern Transitional Council (STC) seized control of capital Hadibu on 21 June after days of fighting. The move compounds the STC’s declaration of self-rule on 26 April over southern Aden and surrounding provinces. Socotra’s seizure further hinders Saudi Arabia’s aims to prevent a second front opening in Yemen’s five-year war and threatens to disrupt security on shipping lanes through Bab al-Mandab Straits. Meanwhile, Egyptian President Abd al-Fatah al-Sisi threatened a cross-border military operation in Libya in support of the Libyan National Army. This could bring it into conflict with Turkey, who supports the Government of National Accord. Turkey’s recent action against France in the Mediterranean indicates Ankara’s appetite to engage with other international powers and threatens to break up NATO.
Sub-Saharan Africa: West African bloc proposes reopening of borders by end-July
Sectors: all
Key Risks: travel restrictions; economic risks; CIET
The Ministerial Coordinating Committee on Transport of the Economic Community of West African States (ECOWAS) recommended the bloc’s 15 member states reopen their borders for international travellers by end-July. According to the proposal, which still requires final approval from national governments, intra-regional travel would resume by 15 July while nationals of non-ECOWAS countries with low COVID-19 transmission rates would be allowed in from 31 July. The plan comes as an increasing number of West African countries begin to lift restrictions on domestic travel. The number of COVID-19 infections in the region is relatively low, though restrictions could be reimposed at short notice if cases were to surge. The resumption of international flights could bring much-needed hard currency income for countries with significant tourism industries – notably Senegal and The Gambia – though tourism is likely to recover only slowly.
13 June 2020
Americas: Controversial proposal to merge Mexico’s regulators postponed amid backlash
Sectors: all
Key Risks: regulatory changes; contract frustration
In Mexico, Ricardo Monreal, the Senate leader of the ruling leftist Morena party, decided to delay a controversial proposal to merge three regulatory bodies – an initiative that was publicly backed by President Andres Manuel Lopez Obrador – following strong opposition backlash. Monreal had presented a plan to merge energy regulator CRE, antitrust watchdog Federal Economic Competition Commission (COFECE) and telecoms regulator IFT, citing the need to reduce public spending. The opposition raised concerns over a potential power grab. Despite the postponement, such concerns will persist and the proposal could be revived at short notice. Attempts to modify oversight bodies and regulatory frameworks in key sectors, including oil and electricity, will remain a risk throughout AMLO’s presidency.
Asia Pacific: Beijing under partial lockdown; Thailand eases COVID-19 restrictions
Sectors: all
Key Risks: economic; business
In China, the government began to re-introduce lockdowns in neighbourhoods across Beijing as COVID-19 cases spiked. The outbreak had been largely brought under control until a fresh wave was detected in the capital last week, with more than 100 cases in the city directly linked to a wholesale food market. The recent outbreak has fueled concerns of a second wave of infections as surrounding provinces have also reported suspected cases connected to those in Beijing. Further lockdowns may be instituted at short notice. Meanwhile, Thailand has lifted nationwide curfews and has eased COVID-19 related restrictions. The government is also planning to reopen to foreign visitors by establishing travel bubbles with countries that have effectively contained the virus. Further lifting of restrictions is expected.
Eurasia: Armenia faces period of heightened political instability
Sectors: all
Key Risks: political instability
On 12 June Armenia said it would seek alternative suppliers for a Soviet-era power plant currently supplied by Russia’s state-owned Rosatom. Yerevan has sought a more multi-vectored foreign policy since Nikol Pashinyan ousted the corrupt Republican Party government, closely linked to Moscow, in 2018 and won the subsequent elections. However, Moscow retains significant leverage and is protective of its foreign nuclear assets and may seek to destabilise Pashinyan’s government. In the past week Pashinyan also began investigating opposition Prosperous Armenia party leader Gagik Tsaruyan, an influential oligarch who Moscow has worked with repeatedly. Numerous security service officials were also sacked – the former Republican elite was broadly formed from the security services. These challenges are being exacerbated by the spread of COVID-19 across the country; Pashinyan himself has tested positive. There is a growing risk of political instability.
