Americas: Trump to move ahead with renegotiation or withdrawal from NAFTA
Sectors: all
Key Risks: increased protectionism; economic uncertainty; reduced FDI
US President Donald Trump is expected to meet with Canadian Prime Minister Justin Trudeau and Mexican President Enrique Pena Nieto to begin renegotiating the North American Free Trade Agreement (NAFTA) over the coming weeks. Trump’s meeting with Pena Nieto has already been scheduled for 31 January while no date has yet been announced for the meeting with Trudeau. NAFTA renegotiation will require support from both Mexico and Canada. Should they refuse to accept a renegotiated deal in which the US gets what the White House described as a ‘fair deal’, Trump’s administration has vowed to move to withdraw from the deal entirely. This could face opposition from free trade advocates within the US Congress. Regardless, the Trump administration is likely to renegotiate existing trade deals, be highly selective in new ones and push for stricter enforcement of violations of existing deals.
Asia-Pacific: Faint hopes for peace deal at talks with communists
Sectors: all
Key Risks: political instability, political violence, terrorism
On 25 January representatives of the National Democratic Front of the Philippines (NDFP) communist umbrella group and government negotiators will conclude six days of discussion in Rome about a bilateral ceasefire agreement, an amnesty for political prisoners and socio-political reforms. President Duterte, who describes himself as a socialist, has made peace with the NDFP a priority and even included communists in his first cabinet. However, clashes between the New People’s Army, the armed wing of the NDFP, and the military on 21 January risk derailing negotiations. While the NDFP has indicated that it strongly supports peace, it maintains that the release of 392 political prisoners the government is holding is a prerequisite for this happening. An agreement would be a political victory for Duterte and would bring an end to the NPA’s practice of extorting businesses in remote areas.
Eurasia: Ukraine’s Defence Minister urges continued US support
Sectors: all
Key Risks: external conflict; sanctions
Stepan Poltorak, Ukraine’s Defence Minister, urged new US President Donald Trump to continue to provide political and military assistance to Ukraine, as well as to keep sanctions on Russia in place, in order to deter ‘further escalation’ of the war in eastern Ukraine. Trump has said he wants a better relationship with Russia than the outgoing Obama administration, raising fears among Ukraine and eastern European states over their protection from potential Russian aggression. Trump’s ability to ease sanctions, however, has been curtailed by former president Barack Obama’s decision to extend sanctions that were due to expire in March 2017 until March 2018. A bipartisan group of senators is also preparing a bill which would require Trump to go through Congress to ease sanctions, adding a further obstacle to any potential Russia – US reconciliation.
Europe: ECB stance remains expansionary, despite signs of recovery
Sectors: all
Key Risks: economic
The European Central Bank left its benchmark refinancing rate at zero and the deposit rate minus 0.4 per cent. German inflation is substantially above the Eurozone average, highlighting that structural macroeconomic differences within the union remains pronounced and in the medium term could pose a challenge to setting appropriate policy of the area as a whole. There were no signs that the bank would taper its quantitative easing programme. Despite a slight recovery, overall the Eurozone remains weak. Multiple issues, including the weak state of the Italian banking sector, and the potential for a far right victory in French president elections, means that uncertainty remains high, and there is thus unlikely to be a revision of the ECB’s expansionary monetary stance over the next few months.
MENA: Syria peace talks unlikely to yield any results
Sectors: all
Key Risks: civil war; terrorism; political violence; civil unrest
Peace talks began on 23 January in the Kazakh capital Astana between multiple actors on both sides of the Syrian conflict, accompanied by their sponsors, Russia, Iran and Turkey. Turkey’s changed policy position marks a fundamental shift in how the remainder of the conflict may play out, making it likely President Assad will remain in power for the foreseeable future in a post-conflict Syria. Furthermore, under a 49-year agreement signed with the Syrian government on 20 January, Russia will be allowed to station 11 warships in the port of Tartus with little Syrian government oversight. With at least one foreign power effectively occupying Syrian territory, Syrian sovereignty will remain permanently compromised, making even small concessions difficult. However, this may mark the start of a more positive chapter in the country’s difficult, years-long conflict-settlement process.
Sub-Saharan Africa: property tycoon and political outsider inaugurated, new era beckons
Sectors: all
Key Risks: constitutional reform; political reform; international reintegration
On 22 January crowds gathered in Banjul, capital of The Gambia, to celebrate Yahya Jammeh’s decision to step down after losing the December 2016 presidential elections following last-ditch mediation efforts by the ECOWAS community and threat of military intervention. The event marks a historic moment for the country, which the former president ruled for over two decades. President Adama Barrow was sworn in in neighbouring Senegal, and ECOWAS forces were present upon his return to the country. Barrow, a property developer who has never held public office, pledged to reverse many of Jammeh’s repressive policies through judicial and constitutional reform and increased media and civil society freedoms. Barrow’s campaign promises also included rejoining the Commonwealth and International Criminal Court. While political uncertainty will remain high during the transition period, particularly given Barrow’s lack of political credentials, there is potential for the newly inaugurated president to bring about political and economic reform.
