Ones to Watch, 24 September 2018

Americas: Labour unions launch 36-hour strike against Argentina’s government

Sectors: all
Key Risks: strikes; civil unrest; governability; policy continuity

In Argentina, labour unions and social movements plan to launch a 36-hour long strike on 24 September led by the Workers’ Central Union (CTA) which the General Confederation of Labour (CGT), Argentina’s largest labour union, plans to join on 24 September to mark its fourth general strike against the government of President Mauricio Macri. Major transport disruption is expected, with potential for localised incidents of unrest in the capital Buenos Aires which could turn violent at short notice. Labour unions, which are undergoing intense infighting, are protesting against the government’s austerity programme as well as the agreement and ongoing negotiations with the IMF. Disruptive protests are likely to continue to take place over the coming months, particularly as the government-backed 2019 austerity budget is being discussed in Congress. Despite growing union pressure, the government is unlikely to change its economic policy direction.

Asia-Pacific: Shock victory for opposition in Maldives’ presidential elections

Sectors: tourism
Key Risks: FoP; political instability

Abdulla Yameen has formally conceded defeat to opposition leader Ibrahim Mohamed Solih in the Maldives’ presidential election. Solih won with a margin of 16.7 per cent over Yameen. Solih lead a joint opposition alliance and has been calling for democratic reforms. Yameen was widely expected to win another term in office, partly due to widespread fears of electoral fraud. Yameen’s government had become increasingly repressive, and twice declared a state of emergency. As president, Solih could attempt to rationalise the country’s relationship with Beijing, which has grown increasingly influential on the islands since the overthrow of former president Nasheed in 2012. Solih could also try to form closer relations with Delhi. The change in government is unlikely to affect the tourism industry significantly, although there is a small risk of fallout to hotels that are partly owned by those close to Yameen.

Eurasia: Sanctions concerns continue to dominate for Russia

Sectors: metals; energy
Key Risks: sanctions; frustration of process

On 21 September the US extended the deadline for dealing with companies controlled by Russian oligarch Oleg Deripaska, most notably Rusal and EN+, from 21 October to 12 November. A Treasury spokesperson said that the extension was in order to consider “substantial corporate governance changes that could potentially result in significant changes in control”. The companies were sanctioned in April as a result of the sanctioning of Deripaska, a close Kremlin confidante, which roiled global aluminium markets. Talks could still fall apart. On 22 September, Russian business paper RBC reported Russia would offer the full financing for the Nord Stream 2 project if Western partners withdrew as a result of US sanctions threats. European energy firms Shell, Uniper, Wintershall, Engie and ÖMV have all committed loans of EUR950m toward the project. Sanctions concerns have only escalated amid repeated direct threats from Washington to punish those firms involved in recent weeks. Germany has so far said it will continue to support the project, however.

Europe: Macedonia name change referendum to be held 30 September

Sectors: all
Key Risks: protests; civil unrest; bilateral tensions

Voters in Macedonia are due to head to the polls on 30 September to vote in a referendum on changing the country’s’ name to North Macedonia. If voters approve the referendum, the Greek legislature is expected – but by no means guaranteed given nationalist sentiment over the issue – to sign-off on the deal initially inked by Prime Minister Zoran Zaev and Alexis Tsipra in June of this year. Doing so would see Greece lift its veto on advancing talks on NATO and European Union membership for Macedonia, although even if this does come to pass both are likely to proceed slowly. Protests are likely in both Macedonia and northern Greece’s own Macedonia region during and after the vote, which could feature isolated incidents of violence.

MENA: Iran mass shooting stirs hostilities, possibility of retaliation

Sectors: all
Key Risks: governability; policy continuity; political instability, bilateral tensions, civil unrest

At least 29 people were killed and another 60 were injured in Ahvaz when gunmen, disguised in Iranian army uniforms, ambushed a military parade commemorating the 30th anniversary of the start of the Iran-Iraq war. Tehran is blaming separatist groups backed by Saudi Arabia and their “US masters”, with Iran’s Revolutionary Guard Corps (IRGC) threatening unspecified reprisals towards Saudi and the US. Local separatist groups deny the attack, which IS has claimed. This attack is the largest of its kind since June 2017, when IS members attacked Tehran’s parliament and a mausoleum. The scale of the attack is unusual in Iran and comes at a time of high political uncertainty and an already dire economic situation exacerbated by US sanctions. Retaliatory attacks may occur amidst heightening regional tensions.

Sub-Saharan Africa: South Africa’s Ramaphosa presents US$3.5bln stimulus package

Sectors: all
Key Risks: economic growth; government finances

On 21 September President Cyril Ramaphosa unveiled a 50bln rand (US$3.5bln) stimulus and recovery package aimed at reviving South Africa’s struggling economy, which slipped into recession in the second quarter of 2018. Alongside long-awaited reform of mining and energy sector regulations and a relaxation of visa requirements to boost tourism, the programme centres on an infrastructure fund, to which the government intends contribute 400bln rand (US$28bln) over the next three years. Ramaphosa promised the government would redirect funds within the budget rather than take on new debt to finance the measures so as not to jeopardise South Africa’s credit rating, while simultaneously leaving social spending untouched. However, the public sector cuts likely required for this could prove difficult to implement. While widely seen as a step in the right direction, initial market reactions to the programme were muted as uncertainty over its impact and financing remain.