Europe: Six months to reach post-Brexit trade deal; lockdowns ending on continent
Sectors: all
Key Risks: trade disruption
On 12 June the UK ‘formally announced’ it was rejecting any possible extension to the post-Brexit transition agreements in which it essentially remains under allEU rules beyond the end of the year, which Brussels said it accepted. While there remains a risk this could be reversed, this is highly unlikely and there is a serious risk that Britain will not be able to secure a new trade arrangement before year’s end, which could cause significant trade disruption even as the economy is expected to be recovering from COVID-19. France is returning to near-normal following the 15 June lifting of all domestic restrictions, and other EU member states continue to make efforts to resume travel and tourism. There is a risk new controls will be imposed at short notice if COVID-19 spreads again.
MENA: Central bank to support Lebanese lira; US-Iraq strategic dialogue continues
Sectors: all
Key Risks: political instability; civil unrest; humanitarian crisis; terrorism
Lebanon’s central bank is expected to inject an unspecified amount into the economy to halt the slide of the lira, which is continuously hitting record lows. The lira has fallen to LBP7,000 to the US dollar on the black market in recent days. Money changers are banned from selling lira at less than LBP3,940 to the dollar. However, recent government initiatives to prevent the slide have not worked and resulted in ever increasing protests. Calls are mounting for new Prime Minister Hassan Diab to resign. Iraq entered its second week of ‘strategic dialogue’ with the US to calibrate bilateral ties and examine the prospect of withdrawing US troops. The talks come as rocket attacks towards US military assets increase, protests escalate and Baghdad runs out of oil revenues. Calls are increasing for new Prime Minister Mustafa al-Kadhimi to resign.
Sub-Saharan Africa: Burundi Constitutional Court rules president-elect Ndayishimiye be sworn in immediately
Sectors: all
Key Risks: political instability
On 13 June Burundi’s Constitutional Court ruled that president-elect Evariste Ndayishimiye take office as soon as possible following former president Pierre Nkurunziza’s death on 8 June. The government turned to the court after Nkurunziza’s unexpected demise threatened to create a power vacuum. Ndayishimiye, of Nkurunziza’s CNDD-FDD, won the disputed 20 May presidential election with 69 per cent but was not expected to be sworn in until August. Although the constitution stipulates that the National Assembly leader be installed as interim president in the event of the president’s death in office, the CNDD-FDD’s cadres appeared split between supporters of Ndayishimiye and National Assembly leader Pascal Nyabenda, who was Nkurunziza’s first choice as successor. The court’s decision to break with constitutional procedure may avert a power struggle in the short-term. However, tensions within the CNDD-FDD could weaken Ndayishimiye’s government.
8 June 2020
Americas: Guyana completes 2 March general election vote recount, opposition set to win
Sectors:oil and gas; mining
Key Risks: political instability; policy continuity; civil unrest
In Guyana, after 33 days the Guyana Elections Commission (GECOM) completed the recount of the votes cast in the 2 March general elections, with unofficial results granting the opposition PPP the presidency and 33 seats in 65-seat Parliament, while the ruling APNU+AFC alliance reportedly secured 31 seats. The GECOM is expected to announce the final result once the final tabulation of all ballots has been completed over the coming days. Although President David Granger had stated he would accept the recount’s results, the ruling APNU+AFC – which had claimed victory shortly after the controversial election – has now denounced irregularities. Political instability and policy continuity risks will remain on the rise. The risk of unrest will increase should final results not be respected and the transition of power be obstructed.
Asia Pacific: Wellington lifts COVID-19-related restrictions; Vietnam rectifies EVFTA
Sectors: all
Key Risks: economic risks; COVID19
Prime Minister Jacinda Ardern stated that all remaining COVID-19-related restrictions on people and businesses would be removed on 9 June, after reporting zero COVID-19 cases. New Zealand enforced one of the strictest lockdowns in the world by only allowing essential services to operate. Strict border controls remain in place. However, Wellington is in discussions with a number of countries to create travel bubbles that would enable travel and trade to resume. Meanwhile, Vietnam announced the ratification of its free trade agreement with the EU that will eliminate 99 per cent of tariffs on goods between the bloc and Vietnam. The EU Vietnam Free Trade Agreement (EVFTA) will certainly boost Hanoi’s GDP and exports as it opens up a number of Vietnamese services while aligning some standards to protect EU food and drinks.
