Americas: Unrest likely as former president Lula testifies in Petrobras corruption probe
Key Risks: civil unrest; political instability; corruption fallout
In Brazil, former president Luiz Inacio Lula da Silva is scheduled to be questioned on 10 May in the first of five trials linked to the Petrobras corruption probe which could threaten his 2018 presidential bid. On 5 May a former Petrobras executive also testifying in the trial stated that Lula not only have prior knowledge of the massive political kickback scheme, allegations that Lula’s defence team continues to deny, but that he had ‘command’ over such operations. Pro- and anti-Lula demonstrations are expected to take place in the southern city of Curitiba, with potential for violence clashes between rival activists in the lead up to and following Lula’s questioning by federal judge Sergio Moro. An increased security force presence is expected. The case will continue to fuel unrest at least over the coming months.
Asia-Pacific: Nepal local elections to make or break the country’s democracy
Key Risks: political instability
On 14 May local level elections will be held across Nepal, with over 49,000 candidates competing for positions such as mayor and principality chief. The elections are of notable significance as they are the first to be held in 19 years. The local elections are a key test of the country’s readiness to hold parliamentary elections, to be called by 18 January 2018. Yet the elections could see Nepal’s weak democracy collapse. The governing coalition split apart last week when the two leading parties attempted to impeach the chief justice after she rejected their nominee for police chief. While the Supreme Court suspended the impeachment, parliament has been postponed to prevent fighting among the branches of government. With the government in such disarray, successful and fair local elections would be a major achievement.
Eurasia: Kosovar and Macedonian governments face major crises
Key Risks: political instability, sectarian unrest
Kosovo’s Prime Minister Isa Mustafa submitted a border demarcation agreement with Montenegro to parliament on 8 April, three days after opposition parties garnered enough support to call a no-confidence vote on 10 May. The ultra-nationalist Vetevendosje party disrupted a previous hearing of the bill by setting off tear gas within and organising riots outside the chamber. Other opposition parties have already joined the Vetevendosje party in announcing rallies against the bill. 80 of 120 MPs must back the agreement for it to pass. Neighbouring Macedonia has already been rocked by unrest as the two-month-long constitutional crisis rolls on. President Gjorge Ivanov has until 14 May to respond to the Social Democrats (SDSM) and two ethnic Albanian parties’ efforts to form a coalition. If he continues to refuse, ongoing street protests by both sides could escalate and prompt further violent incidents.
Europe: Macron’s victory and improved second round results
Key Risks: political stability
Emmanuel Macron easily defeated the far-right Front National’s Marine Le Pen with 66 per cent of votes cast, nearly 6 percentage points above his polling average in France’s 7 May presidential runoff. Le Pen won 10.6 million votes, only 3 million more than in the first-round, demonstrating her party’s difficulties in expanding its base. Her second-round result likely includes the 2 million who voted for ultra-Gaullist candidate Nicolas Dupont-Aignan and another far-right candidate, Francois Asselineau, in the first-round. Polls indicate Macron’s En Marche movement could win a majority in the 11-18 June parliamentary elections, although he may be forced to seek a coalition. As of now, this coalition would most likely have to be with the Republican party given the new-far left movement led by defeated presidential contender Jean Luc Melenchon appears to have taken away much of the Socialist Party’s support..
MENA: FLN dominated-cabinet likely after parliamentary elections
Sectors: economy; banking; finance; domestic businesses
Key Risks: currency fluctuations; import bans; political stability
In the 4 May Algerian parliamentary elections, the country’s lack of confidence in the People’s National Assembly and the ruling National Liberation Front (FLN) party became ever-clearer after the FLN seat share fell to 164 from over 200 five years’ earlier. Pro-FLN parties either maintained or increased their seat share, with the National Rally for Democracy (RND) gaining 29 seats and the MSP party maintaining its 33 seats. This secures the existing governing coalition in the 462-seat assembly, despite a turnout rate of 38.25 per cent. A new cabinet is likely to be announced in the next week, and it is unclear whether serving prime minister Abd al-Malik Sellal will remain in post. The pro-Bouteflika political status quo will remain unchanged even as the president’s health continues to deteriorate.
Sub-Saharan Africa: Revealing the depths of Mozambique’s fishy business
Sectors: SOEs; banking; oil and gas
Key Risks: corruption; debt restructuring; investor uncertainty; political violence
Results of the thrice delayed IMF-requested audit of three state-owned enterprises, ProIndicus, MAM and EMATUM, are due on 12 May. The audit comes after Mozambique revealed US$1.4bln in previously undisclosed debt, resulting in the IMF, World Bank and key donors suspending assistance. It is likely to document corruption and unconstitutionality in the loan procurement process, alongside widespread failures by organisers Credit Suisse and VTB Capital. Meanwhile, earlier in May, Mozambique’s parliament retroactively voted to approve the borrowing programme, signalling it is willing to honour the debt rather than risk the potential political fallout. Nevertheless, the government has spoken about honouring loans in the “public interest”, indicating it could only partially honour the debt. While the audit forms one criteria for the IMF resuming assistance, the other – debt restructuring – will be difficult and contentious, already evidenced by the impasse between Mozambique and its creditors.