Americas: Privatisations plans likely to continue to stall in Brazil
Key Risks: delayed privatisation plans
In Brazil, a recent ruling by a Supreme Court justice stating that privatisations should be approved by Congress is likely to continue to delay several planned privatisations. On 3 July state-owned oil company Petrobras announced plans to suspend key asset sales in certain refineries, gas pipeline company Transportadora Associada de Gas (TAG) and the Araucaria fertilizer factory. On 12 July Brazilian development bank BNDES confirmed that it would suspend an auction of six electricity distributors owned by state-owned utility Eletrobras as it evaluates the ruling blocking the sales. The auction was scheduled for 26 July and was part of Eletrobras’ plans to sell indebted distributors before moving forward with government plans to privatise the company. Further delays and suspensions should be expected.
Asia-Pacific: Sino-US trade war escalates
Key Risks: trade war
On 10 July, the US published a list of about US$200bln worth of Chinese products that will be targeted with 10 per cent tariffs. The tariffs will target agricultural products, seafood, fruits as well as a wide range of consumer goods. Washington has said they will be imposed if Beijing fails to reduce its trade surplus. The threat comes after the US fired the first shot of the Sino-US trade war on 6 July, activating 25 per cent tariffs on US$34bln worth of Chinese goods. China retaliated with its own 25 per cent tariffs on US$34bln of American goods effective immediately. The trade war had been on the horizon for weeks as high level trade delegations repeatedly failed to hold mutually satisfactory negotiations, instead instigating a volatile back and forth between the two countries. Neither China nor the US is likely to back down on the trade war and further tariffs are likely to be imposed over the coming months.
Eurasia: Impact of Putin-Trump meeting likely muted; tensions in Azerbaijan rising
Key Risks: sanctions; political unrest; political stability
The impact of the 16 July summit between Russian President Vladimir Putin and US President Donald Trump is likely to be muted given ongoing US political scandals and the fact that the US Congress firmly opposes any reconciliation with Russia. Trump’s administration has also taken a far more hardline position on Russia than Trump himself has, although Trump’s denunciation of the Russian-German Nord Stream II pipeline and US legislation enabling it to be sanctioned could significantly affect that project. In Azerbaijan, the security situation is at risk of escalating rapidly after local security forces claimed they detained 18 in the city of Sumgayit on 15 July. They allege they were planning a coup-like attempt and were part of a group of ‘religious radicals’ it tied it to recent unrest in the western Azeri city of Ganja, the details of which remain extremely murky. Azeri officials also claimed the same day to have detained an Armenian soldier, which could raise bilateral tensions as well.
Europe: May fiddles with Brexit while Belfast burns
Key Risks: political violence; political instability
Britain’s governing Conservative party continues to argue amongst itself over a Brexit strategy, only eight-and-a-half months before it is due to formally leave the EU. A notable MP from the party, Justine Greening, proposed yet another referendum over the final deal on 16 July while British Prime Minister Theresa May faces increased pressure from hardline Brexiteers to change course. However, the government and British press largely ignored another notable development on 12 July – the outbreak of violent clashes between rioters and police in Northern Ireland, centred on contentious Unionist celebrations marking the Battle of the Boyne in Derry/Londonderry. The following day two petrol bombs were thrown at the leaders of the Republican Sinn Fein party in West Belfast. Given that the border between Ireland and Northern Ireland is one of the most contentious Brexit topic, the breakdown of the political aspects of the Good Friday Agreement over the past 20 months and the fact that May’s government relies on the support of the largest Unionist party, the DUP, to pass key legislation, an escalation of violence there could have a major impact on Brexit as well.
MENA: Protests in southern Iraq disrupt major infrastructure and transport hubs.
Sectors: Oil and gas; aviation; ports
Key Risks: Civil unrest; SRCC; violent clashes
In Iraq there have been days of protests in the south of the country over a lack of public services and employment. Protests began in Basra, near the West Qurna oilfield, and have since spread and gained momentum, largely focusing on major infrastructure such as the aforementioned oilfield, Najaf airport and Umm Qasr port, causing notable disruption to operations. The provinces of Karbala, Maysan, Muthanna, Babil, Dhi Qar, and Najaf have also been affected. Flights were grounded from Najaf airport on 13 July but have since been reopened. Also on 13 July, protestors marched on the headquarters on the main Shi’ah political parties. Overall at least eight people have been killed – three in Maysan, two each in Basra and Najaf, and one in Muthanna – and over 150 injured. There remains a risk of further unrest throughout the south of the country and the capital, Baghdad, could also be affected.
Sub-Saharan Africa: Bemba candidacy a boon for President Kabila?
Key Risks: political stability
In the Democratic Republic of Congo the Movement for the Liberation of Congo (MLC) opposition party officially nominated former rebel leader Jean-Pierre Bemba as its presidential candidate. Speculation about Bemba’s return to politics had been rife since the ICC overturned his war crimes conviction in June. Bemba, who won 42 per cent of the vote against President Joseph Kabila in 2006, can count on a strong support base in western DRC. Whereas the DRC’s opposition seemed rudderless following long-time opposition leader Etienne Tshisekedi’s death in 2017, there are now two strong contenders, after popular ex-governor of Katanga province Moise Katumbi declared he would return home from his Italian exile by August. However, Katumbi could still face prison for corruption charges or be barred from running because he previously held Italian citizenship. Meanwhile, President Kabila has been sending mixed signals regarding his ambitions to run for an unconstitutional third term. Paradoxically, Bemba’s nomination might be just what Kabila has been waiting for, given that the candidacy of a second high-profile candidate greatly reduces the likelihood of a joint opposition bid. Few would be surprised if the charges against Katumbi were now, suddenly, to be dropped.