Eurasia: Moscow eases restrictions; Belarus may launch crackdown; Uzbek outlook downgraded
Sectors: all
Key Risks: COVID-19; economic; civil unrest
On 8 June, Russian Prime Minister Mikhail Mishustin announced the first steps to ease border restrictions implemented as part of national COVID-19 lockdown measures. Citizens will be able to leave for work, study or see relatives. The move came on the same day that the federal transport agency announced plans to restart international flights in July. In Belarus, hundreds of activists are gathering registration signatures for opposition candidates ahead of the August presidential elections. Large crowds risk a forceful police dispersal as small challenges to long-time President Alexander Lukashenko rule emerge. On 5 June S&P announced the downgrade of Uzbekistan’s credit outlook from stable to negative due to the COVID-19-hit economy. Tashkent retained its BB- rating. Recovery will likely take at least a year, though declining trade with China could extend this.
Europe: Kosovo’s new government unstable, faces daunting task of seeking Serbia deal
Sectors: all
Key Risks: political instability; civil unrest; terrorism; war
In Kosovo, Avdullah Hoti formed a new government on 3 June which is likely to prove highly unstable as its majority relies on the baking of MPs from the Belgrade-backed Srpska Lista. Although Serbia does not formally recognise Kosovo’s independence, the US is pushing talks for a peace agreement between the pair to be struck before the US’s November election, something presidents in both countries have indicated support for despite their traditional animosity. Hoti, however, has opponents even within his own Demoratic League (LDK). His government is bitterly opposed by predecessor Albin Kurti – who is far more popular – and his Vetevendosje party. Vetevendosje could seek to re-launch demonstrations and engage in symbolic violence, for which it has a long track record, even if no Serbia-Kosovo deal is tabled. It is all but guaranteed to do so in the event of a deal.
MENA: Protests in Lebanon restart in earnest; Israel’s 1 July annexation plans raise tension
Sectors: all
Key Risks: political instability; civil unrest; humanitarian crisis; terrorism
In Lebanon, protests restarted in earnest on 6 June with a descent into violence in some restive areas of Beirut during the evening. This may portend further instability as the country’s economic position deteriorates. Anti-government unrest which started in October 2019 was disrupted by COVID-19 lockdowns but is being significantly inflamed by COVID-19 overlaid on the economic crises. Over 40 per cent of the country has been pushed into poverty and over 35 per cent are unemployed. While most will attempt to keep the protests peaceful there is the possibility of further violence, arson and vandalism. Protests also erupted in Tel Aviv on 6 June against Israeli Prime Minister Benjamin Netanyahu’s plans for annexation of Palestinian territory in the West Bank due to begin on 1 July. Unrest could escalate in advance of the deadline. Already inflamed tensions will rise.
Sub-Saharan Africa: French forces kill AQIM leader; thousands call for Keita’s resignation in Mali
Sectors: all
Key Risks: terrorism; internal conflict; political stability; civil unrest
France announced that its forces had killed al-Qaeda in the Islamic Maghreb (AQIM) leader Abdelmalek Droukdel in an operation in Mali on 3 June. Droukdel also occupied a senior position within JNIM, an organisation subsuming several al-Qaeda-linked groups in the Sahel. While Droukdel’s elimination and the capture of Islamic State in the Greater Sahara commander Mohamed Mrabat dealt a blow to insurgents in the region, the risk of attacks will persist given the extremists’ proven ability to adapt to external challenges. Meanwhile, at least 20 ethnic Fulani were killed by suspected government troops in central Mali on 5 June. In the capital Bamako, thousands protested to demand President Ibrahim Boubacar Keita’s resignation over insecurity and over the government’s mishandling of COVID-19. Abuses against minorities and the impact of COVID-19 will continue to fuel anti-government sentiment.
2 June 2020
Americas: Suriname faces heightened political instability after crucial election
Sectors: oil and gas; mining
Key Risks: political instability; policy continuity; legislative gridlock; unrest
In Suriname, political instability is set to heighten as pressure mounts for electoral authorities to announce the final results of the 25 May elections. As of 31 May, with 99.5 per cent of the ballots counted, Chan Santokhi’s opposition Progressive Reform Party (VHP) had secured 20 seats in the 51-seat legislature, while President Desi Bouterse’s National Democratic Party (NDP) appeared to have lost its majority after securing just 16 seats. Santokhi has urged Bouterse to concede defeat and allow a transition, highly likely to lead to a coalition government. Bouterse is deeply interested in securing a third five-year term: he was convicted of murder in 2019 over the killing of 15 opposition figures in 1982 and would lose his immunity after leaving office. The risk of unrest will likely increase should a vote recount be ordered once final results are announced.
