Ones to Watch, 29 January 2018

Americas: Ecuador to held referendum on constitutional reform

Sectors: all
Key Risks: policy continuity; political stability; regulatory changes

In Ecuador, a government-backed referendum on seven questions, five of which entail amending the constitution, is scheduled to take place on 4 February. Amongst President Lenin Moreno’s proposals is the elimination of indefinite re-election, a move that could negatively affect former president Rafael Correa’s ambitions to return to power; the introduction to greater limits on oil production in the Yasuni National Park; and a ban on metallic mining in protected areas, urban centres and near waterways. Correa, Moreno’s former friend and ally, quit the ruling PAIS Alliance (AP) on 16 January. He has declared himself the main opponent of the current administration and is leading the ‘no’ campaign ahead of the vote. Moreno has significant popular support and will likely win the referendum. Nevertheless, the fracture within the AP is expected to increase the risk of political uncertainty and instability.

Asia-Pacific: Anti-junta protests mount in Thailand

Sectors: all
Key Risks: political instability; unrest

So far protests against Thailand’s junta government have been surprisingly muted, but this may be set to change over the next week due to two flashpoints of public anger. Last week the junta-dominated parliament delayed judicial changes that in turn have led to yet more delays to general elections, which are now scheduled for February 2018. The same week, a scandal erupted online over a deputy general’s penchant for wearing expensive watches that should be unobtainable on his pay grade. Small pro-democracy protests were held across the country on 29 January, but these may gather steam as the week goes on. While for a long time it has been acquiescent with the military junta’s corruption, Bangkok’s elite appears increasingly frustrated. Opposition groups may finally gain some momentum against the regime.

Eurasia: White House to impose new measures targeting Russia under CAATSA

Sectors: all
Key Risks:  sanctions; compliance

Tensions between Russia and the United States are set to grow as the White House administration is set, by law, to issue three reports on 29 January that will undoubtedly anger Moscow. The White House will then have to choose at least five from a set of 12 sanctions laid out in the Countering America’s Adversaries Through Sanctions Act (CAATSA). CAATSA was passed overwhelmingly by Congress over the White House’s objections last August. The three reports will detail US support for Ukraine, oligarchs’ relationships with the Kremlin, and examine the potential for restricting Russian state and other debt and equity sales to US financial institutions. Oligarchs and their entities named will not be subject to so-called specifically designated nationals (SDN) or sectoral sanctions identifier (SSI) list sanctions but their businesses will undoubtedly face further compliance and regulatory challenges. The White House is seen as more likely to choose five of the 12 CAATSA measures that would have a relatively minimal impact but it cannot be ruled out some of the more stringent ones will be imposed.

Europe: Brexit continues to bedevil Britain, Zeman’s victory boosts Babis

Sectors: all
Key Risks: political stability

On 29 January Britain’s House of Lords’ Constitutional Committee said that the draft European Union (Withdrawal) legislation was ‘constitutionally unacceptable’. The Lords is due to debate the bill, beginning 30 January, and it has long been expected the Lords will return the bill to the Commons. Prime Minister Theresa May continues to face many of the same internal challenges that have bedevilled the Brexit process from the beginning of her prime ministership and these are highly unlikely to abate despite the fact there are only 14 months remaining until Britain is technically due to leave the EU. Meanwhile, in Czech Republic on 27 January, incumbent Milos Zeman was re-elected as president with 52 per cent of votes, beating independent Jiri Drahos by fewer than 150,000 votes. Zeman is seen as supportive of Prime Minister Andrej Babis and has said he will seek to keep him in the post and avoid early elections despite the fact Babis’ ANO party has been unable to secure coalition partners for a majority in parliament.

MENA: End of the beginning for Saudi anti-corruption case

Sectors: all
Key Risks: all

Between 26 and 28 January, several high-profile figures including Prince al-Waleed bin Talal and TV broadcasting executive Waleed al-Ibrahim were released from detention in the Ritz-Carlton hotel in Riyadh in Saudi Arabia in a sweeping anti-corruption campaign launched by Crown Prince Muhammad bin Salman in early November 2017. Announcements by Saudi officials and the Attorney General that several key accused businessmen agreed financial settlements with the government cannot be confirmed. Those announcements contradict statements saying a number of the accused businessmen were innocent, as officials said any one found innocent would not need to reach a financial accomodation with the government. Some of those detained have reportedly been moved to al-Ha’ir high-security prison and are due to stand trial on unconfirmed charges. Charges could be announced soon, although it is unclear whether the trials will be conducted publicly to provide transparency.

Sub-Saharan Africa: Important month ahead for Ethiopia – Egypt – Sudan relations

Sectors: hydropower; infrastructure
Key Risks: trilateral tensions

On 29 January the leaders of Ethiopia, Egypt and Sudan met on the sidelines of the AU summit in Addis Ababa to discuss the impasse between the three countries related to the Grand Ethiopian Renaissance Dam (GERD). Tensions have been simmering for some time. Cairo fears the project will reduce the flow of the Nile, threatening the country’s water supply, while Ethiopia has been dismissive of such claims. Sudan supports the project as it stands to benefit from the electricity it will produce. However, an escalation of the dispute has been avoided for now after the three agreed to work together to resolve outstanding issues. The water and energy ministers from each country have been given one month to come up with ways of solving the impasse in order to finish an initial technical study, while Ethiopia Prime Minister Hailemariam Desalegn and his Egyptian and Sudanese counterparts, Abd al-Fattah al-Sisi and Omar al-Bashir, also agreed to hold an annual trilateral meeting with the aim of maintaining positive relations and to establish a joint infrastructure fund.