Americas: Election recount underway in Honduras

Sectors: all
Key Risks: civil unrest; political instability

Honduras’ electoral commission is undertaking a recount of some votes cast in the 26 November presidential election after opposition candidate Salvador Nasralla accused the government of tampering with the vote. Ballots from 1,000 voting precincts reportedly showed irregularities. The opposition criticised the decision and said it would not accept the results. The controversy prompted mass protests in Tegucigalpa and elsewhere. In response, the government has imposed a nightly curfew in a bid to prevent protests from escalating, with tens of people thought to have been injured and detained in a crackdown by the security services that has included the use of live fire. At the time of writing incumbent Juan Orlando Hernandez remains in the lead in the re-count. There will remain a high risk of unrest across the country over the coming days in the wake of the controversial recount.

Asia-Pacific: Philippines nervous as Duterte flip-flops over declaring revolutionary government

Sectors: all
Key Risks: violent unrest; political stability

On 30 November, a holiday celebrating the birth anniversary of Filipino revolutionary Andres Bonifacio, thousands rallied in Manila both in support and opposing a suspension of the constitution and a declaration of a revolutionary government in the Philippines. Such a declaration will allow President Rodrigo Duterte to centralize political power under him. He has floated the idea of doing so before, supposedly to serve national security and economic needs, but has also repeatedly pulled back on his threats. These flip-flops are explained by the opposition of the Armed Forces of the Philippines, whose chief Rey Leonardo Guerrero allegedly expressed in November he would not support any revolutionary government. If Duterte does declare one, massive street protests led by the democratic opposition, including Vice President Leni Robredo, and supported by the army, could plunge the country into chaos.

Eurasia: Domestic political tensions escalate in Ukraine

Sectors: all
Key Risks:  political instability

Ukraine’s National Anti-Corruption Bureau (NABU) claimed seven of its employees disappeared on 29 November. NABU said they were involved in an undercover corruption investigation of the State Migration Service (SMSU). NABU issued a statement blaming Prosecutor General Yuriy Lutsenko and State Security Service (SBU), which announced the arrest of a NABU employee on bribery charges for interfering. Lutsenko and the SBU are close allies of President Petro Poroshenko’s administration; NABU is supported by activists who formed the core of the 2014 Euromaidan revolution. Yet another round of anti-government protests was launched by pro-reform activists on 3 December, while on 1 December the European Commission halted a EUR600m loan, the final third of its planned macro-financial assistance programme. The Commission cited Kiev’s failure to comply with a number of terms of its loan agreement. Kiev returned to sovereign bond markets in September, raising US$3bln, lowering the pressure on it to make economic reforms demanded by the EU and IMF. Tensions between the government and pro-reform actors will increase.

Europe: May travels to Brussels, deal on EU exit terms reportedly in sight

Sectors: all
Key Risks: political instability; frustration of process

British Prime Minister Theresa May is travelling to Brussels on 4 December, with hopes of sealing an agreement on the terms of exiting the European Union. Preambulatory reports have raised hopes a deal will be reached, boosted by an slight softening of Northern Ireland’s Democratic Unionists’ position on potential Irish border arrangements, and hardline Brexiteer acquiescence to EU demands for an exit bill of around EUR50bln. Nevertheless, concerns remain over a number of issues, including the applicability of the European Court of Justice after Brexit. If a deal is reached, it is expected the EU will approve moving on to the next set of negotiations, around the future EU-UK relationship later this month and that related talks would likely begin early 2018. Failure to reach an agreement could prompt political turmoil in the UK.

MENA: Atilla sanctions trial leads to controversy for Turkish banks and government

Sectors:  banking; finance
Key Risks: currency concerns

On 28 November in Turkey, the trial of Mahmet Hakan Atilla, a former deputy director of Turkish state-owned Halk Bank and eight other Turkish nationals began in a Manhattan federal court in New York. Atila is charged with arranging the illegal transactions with Turkish banks to launder money on behalf of the Iranian government One of the nine, Turkish-Iranian gold trader Reza Zarrab gave two days of testimony against the defence, after pleading guilty on 26 October to six charges to conspire to evade US sanctions against Iran. Zarrab has implicated the highest levels of the Turkish government in the scheme, as well as executives at Halk Bank, VakifBank and Ziraat Bank. Zarrab may also be cooperating with special counsel Robert Mueller’s investigation. The case is highly embarrassing for the Turkish government although it will have a limited impact at home. Further revelations this week during the trial will likely weaken implicated Turkish banks’ shares further.

Sub-Saharan Africa: Changes afoot but problems linger in Ethiopia

Sectors: all
Key Risks: inflation; civil unrest; political instability

It’s been almost two months since Ethiopia devalued its currency in a bid to stimulate stagnant exports and inflation is on the rise, as happened in 2010 when the country last had a major devaluation. The move to raise interest rates to forestall inflation appears to have had at best only a small effect. The government’s enduring economic problems, including chronic foreign exchanges shortages, have led it to cancel a planned fuel export pipeline to Djibouti. There are changes afoot in the Tigrayan People’s Liberation Front, the hegemonic faction in the ruling coalition. Former Minister of Communication and Information Technology Debretsion Gebremichael was elected as Chairperson of the party in what was one of several moves including the removal of Azeb Mesfin, the widow of former prime minister Meles Zenawi, from the Executive Committee. Gebremichael’s appointment could see increased foreign investment in certain sectors. The reshuffle is the latest in a long line of reforms that have so far failed to end protests in the restless Oromia region where demands for greater political freedoms continue.