Ones to Watch, 23 April 2018

Americas: Nicaragua to remain at risk of further violent unrest

Sectors: all
Key Risks: political stability; policy continuity; violent unrest

In Nicaragua, the risk of further unrest and associated violence will persist at least over the coming months, despite President Daniel Ortega’s decision on 22 April to cancel controversial social security reforms approved on 16 April. The reforms sparked a wave of nationwide protests in which at least 27 people were killed between 18 and 22 April. The reform, which increased social security contributions and lowered pensions, catalysed growing anti-government sentiment into protests that were met by a violent security force response. The military was deployed on 21 April. Live ammunition was fired, journalists were targeted and lootings were reported nationwide. Despite Ortega’s backpedalling, the recent incidents demonstrate that discontent towards his autocratic drive, alongside socio-economic grievances, could reignite unrest at short notice over the coming months. Nevertheless, Ortega’s grip on power is unlikely to be significantly challenged.

Asia-Pacific: Malaysian High Court halts order to dissolve opposition Bersatu party

Sectors: all
Key Risks: political instability; civil unrest

Tensions continue to mount in Malaysia after the Kuala Lumpur High Court halted an order by the Registrar of Societies to provisionally dissolve the opposition Parti Pribumi Bersatu Malaysia (PPBM) led by former prime minister Mahathir Mohamad. PPBM filed an appeal against the 5 April order, which was justified over the party’s alleged failure to submit required documents, and will remain a valid political party until a final verdict. General elections will take place on 9 May – the first time elections have taken place on a weekday since 1984 – and Prime Minister Najib Razak’s UMNO Party is the favourite given Razak’s support among the Malay majority. While PPBM members would still be able to run in the election as part of Anwar Ibrahim’s People’s Justice Party (PKR), a ruling against PPBM so close to general elections on 9 May could spark protests in urban areas such as Kuala Lumpur.

Eurasia: Armenian protests continue to grow despite leaders’ arrests

Sectors:  All
Key Risks: political instability; political violence; civil unrest

Mass demonstrations in Armenia continued over the weekend of 20-22 April, with tens of thousands regularly protesting across Yerevan. Smaller demonstrations in support of the anti-government protests also took place elsewhere across the country. On 22 April, opposition figure Nikol Pashinyan was detained, as were two other opposition leaders, shortly after Prime Minister Serzh Sargsyan walked out of a meeting with Pashinyan in which Pashinyan demanded he resign. Police and protesters clashed near Republic Square in Yerevan on 22 April, while protests continued that night and into 23 April, despite the arrest of their ostensible leaders. Further protests are expected and the crisis may escalate given the lack of serious negotiations between the government and protesters. Significant attention will be paid to Russia and Azerbaijan’s reaction as well given the former’s influence over Armenian politics and the latter’s still unresolved conflict with Armenia.

Europe: British Prime Minister Theresa May faces crucial week over customs union position

Sectors: all
Key Risks: political instability; economic uncertainty

The British government reaffirmed on 22 April that it plans to leave the European Union’s customs union as part of its Brexit plans. The affirmation followed a weekend of reporting that the Prime Minister’s cabinet thought it could survive being forced to negotiate remaining in the customs union by parliament, though some prominent Brexit hardliners such as Boris Johnson might resign in response. The House of Commons is due to debate a bill on 26 April that would force the government to seek remaining in the customs union and there have been indications sufficient Conservative MPs could defect to hand the government a defeat on the bill. Such a result would also likely prompt a challenge from the Conservatives’ pro-Brexit faction. A Cabinet reshuffle is increasingly likely, at the minimum. With 11 months remaining until Britain formally leaves the EU, there still remains significant uncertainty over the transition period and subsequent economic and customs relationship.

MENA: Unofficial election campaigning starts with YSK’s approval of Iyi Party participation

Sectors: all
Key Risks: political instability; economic uncertainty

On 22 April in Turkey, the unofficial start of election campaigning began with a bang. The Supreme Electoral Council (YSK) confirmed the Iyi Party was eligible to run despite being 4 days from the minimum six-month establishment date by election day, which marked a notable victory for party leader and former MHP deputy leader Meral Aksener. This came after 15 CHP parliamentarians announced their defection to the Iyi Party. The defections meant the Iyi Party crossed the minimum threshold of 20 parliamentary candidates, that it will receive state funding for campaigning and be eligible to stand in the 24 June parliamentary elections. President Recep Tayyip Erdogan and the leading AK Party are under pressure from a potentially overheating economy and campaign rhetoric will increase sharply in the coming week, although Aksener and her Iyi Party will not pose a large threat to the AK Party’s dominance.

Sub-Saharan Africa: Crucial weeks ahead for South Africa mining sector

Sectors: mining
Key Risks: expropriation; reduced FDI; policy uncertainty

The following weeks will be crucial in determining the future trajectory of South Africa’s mining sector. South Africa has the world’s largest platinum reserves, as well as an abundance of manganese, iron, coal, gold and zinc. However, the sector has been beset by labour-related issues and has been at the heart of the debate over the redistribution of wealth to the black majority. Mineral Resources Minister Gwede Mantashe has previously said his department hoped to finalise what would be a third version of the industry charter by the end of May. The charter will aim to appease mining firms who fear excessive government intervention, as well as demands for more stringent redistribution and social provisions. To this end, the government is set to challenge a 4 April High Court ruling on the ‘once empowered, always empowered principle’. The court ruled that firms do not have to top-up black shareholding levels in perpetuity if they previously met the required threshold of 26 per cent. However, in a development likely to concern mining firms, the Department of Mineral Resources has filed an appeal.