Americas: crucial week for government-FARC final peace deal
In Colombia, the coming week will be crucial in securing a final peace agreement between the government and the FARC. On 26 September both parties plan to formally sign the final deal in Cartagena in a ceremony that is expected to pass peacefully, although rallies by those opposing the deal cannot be ruled out. On 2 October Colombians will either approve or reject the deal in a national referendum. Recent polls indicate the ‘yes’ vote will almost certainly win, although a low turnout or a tight win could add weight to the deal’s implementation challenges that Colombia will face once the agreement is approved. The FARC have already unanimously ratified the deal, and an absence of significant violence in the coming months will be crucial for it to be successful.
Asia-Pacific: new CDS tools to shake up China’s credit markets
Defaults are set to become more common in China’s corporate-bond market over the coming months following regulators’ introduction of trading in credit-default swaps (CDSs). The new CDS tools improve investors’ ability to hedge against default risks. Beijing had for years prevented bond-market defaults in order to avoid financial instability, but since 2014 it has gradually started allowing bankruptcies. This trend will now likely accelerate, as the CDS tools will limit the systemic risks stemming from defaults. However, local governments’ resistance to defaults could see many ‘zombie’ firms in overcapacity-plagued industries survive. Furthermore, concerns over price distortions and illiquidity will dampen foreign sentiment towards the new tools. Poor uptake would set back wider government plans to increase market forces’ role in the country’s credit markets.
Eurasia: Azerbaijani referendum to further tighten Aliyev family rule
A 26 September referendum in Azerbaijan, which is all but guaranteed to pass, will further enshrine President Ilham Aliyev’s power. The measures include a strengthening of the vice-presidency – a post which various Aliyev family members have been linked, extending presidential terms, lowering the age limit for the presidency, and allowing the president to dissolve the legislature at any time. The referendum has prompted rare isolated protests but arrests of various organisers and the security forces’ tight control mean major unrest is unlikely. Aliyev has been in power since succeeding his father, Heydar Aliyev, in 2003. Heydar served as president from 1993 until 2003, having previously been a leading Politburo member and regional KGB head in the Soviet Union. The referendum sets the stage for the family to further cement its power but the large youth population and endemic corruption will remain risks over the long term.
Europe: tensions in Western Balkans high following referendum
Over 99 per cent of voters in Bosnia-Herzegovina’s majority Serb confederal region, Republika Srpska, voted in favour of declaring 9 January a Serbian national holiday. The vote was extremely controversial as not only had Bosnia’s Constitutional Court ruled the holiday illegal – it marks the declaration of independence by Serb authorities in Bosnia at the start of the Bosnian Civil War – but also had ordered Republika Srpska President Milorad Dodik to halt the referendum. While some politicians have sought to hedge the impact of the referendum, stating minorities’ rights would be protected, the vote has raised the risk additional tensions could erode the stability of the Dayton Accord that ended the Civil War. The vote also riled tensions in Serbia and Croatia, which were both parties to the conflict and have had increasingly poor relations over the past year. Nevertheless, despite fierce rhetoric by a number of politicians in all three countries, major conflict remains unlikely.
MENA: senior Huthi leader proposes terms as civil war deepens further
The head of the Supreme Political Council (SPC), Salih al-Samad, proposed an amnesty and possible ceasefire. Al-Samaad offered to end the Huthi offensive on the border with Saudi Arabia in return for the end of its neighbour’s aerial campaign and the lifting of the almost total naval blockade. The SPC is a 10-member political committee consisting of members of the Huthi movement and of the General People’s Congress, the political party allied to former president Ali Abdullah Salih, and now the opposition’s highest political authority. The proposal could form the basis of a tentative third round of peace negotiations, depending on the Saudi response in the coming days. Stalemates on key front lines may encourage both sides to return to negotiations soon, although a negotiated settlement will remain distant.
Sub-Saharan Africa: Niger Delta Avengers break ceasefire with attack on Shell pipeline
The Niger Delta Avengers (NDA) claimed an attack on the Shell-operated Bonny crude export pipeline in the Nigeria’s Niger Delta, the first attack following the cessation of hostilities announced at the end of August in which the militant group expressed interest in negotiating with the Nigerian government. The NDA conducted almost 30 attacks on oil and gas pipelines before the ceasefire, with oil production falling to 20 year lows. The NDA cited the lack of progress of government talks and use of troops to hunt militias as motivations for the attack. Further attacks are expected in the coming weeks absent any progression in discussions between the Nigerian government and NDA, however the NDA have claimed that they still support negotiation.