Americas: new corruption probes to stoke political instability, governability risks in Brazil
Sectors: all
Key Risks: political instability; strikes and demonstrations; corruption fallout; governability

In Brazil, President Michel Temer’s administration will likely face increased political instability and governability risks over the coming weeks and months. On 14 March General Prosecutor Rodrigo Janot requested the Supreme Court open formal corruption investigations into 83 high-profile politicians. The request, known as the ‘second Janot list’, is based on the testimonies of 77 Odebrecht executives and reportedly includes five ministers, the Senate’s president and the Chamber of Deputies’ president. Janot also requested the opening of 211 cases against less senior figures who are under the jurisdiction of regular courts. Once the names on the list are formally announced, pressure on Temer’s administration to suspend and remove ministers will grow. The probes could also hamper the government’s capacity to move forward with crucial fiscal consolidation reforms. Anti-government unrest is also expected to increase as the scandals continue to unfold.

Asia-Pacific: leadership election set to ignite protests in Hong Kong
Sectors: all
Key Risks: political instability; strikes and demonstrations

On 26 March the 1,194 members of Hong Kong’s election committee will cast first round votes to elect the territory’s next Chief Executive, with the pro-Beijing candidate Carrie Lam most likely to win, and pro-democracy protests certain to follow. While former financial secretary John Tsang has more popular appeal than Lam and has the support of the committee’s 326-strong pan-democrat movement, Beijing controls most committee votes, and Beijing appears to prefer Lam. The third candidate, and critic of China, Woo Kwok-hing will struggle to get a look in. Pro-democracy protests and acts of civil disobedience are planned in Kowloon and Hong Kong Island. The protests are intended to be peaceful, the nature and timing of the rally mean that outbreaks of violence cannot be ruled out. The real test for Hong Kong’s democracy is not who emerges victor in the elections, but how Beijing handles the popular anger that follows.

Eurasia: investigation into Russian money laundering via Moldova could ensnare foreign banks
Sectors: banking
Key Risks: corruption; credit risk

Novaya Gazeta, Russia’s sole openly pro-opposition newspaper, published the summary of its multi-year investigation into the alleged laundering of 700bln rubles (US$12bln at current exchange rates but roughly US$20bln at the time) out of Russia via Moldovan banks between 2011-2014. The money reportedly ended up in the hands of more than 732 banks, 5140 companies and in 96 different countries. Nearly US$1bln was laundered to each of China, Denmark, Hong Kong and Cyprus. The investigation may lead to numerous legal actions abroad, but Moscow will seek to suppress the story domestically. Specifically affected foreign banks will include Danske Bank, the Bank of China, Hellenic Bank, and HSBC, all of which reportedly received at least US$500m through the scheme. Further revelations from other papers working on the story, with coordination overseen by the Organised Crime and Corruption Reporting Project (OCCRP), are expected in the coming days.

Europe: Brexit expected to be triggered on 29 March
Sectors: all
Key Risks: political instability; sovereign disputes

British Prime Minister Theresa May is to trigger Article 50 of the Lisbon Treaty, the first step to leaving the European Union on 29 March according to media reports. The move has long been expected, with May repeatedly emphasising Brexit would begin by March’s end, but could nevertheless significantly impact the pound and UK stock markets depending on whether or not a format for negotiating Britain’s EU exit has been agreed and what shape it takes. Uncertainty remains over whether Article 50 can legally be revoked. Related legal challenges are set to develop, although it remains highly unlikely that the current UK government will revoke Brexit. The move will also aggravate centrifugal tendencies in Northern Ireland and Scotland. The process is likely to cause strains within the EU itself as well and could provide an incentive for more serious consideration of proposals for ‘multi-speed’ European integration.

MENA: Syrian civil war becomes more convoluted
Sectors: security; economy; business and finance
Key Risks: war on land; political violence; terrorism

The civil war in Syria is becoming even more complicated as momentum builds towards the anti-Islamic State (IS) offensive in Raqqah, now due to begin in April. On 20 March, a spokesman for the pro-Kurdistan Workers’ Party (PKK)-affiliated People’s Protection Units (YPG) confirmed sightings of Russian military personnel in Kurdish-controlled northern Syria by announcing Russia had agreed to provide training and support to Syrian Kurdish fighters who participate in the Syrian Democratic Forces (SDF). This new involvement of Russia in Syrian territory, alongside a recent spate of Israeli air strikes against Syrian government targets, poses even greater challenges to an already multifaceted battlespace. The risk of the Syrian civil war escalating to include greater Turkish involvement and increased Israeli military activity is growing, while the likelihood of Bashar al-Assad remaining president is also increasing.

Sub-Saharan Africa: easing of state of emergency positive for Ethiopia but grievances remain
Sectors: all
Key Risks: strikes; civil unrest; business interruption; political violence

In Ethiopia, the recent easing of some restrictions put in place under the October 2016 state of emergency highlights the calming of anti-government protests. The measure is also intended to reassure businesses that Ethiopia remains an attractive investment destination after FDI and tourism dropped amid repeated attacks on foreign commercial assets. While violence has not completely subsided, the security environment has improved. However, promised ‘deep reforms’ have fallen short of expectations, which means grievances remain and low-level attacks are set to persist. In addition, policies designed to address grievances have affected the business environment. For example, Dangote Cement’s operations in Oromia state were temporarily halted following demands by local government officials that foreign cement producers hand over control of pumice production to youth cooperatives. If implemented correctly, reforms to address youth unemployment will aid political stability, however the incident is indicative of the potential for reforms to pose short term business risks.