Americas: ELN and government scheduled to resume peace talks

Sectors: all
Key Risks: policy continuity; terrorism; targeted attacks

In Colombia, the government and the ELN guerrillas are expected to launch the sixth round of formal peace talks on 2 July in Cuba’s capital Havana. The sixth round was originally scheduled to begin on 20 June and was initially postponed to 25 June. The second postponement was allegedly due to talks between the current administration and the incoming one, due to take office on 7 August. The ELN expressed concern over president-elect Ivan Duque’s intention to impose stricter conditions for the dialogue to continue. The ELN reiterated its willingness to move forward with the talks, but post-August continuity cannot be entirely guaranteed as the guerrillas might be reluctant to accept Duque’s conditions to negotiate peace, which will likely include a unilateral ceasefire. Uncertainty over the future of the ELN peace process is expected to increase over the coming weeks.

Asia-Pacific: Talks over Freeport divestment completed with agreement expected in mid-July

Sectors: mining
Key Risks: frustration of process; business risk

On 2 July Indonesia’s SOE Minister Rini Soemarno announced that negotiations over the purchase of a majority stake in Freeport McMoran’s Grasberg gold and copper mine by state-owned mining company Asaham Aluminum (Inalum) have been completed. Freeport agreed to sell 51 per cent of its shares in its local unit that operates the Grasberg mine to Indonesian investors back in August 2017. The divestment is part of a new law requiring that a controlling share of the mine be locally-owned. Negotiations between Freeport, joint venture company Rio Tinto and Inalum have faced repeated delays amid disagreements over valuation. Soemarno hinted that Inalum’s share purchase will take place in mid-July and the upcoming agreement will address investment programs to maintain business stability during the divestment process. This will be seen as a major victory for the Jokowi administration ahead of presidential elections in 2019.

Eurasia: IFC issues first Uzbek som-denominated bond

Sectors: sovereign; banking
Key Risks: sovereign risk

The first Uzbek som-denominated bonds were listed in London, in a move that could enable further such issuances. The som was allowed to float freely against the dollar after years of a controlled currency policy last September. Revelations over the relatively strong state of the Uzbek government’s finances, growing FDI, and ample gold supplies, means that the currency has in fact since strengthened by some 7 per cent against the US dollar. The Uzbek government is still seeking to issue its first Eurobonds, although it is unclear when it will and it has not commented on the apparent delay in the issuance. The som-denominated bonds were issued for Hamkorbank together with the support of the IFC but should enable additional trading of Uzbek-linked instruments and provide a better view as to market sentiment on the country.

Europe: EU initiates legal proceedings against Poland over Supreme Court reform

Sectors: all
Key Risks: protests

A law requiring judges to retire after turning 65 comes into effect in Poland on 3 July, setting the stage for a constitutional clash between the Supreme Court and the government. The Supreme Court approved a new term for its president, Malgorzata Gersdorf, last week though she too must resign under the law. The government argues reforms are needed to overhaul an inefficient system. However, the EU, which has battled Poland’s ruling Law and Justice party (PiS) over a series of reforms for almost two years, has decried the measure and is challenging PiS over its commitment to the rule of law and judicial independence, which could ultimately wind up at the European Court of Justice. The measure could also lead to further anti-government protests in Warsaw and other major urban centres.

MENA: Haftar increasingly unlikely to abide by Paris agreement after Derna capture

Sectors: all
Key Risks: conflict; humanitarian crisis

On 29 June Khalifa Haftar, commander of the eastern-based Libyan National Army (LNA), announced the ‘liberation’ of the city of Derna after weeks of fighting and several months of besieging the city. The victory further consolidates the LNA’s grip on eastern-Libya, although violent clashes will likely continue, particularly involving militia aligned to Ibrahim Jadhran in the central oil crescent region. As Haftar’s forces consolidate their control over an ever-expanding area of territory, strengthening their hand in negotiations with the Tripoli-based UN-backed Government of National Accord (GNA), they is an increased risk they will not abide by the Paris agreement and settle for a diplomatic solution to Libya’s political division. On 2 July the Tripoli-based National Oil Corporation (NOC), announced it has suspended all crude oil exports, declaring Force Majeure on operations and shipments from the ports of Zuetina and Marsa al-Hariga in the east of the country. The statement comes after Haftar’s forces handed control of the oil terminals at Ras Lanuf and Es Sider to a rival eastern-based NOC, and prevented two tankers from loading oil cargoes sold on behalf of Tripoli’s NOC. The move will cut output by around 850,000 barrels a day, implying that absent a notable increase in output from Saudi Arabia, prices global oil prices will rise.

Sub-Saharan Africa: Outrage as social media tax comes into effect in Uganda

Sectors: IT
Key Risks: protests; curtailing of freedom of expression

On 1 July a new law imposing a US$0.05 daily levy on users of social media platforms such as WhatsApp, Facebook, Viber and Twitter came into effect. The government has said the so-called ‘gossip tax’ will expand government revenues and limit the spread of false information. However, it is more a continuation of a worrying trend of limiting free speech and criticism of the government, not to mention a string of overburdening taxes imposed by the government. The law is set to be challenged in court, while there could also be protests against it. In the meantime, many Ugandans have turned to the use of virtual private networks (VPNs). In 2016 internet users in the country downloaded over 1 million VPN applications in the space of three days when the government issued a directive to block social media during elections. The Ugandan Communications Commission has said this time it will block VPN applications in what is another worrying development for free speech and privacy.