Ones to Watch, 18 December

Americas: Peru’s President Kuczynski to face impeachment vote

Sectors: all
Key Risks: policy continuity; political stability; governability

In Peru, centre-right President Pedro Pablo Kuczynski will face an impeachment vote on 21 December triggered by bribery allegations linked to the Odebrecht corruption scandal. On 15 December Congress voted 93 to 17 to begin impeachment proceedings against Kuczynski, who has denied the allegations but has admitted to have worked as a financial adviser to a project run by a company owned by scandal-ridden Odebrecht. He asked for forgiveness for not having clearly explained his links to Odebrecht, which he had previously denied. 87 out of 130 votes are needed to oust Kuczynski, whose party only holds 18 seats in the opposition-led unicameral Congress. Kuczynski would be replaced by his first vice-president Martin Vizcarra. Should this occur, snap elections cannot be ruled out. Uncertainty is expected to persist over the coming months.

Asia-Pacific: India needs to respond as Nepal signals shift closer to China

Sectors: transport infrastructure; energy
Key Risks: regional tensions

With Nepal’s historic elections coming to a close, the Left Alliance made up of the Unified-Marxist-Leninist party (UML) and the Maoist Centre (MC) party has a strong majority in parliament, winning 126 of 180 seats. Restoring economic growth was the dominant theme of the election, and even before it has formed a government the Left Alliance has made it clear that it will be bringing the country much closer to China in an effort to spur investment. On 14 December the coalition announced that it would revive the US$2.5bln Budhi Gandaki hydropower project, undoing the previous government’s decision to block it, and encouraged more Chinese participation in infrastructure development. This will incense India, which has long sought to counter Chinese influence in its smaller neighbour. This week New Delhi will have to respond with its own overtures to Kathmandu or lose out to Beijing.

Eurasia: Saakashvili stays at the centre of events, and the centre of Kiev

Sectors: all
Key Risks:  political instability

On 17 September Ukrainian police and protesters scuffled outside the October Palace concert hall, off Kiev’s symbolic Independence Square, better known as Maidan. Protesters allegedly planned to occupy the hall in an echo of the 2013-14 Euromaidan revolution. Controversial opposition politician Mikheil Saakashvili, a former governor of Odessa Oblast and Georgian president, denied calling for supporters to take part in the protest, which was criticised by Western embassies that have so far largely supported Saakashvili in his disputes with prosecutors. Ukrainian Prosecutor General Yuriy Lutsenko warned Saakashvili would likely be extradited to Georgia in the coming weeks. Saakashvili is wanted in Georgia for abuse of office charges related to his presidency (2004-2013). Although for domestic political reasons Tbilisi’s ruling Georgian Dream party cannot drop charges against him, some in the party quietly oppose his extradition, concerned it could prompt international criticism given Saakashvili’s pro-reform reputation in the West. Kiev may demur to extradite him over similar concerns.

Europe: Hopes rise for softer Brexit

Sectors: all
Key Risks: political instability

On 15 December the European Council formally agreed to move on to the second phase of Brexit talks. Discussions on the future UK-EU relationship will likely begin in the first weeks of 2018 and the prospect of Britain at the least mirroring regulations and rules from the customs union to smoothe trade is seen as increasingly likely, as is a largely ‘no-change’ transition period of around two years. Nevertheless, Prime Minister Theresa May’s cabinet remains riven by divides while major disagreements over Brexit strategy remain within the wider Conservative Party. The opposition Labour party is similarly riled by internal divides. The fact May’s government is reliant on support from Northern Ireland’s Democratic Unionist Party (DUP) and its hardline pro-Brexit factions means renewed calls for a ‘hard Brexit’ cannot be ruled out, although this outcome is seen as less likely than at any point so far in the talks.

MENA: Pence’s Middle East visit a failure before it begins

Sectors: all
Key Risks: all

On 20 December, US Vice President Mike Pence begins a three-day Middle East tour, visiting at least Egypt and Israel. The purpose of the visit is to highlight the challenges faced by Christian minorities in the region and has been reduced from five days after multiple senior multi-faith religious leaders cancelled their planned meetings in the wake of the US policy change on the status of Jerusalem. The vice-president will now not meet any Christian clerics. Pence’s planned pilgrimage as an evangelical Christian to Bethlehem has also been cancelled. Pence is also likely to discuss the administration’s desire to counter Iranian regional influence and combat Islamic State in meetings with Egyptian President Abd al-Fatah al-Sisi and Israeli President Benjamin Netanyahu. Attempts to progress the Middle East Peace Progress by the US administration will remain frustrated.

Sub-Saharan Africa: Voting closes in ANC leadership race

Sectors: all
Key Risks: political instability; party split; economic stagnation; diminished business confidence

After some delays, on 18 December voting ended in the African National Congress (ANC) leadership election. Delegates formally nominated Cyril Ramaphosa and Nkosazana Dlamini-Zuma to compete to succeed President Jacob Zuma. Just over 4,700 delegates will vote following a ruling to exclude 10 per cent of delegates who lack proper accreditation. The first ballot put Ramaphosa ahead, but the race is too close to call given the complex and secret nature of the voting system. With the ANC more divided than ever, at stake is not only the party’s future but given the ANC’s dominance over South African politics, the country’s economic trajectory will be significantly impacted by the outcome. Ramaphosa is revered by the business community and has pledged to put an end to corruption and restore investor confidence, whereas Dlamini-Zuma has promised ‘radical economic transformation’ to improve the lives of the black majority. A decision is expected shortly.