Americas: Senate to vote on controversial labour reform; Congress to vote on Temer’s trial

Sectors: all
Key Risks: political instability; civil unrest; strikes; corruption fallout

In Brazil, the Senate is expected to vote on the controversial government-backed labour reform bill on 11 July. A motion to fast-track the bill, which is part of President Michel Temer’s flagship proposals to consolidate public finances and kick start the economy, was passed on 4 July, highlighting congressional support for the measure despite an escalating political crisis. The bill is expected to be approved by a majority. The pension reform, however, will be more difficult to pass as it requires at least two-thirds of the vote in the lower house of Congress to pass. Ongoing political turmoil might continue to delay the votes on Temer’s proposed reforms. The lower house of Congress is expected to vote by the end of July on whether to accept Temer’s corruption charges. Should the latter be approved, he would be suspended for up to 180 days and face a Supreme Court trial.

Asia-Pacific: China faces international pressure to release Liu Xiaobo

Sectors: all
Key Risks: geopolitics; domestic stability

Thanks partly to their loss of confidence following 2008’s financial crash, western governments have appeared increasingly unable to confront China over human rights abuses and its mistreatment of critics. When Norway awarded the Nobel Peace Prize to imprisoned dissident Chinese author Liu Xiaobo in 2010, China halted trade talks with the country and froze relations for six years. After this, most countries decided to keep quiet lest China exclude them from major markets. It is remarkable, therefore, that the international community has finally rediscovered its voice, this time in calling for Liu to be allowed to leave China to receive superior treatment for terminal liver cancer. Even Britain has joined the chorus of calls for Liu to be allowed to leave the country, with this week likely to be crucial in deciding his fate.  China faces condemnation abroad if it ignores the request, but risks appearing weak domestically if it caves.

Eurasia: Long-simmering ethnic tensions in Russia’s Dagestan region move to fore

Sectors: all
Key Risks: civil unrest; political violence

There is a growing risk of violent unrest and ethnic strife destabilising Russia’s Dagestan region. On 7 July Chechen officials, including the speaker of Chechnya’s legislature, arrived in Leninaul in Dagestan’s Kazbekovskiy district amid rising ethnic strife across Dagestan. The following day the head of Chechnya, Ramzan Kadyrov, reportedly held talks with Dagestani officials. Chechen officials reportedly voiced support for demands an autonomous Chechen district be carved out of the Kazbekovskiy district amid increasing unrest between Chechens and Avars, Dagestan’s largest ethnic group. 1,000 Chechens reportedly fled the district in recent weeks. However, intervention by Chechnya’s powerful security forces risks fomenting further unrest. The previous week ethnic Nogay protesters seized a government building in Dagestan’s Nogaysky district to protest the influence of Avars. Nogays have also held demonstrations in Moscow calling for the central government to intervene in the region, long a hotbed of violence and poor governance.

Europe: EU citizens and repeal bill prove major early roadblocks for Brexit

Sectors: all
Key Risks: inability to reach a deal; frustration of process

British Prime Minister Theresa May is due to submit the ‘Great Repeal Bill’ that would enshrine existing EU legislation into British law on 13 July, and reports indicate the bill, once expected to be largely a formality, will become the subject of significant debate both within the Conservative party and other parliamentary parties. The bill may become a proxy for varying positions on the extent of Brexit, with some seeking to use it to ensure Britain remains a party to various EU institutions and to atomic agency Euratom. The fight over EU citizens’ rights in Britain after Brexit is also to prove an increasingly contentious point after heads of parties representing two-thirds of the European Parliament labelled May’s current offer of ‘settled status’ as inadequate on 9 July. Within the EU, French officials are set to push for looser fiscal rules, potentially setting off a dispute with Germany.

MENA: Fight against Islamic State reaches new phase in Iraq

Sectors: energy; construction; trade; retail; security
Key Risks: terrorism; political violence

On 9 July, Prime Minister of Iraq Haidar al-Abadi congratulated the Iraqi Security Forces (ISF) on their efforts defeating Islamic State (IS) in Mosul, although cautioned against declaring a total victory as fighting continued in two small pockets of the Old City. The nine-month long offensive has come at a devastating cost to the city, with vast areas of the city’s western bank destroyed. IS has already launched a number of counter-offensives inside Mosul, while simultaneously increasing its attacks against ISF elsewhere. Now the Mosul offensive is over, ISF will be forced to divide their combined resources between fighting IS in the territory it holds in the deserts of Ninawa and Anbar province and in Hawijah in southern Kirkuk as well as combating its post-Mosul guerilla tactics inside the city. The international coalition’s remit may well expand to include the remaining anti-IS operations in the country.

Sub-Saharan Africa: DRC elections unlikely in 2017, risk of protests amid democratic backsliding

Sectors: all
Key Risks: protests; civil unrest; internal conflict

The president of Democratic Republic of Congo’s electoral commission stated that elections in 2017 will most likely not be possible. Constitutionally prevented from standing for a third term, President Joseph Kabila has no choice but to indefinitely cling onto power, despite his mandate having expired in December 2016. Failure to hold elections this year also violates a political agreement with the opposition brokered at the end of last year. The opposition called the latest move “a declaration of war”. Scores died in protests over the latter half of 2016, and the announcement raises the risk of further deadly protests over the coming weeks. Just as likely are villes mortes, which will see the streets empty in defiance of the decision. However, the opposition remains fragmented, and the leader of the G7 group Moise Katumbi is in Europe in exile. The political impasse looks set to continue, amid a rapidly deteriorating security environment.