Asia Pacific: Fighting continues in Myanmar’s Rakhine state; Thailand unveils stimulus package
Sectors: all
Key Risks: political instability; fiscal stability; recession
In Myanmar, four police officers were killed in the latest clash between the police and the Arakan Army (AA). Since May 2018 the Myanmarese government has been locked in an increasingly brutal conflict with the AA, an insurgent group fighting for more autonomy for ethnic Rakhine Buddhists. The gun battle lasted for more than three hours before the outnumbered police officers abandoned the area. Further similar clashes are highly likely. On 31 May Thailand’s parliament passed a record stimulus package of US$60bln to revive its battered economy. The stimulus will aid farmers and informal workers such as street vendors, as well as include funds to stabilise the market. Opposition members largely abstained from voting, a gesture of criticising the lack of transparency in how the money will be allocated. Near-term threats to social stability remain moderate.
Eurasia: Armenian premier ill; Russia looks to ease lockdown
Sectors: all
Key Risks: COVID-19; economic lockdowns
Armenian Prime Minister Nikol Pashinyan announced on 1 June that he had tested positive for COVID-19 although he was not showing any symptoms. Pashinyan almost single-handedly led the 2018 revolution that ousted the country’s formerly dominant and highly corrupt Republican party, but has not yet managed to build up independent institutions or a larger prominent political class of reformists, despite hifalutin talk of doing so. Were he to be incapacitated, a political crisis could erupt. Moscow, which has seen some two-thirds of Russian COVID-19 cases thus far, moved to ease its lockdown on 1 June. However, there are concerns over the disease’s continued rapid spread in the area and in other parts of the country, exacerbated by claims that the Kremlin is suppressing the true figures. There are growing concerns about the veracity of figures being reported out of Central Asia as well.
Europe: Albania’s crisis may be coming to end; Brussels grapples with joint debt and Brexit
Sectors: all
Key Risks: recession; fiscal stability; political crisis
On 28 May the European Commission announced it had made progress in talks with Albania’s opposition aimed at ending the nearly two-year political crisis in the country. In January the opposition and the government agreed to seek electoral reform before next year’s parliamentary election. However, given the renewed protests in the week prior there remains an elevated risk the process will collapse. The EU is finally pushing ahead with plans for additional mutual debt as part of a EUR750bln COVID-19 recovery programme that also includes grants to poorer member states, particularly those in the south of the bloc. Talks between the EU and UK over a post-Brexit relationship are also ongoing with the terms requiring any extension of the transition be agreed before the end of June, although British Prime Minister Boris Johnson has so far refused to accept any such delay despite COVID-19.
MENA: US-Iraq ‘strategic dialogue’ to begin; UN seeks US$2.4bln to prevent Yemen catastrophe
Sectors: oil & gas; all
Key Risks: political instability; civil unrest; humanitarian crisis; terrorism
A ‘strategic dialogue’ is due to begin in June to recalibrate Iraqi – US relations in ‘all areas’. The dialogue comes over 11 years since the last strategic framework. New Prime Minister Mustafa al-Kadhimi faces an extreme situation; cratering oil prices and government revenues, an escalating COVID-19 pandemic and Islamic State (IS) resurgence overlaid on chronic pre-existing political stagnation and a dire humanitarian situation prompting long-term unrest. Short of a complete constitutional overhaul, implementing functional reforms will be difficult. Neither Washington nor Baghdad are likely to prioritise the Iraqi populace above short-term ambitions. On 2 June the UN alongside Saudi Arabia will attempt to raise US$2.4bln for Yemen, one of the world’s biggest aid operations overlaid with rampant COVID-19 as UN aid agencies in Yemen go broke. Officials warned that without significant funding
Sub-Saharan Africa: Tanzania court bans opposition MP from making public comments ahead of October elections
Sectors: all
Key Risks: political stability; civil unrest
A Tanzanian court found Member of Parliament Zitto Kabwe, leader of the opposition ACT-Wazalendo party, guilty on three charges of sedition and banned him from making public comments for one year. Zitto was previously charged with incitement in 2018 for alleging that 100 people had been killed in clashes between farmers and herders in his Kigoma home region, a claim the government has denied. The ruling came ahead of presidential and legislative elections due to take place in October. Rights groups and the opposition have accused President Magufuli of curtailing democratic and civic space. The government’s crackdown on dissent is likely to intensify in the coming months to ensure victory for Magufuli and the ruling Chama Cha Mapinduzi party. Sporadic protests are expected, though the risk of violent unrest in mainland Tanzania remains relatively low