Ones to Watch, 9 July 2018

Americas: Haiti to face further disruption amid violent unrest over fuel price hike

Sectors: all
Key Risks: lootings; violent unrest; travel disruption

In Haiti, violent unrest has been observed since 6 July across the country following the government’s controversial decision to raise fuel prices. The highly disruptive protests and blockades may continue over the coming days despite the government’s decision to scrap the move on 7 July. At least three people were killed in the capital Port au Prince on 6 July with protests on 7 and 8 July including lootings, clashes with the security forces, disruptive barricades and widespread vandalism. Four other bodies were found in Delmas district on 8 July, although it was unclear if they were related to the latest wave of unrest. Several flights were cancelled and further disruption, unrest and the associated risk of commercial damage and deadly violence should be expected.

Asia-Pacific: Malaysia suspends China-led project amid growing scepticism in the region

Sectors: infrastructure
Key Risks: frustration of process; contract frustration

On 4 July construction works for the China-led East Coast Rail Link (ECRL) project in Malaysia was suspended pending the government’s renegotiation of contract terms with Beijing. Construction for two Beijing-backed pipeline projects that cost over US$1bln a piece as well as another worth US$813m were suspended. The contract renegotiations reflect a wider regional trend of growing scepticism of Belt and Road infrastructure projects due to concerns over unsustainable Chinese investment. The plight of Sri Lanka’s Hambantota port, which was handed over to China for 99-years to repay Chinese loans has emerged as a cautionary tale for Myanmar and the government is questioning the value for money of a US$10bln SEZ project in Rakhine state. In Vietnam, thousands of people took to the streets last month to contest government plans for new SEZs, which they feared would favour Chinese investors with long-term leases. In Indonesia, China’s US$5.5bln Jakarta-Bandung rail project has stalled due to concerns over affordability. Further Chinese-led projects in Southeast Asia could be suspended over the coming months.

Eurasia: Novichok incident results in death ahead of Putin-Trump summit

Sectors: all
Key Risks: sanctions; escalation in Ukraine and Syria

US President Donald Trump and Russian President Vladimir Putin will  meet in their first bilateral summit on 16 July. Putin will likely look to take a page from the playbook of North Korean dictator Kim Jong Un, whom Trump met in Singapore in May, and seek a direct meeting after which the two leaders can claim to have improved relations without agreeing any actual concrete measures to do so. Trump is likely to be constrained in his ability to lift sanctions as many were solidified by the CAATSA legislation passed by Congress, despite his criticisms, last August, though he could offer to loosen some measures. However, Trump is first set to meet NATO allies on 11-12 July. The 8 July announcement by the UK government that a British citizen died from exposure to the nerve agent that the Kremlin is suspected to have deployed in an assassination attempt against an ex-double agent in the UK means the alliance could call for tougher measures against Russia, though these could be overshadowed by Trump’s own criticisms of the bloc.

Europe: Brexit, Trump and NATO come to a head this week

Sectors: all
Key Risks: various

While the UK government attempted to clarify the direction of its post-Brexit relationship with the European Union in a 6 July cabinet meeting that resulted in the agreement of a plan to seek to effectively maintain EU rules on goods but diverge on services, it was quickly thrown into disarray by the resignation of Brexit Secretary David Davis two days later. Boris Johnson, arguably the most prominent Brexiteer, also resigned on 9 July. The UK government is still due to release the result of the Cabinet meeting as a White Paper, after which the EU will respond, but Davis and Johnsons’’s resignations raises the risk of a short-term challenge to May. The prospects of her surviving are murky, though should she do so it would likely lower the risk of a seriously disruptive dard Brexit. Meanwhile US President Donald Trump is due to visit the UK and hold a NATO summit this week as well, and EU leaders will likely see it as a success if he doesn’t lambast fellow NATO allies over spending. Though hyperbole is to be expected, a potential new US-UK trade deal likely remains years away as well. Expected record protests against Trump in London could also negatively impact bilateral ties.

MENA: Hodeidah offensive could restart, but swift conclusion looks unlikely

Sectors: ports; shipping; aid
Key Risks: political violence; war on land

There are conflicting narratives emerging from Hodeidah, Yemen, as to the relative success of the Saudi and UAE-backed military campaign so far. The coalition claims to have control of the airport on the outskirts of the city, however local reports, including some from aid officials, claimed that despite taking parts of the airport, the coalition forces were swiftly pushed back out. The conflict paused over the last week as UN special envoy Martin Griffiths attempted to broker a solution to the conflict that would spare the city from a potentially long drawn out battle, which could worsen an already sever humanitarian crisis. If fighting restarts due to the failure of these talks, it is thought unlikely that the Huthi rebels would be defeated swiftly. They have proved themselves adept at conducting guerrilla warfare, and there is a risk that a violent stalemate could impose a significant cost on both sides, while the civilian population in Huthi-controlled territory could potentially be cut off from imports of vital food and medical aid for weeks or months. Although there remains potential for a deal to avoid such a scenario, the window is narrowing fast.

Sub-Saharan Africa: Peace talks ongoing as South Sudan marks independence day

Sectors: all
Key Risks: internal conflict

The 9th July marks independence day in South Sudan. Its population has spent the majority of its seven years of independence from Sudan mired in conflict. Ongoing peace talks have offered a glimmer of hope that violence will end, however a permanent ceasefire reached on 27 June has already been violated multiple times and the rebel groups that make up the South Sudan Opposition Alliance (SSOA) have rejected parts of a deal reached between the conflict’s two main protagonists, President Salva Kiir and Sudan People’s Liberation Movement – in Opposition (SPLM-IO) leader Riek Machar, over the weekend of 7-8 July. Negotiations have been extended until Thursday, but with over seven million people in need of humanitarian assistance, an agreement will not signal the end of the suffering for South Sudanese. Violence separate from the main conflict dynamics is also likely to continue to flare, and history suggests that any peace deal reached is not necessarily the end of the civil war.