Americas: Costa Rica’s controversial tax reform moves forward; strike to continue
Sectors: all
Key Risks: civil unrest; strikes; policy changes
In Costa Rica, Congress approved a controversial tax reform on 5 October amid ongoing protests from public sector workers. The government-backed Strengthening Public Finance bill is aimed at addressing a fiscal crisis. The Constitutional Chamber now needs to rule on its constitutionality. The reforms will then return to Congress for a final vote, with the process likely to take at least 45 days. The reform would turn the country’s 13 per cent sales tax into a Value Added Tax, increasing the number of taxed products and services. A unions-led indefinite national strike has been ongoing since 10 September. Violence and security-force repression have been reported during the associated protests. Further incidents will remain likely over the coming weeks as the strike action and related unrest are expected to continue.
Asia-Pacific: Serious health issues may force Duterte to step down
Sectors: all
Key Risks: political stability
On 5 October Philippines President Rodrigo Duterte hinted that he may not be physically fit to continue as president after conceding he was admitted to hospital for digestive tract examinations and awaiting findings on a ‘growth’. Duterte added that he would step down if results revealed he was suffering from a serious illness such as cancer. Duterte has long complained of suffering from Barrett’s esophagus – an inflammation of the tube connecting the mouth to the stomach – although there has been speculation for some time that he may be terminally ill. According to the constitution, the president would be replaced by the vice president if he decides to resign, although Duterte has repeatedly signaled he is opposed to current Vice President Leni Robredo succeeding him. Robredo’s election is being challenged by Ferdinand Marcos Jr. the son of the former dictator.
Eurasia: Asylum case may cause Kazakh-China tensions, IMF calls to shutter Tajik banks
Sectors: Energy; metals and mining; banks
Key Risks: frustration of process; contract frustration
On 5 October a lawyer for Sayragul Sauytbay, an ethnic Kazakh Chinese national, said that Kazakh authorities denied her asylum. Sauytbay fled China’s Xinjiang province in April after being detained in a ‘re-education camp’. She was previously tried and given a six-month suspended sentence but was not deported, as human rights groups had feared. Sauytbay’s lawyer hinted she may seek asylum elsewhere. If Sauytbay is able to do so, it may avoid the case escalating to the point it affects bilateral ties. Tajikistan on the other hand faces more serious headwinds after local media reported on 4 October that an IMF delegation to Tajikistan recommended that the government declare Tojiksodirotbank and Agroinvestbank as bankrupt. Meanwhile the country’s debts continue to mount and various state entities are believed to be late in payment to several local entities.
Europe: Election leaves Latvia in Limbo; Romania referendum fails and PSD faces challenges
Sectors: all
Key Risks: political instability
The Russia-friendly Harmony Centre won 24 seats in the 100-seat legislature in Latvia’s 6 October elections, making it once again Latvia’s largest party. The populist New Conservatives won 16 seats. The anti-establishment Who Owns the State Party (KPV LV) won 15. Prime Minister Maris Kucinskis’ Union of Greens and Farmers’ fell from 21 seats to 11. For Development, another new faction, won 13 seats. The centrist New Unity and National Alliance parties won 13 and 8 seats, down from 17 and 23. Traditionally, Latvian coalitions have excluded Harmony Centre but this may be impossible given the fractured parliament. Political instability will rise and it could be some time before a cabinet is formed. Political instability is also likely to increase in Romania after the governing Social Democrats (PSD) were unable to drive out votes for a referendum barring LGBT marriages.
MENA: Diplomatic tensions between Turkey and Saudi Arabia raised over disappearance of journalist in Istanbul
Sectors: all
Key Risks: frustration of process; contract frustration
Diplomatic tensions between Riyadh and Ankara are spiking over the disappearance of the dissident reporter Jamal Khashoggi, reportedly last seen at the Saudi consulate in Istanbul on 2 October. Khashoggi, a Saudi national and fierce critic of the Saudi government, has been living in self-imposed exile in Washington. A Saudi official denied Khashoggi had disappeared and stated that he had left the consulate as a Turkish presidential spokesman alleged that Khashoggi is being detained within the building. A search of the consulate has been requested by Turkish authorities. The two countries are allies, and have a good historical economic partnership. However given Mohammad bin Salman’s historically disproportionate reaction to perceived slights against Saudi Arabia and Turkey’s current economic woes, Erdogan may have to tread gently so as not to alienate a financial ally. It is unlikely that either will concede to the other.
Sub-Saharan Africa: Expected Biya victory could provoke escalation of separatist conflict in Cameroon
Sectors: all
Key Risks: political instability; civil unrest; conflict
On 7 October Cameroonians voted in a presidential election that is expected to change little politically but could have significant implications for the ongoing insurgency in the country’s Anglophone regions. Amid a tightly restricted electoral environment, incumbent Paul Biya, now in the 37th year of his rule, is widely expected to win a seventh term. The relevant question is by how large a margin Biya will prevail over his main challenger Joshua Osih of the opposition Social Democratic Front (SDF), and how both the president and the opposition will act in the coming weeks. Osih is an Anglophone, and the English-speaking Northwest and Southwest regions are traditionally SDF strongholds – perceptions of massive vote fraud or an intensified crackdown on dissent in the wake of Biya’s expected victory could lead to a further escalation of the crisis, which has already claimed hundreds of lives since 2017.
