Americas: US partially rolls back policy changes towards Cuba
Key Risks: economic; reduced foreign investment
A new chapter in Cuba-US bilateral relations is set develop from this week onwards following US President Donald Trump’s decision to partially roll back policy changes towards the island implemented by the Obama administration. On 16 June Trump announced he would ‘cancel’ the historic shift aimed at normalizing bilateral ties. Travel and transactions with Cuba’s military have been particularly targeted. However, many policies are expected to remain in place and the US embassy in Havana will remain open. The Cuban government denounced the move, while stating it would continue to cooperate with the US. Further loosening of US policy towards Cuba is unlikely under the Trump administration, which intends to keep the US embargo in place until Cuba fulfils a series of conditions, including holding free elections and releasing political prisoners, that the island’s government is not expected to accept.
Asia-Pacific: Papua New Guinea to hold general elections, instability likely to continue
Key Risks: political stability
Papua New Guinea will hold general elections from 24 June to 8 July, with around 2,614 candidates contesting just 111 seats. Incumbent Prime Minister Peter O’Neill has held power since 2011 and is expected to win the election due to the fragmented nature of the country’s opposition groups, although O’Neill’s People’s National Congress may struggle to secure a majority. Yet Papua New Guinea remains beset by problems. The economy remains extremely fragile thanks to many years of overspending and foreign reserves remain perilously low. In March, hundreds rioted in the capital, Port Moresby, and properties were torched, although the government suppressed many domestic reports of the incident. Whether O’Neill wins or the opposition is elected, cost-cutting and reduction of the government debt are likely to be high on the agenda in the years ahead.
Eurasia: Kremlin pressure on Prokhorov continues as he sells RBC
Sectors: media; metals; energy
Key Risks: forced divestiture
RBC, a leading media and television outlet known for its business coverage, was reportedly sold to oligarch Grigory Berezkin. RBC has not yet made an announcement. Berezkin owns Komsomolskaya Pravda, Russia’s leading right-wing tabloid. The price paid to former owner Mikhail Prokhorov was not announced. It was widely reported Prokhorov would be forced to sell the business last year, after the Kremlin effectively ordered him to sell a stake in Uralkali as well. The Kremlin will continue to exercise significant influence over oligarchs’ holdings. Prokhorov’s holding company ONEXIM is likely to continue to shed Russian assets, including its stake in metals firm Rusal and energy company Quadra, although a timeline for doing so is difficult to predict.
Europe: US Senate bill targets Nord Stream 2, infuriating Berlin and Austria
Key Risks: frustration of process; delays; sanctions
On 15 June, the German and Austrian governments jointly criticised a pledge to continue to oppose Nord Stream 2 in the new Russian sanctions package passed overwhelmingly by the US Senate the previous day. They warned the amendments could negatively impact European-American relations. The pipeline will be owned by Russia’s Gazprom but European energy companies – Shell, Uniper, Wintershall, OMV and Engie – are providing much of the financing. The following day German Chancellor Angela Merkel herself criticised the planned sanctions, claiming they were against international law. Merkel also called for legal questions around the pipeline project to be resolved. Merkel’s position has infuriated a number of Eastern European EU members although the German business community has a strong consensus of support for the controversial project. Legal challenges are expected from within the EU.
MENA: Escalation of US-Syria fighting
Key Risks: political violence; civil war; war on land
On 18 June, a US Air Force F/A-18E Super Hornet shot down a Syrian Air Force SU-22 over the village of Ja’adin near Rasafah, south of Tabqah. The Combined Joint Task Force-Operation Inherent Resolve (CJTF-OIR) claimed the plane was shot after it had carried out several airstrikes against US-backed Syrian Democratic Forces (SDF) fighting Islamic State. The Syrian army claimed the plane was downed while flying a mission against IS militants. The action followed intense ground fighting near Tabqah between the SDF and pro-government forces, which restarted after the SU-22 was shot down. The incident is a sharp escalation following several other incidents targeting US-backed anti-government troops to the south. The Syrian government considers the US an illegitimate occupying force. Further incidents are likely amid high tensions. Russian mediation may mitigate any immediate risks.
Sub-Saharan Africa: African Union calls for calm as Djibouti-Eritrea tensions escalate
Key Risks: external conflict; border incursions
On 17 June the African Union appealed for calm and urged Djibouti and Eritrea to show restraint after Djibouti alleged Eritrean troops moved to occupy territory in the Doumeira area of the two countries’ disputed border following the withdrawal of Qatari peacekeepers. The long-standing dispute sparked several days of fighting in 2008, during which around 12 Djiboutian troops were killed. Both sides later withdrew and Qatari peacekeepers were deployed. However, they were withdrawn on 14 June just days after both Djibouti and Eritrea sided with Saudi Arabia in the ongoing Gulf crisis. An African Union fact-finding mission will travel to the region, but there is an increased risk of border clashes over the coming days amid high tensions. Despite this, all-out conflict remains unlikely and a return to the mutually-beneficial stalemate is likely over the medium term.