Ones to Watch, 29 October 2018

ONES TO WATCH

Americas: Keiko Fujimori’s preventive detention request hearing continues in Peru

Sectors: all
Key Risks: political stability; civil unrest

In Peru, the hearing to assess the public prosecutor’s 36-month preventive detention request for conservative Popular Force (FP) party leader Keiko Fujimori and ten others continued for the fifth day on 29 October. The hearing is part of a money laundering investigation involving Fujimori, the daughter of former president Alberto Fujimori and ten others with connections to the party. Fujimori is accused of leading a criminal organisation within the party and laundering US$1.2m in illegal funds from Brazilian construction firm Odebrecht disguised as campaign donations during her 2011 presidential campaign. She was arrested on 10 October for a preliminary 10-day detention alongside 19 others, but was released on 17 October. Fujimori said the arrest was politically motivated and has denied taking money from Odebrecht. Judge Richard Concepcion Carhuancho is expected to make the hearing decision over the coming days.

Asia-Pacific: A potentially unconstitutional coup in Sri Lanka

Sectors: all
Key Risks: political stability

On 26 October Sri Lankan President Maithripala Sirisena replaced Prime Minister Ranil Wickremesinghe with ex-president Mahinda Rajapaksa, who had been voted out of office in 2015 on the back of war crime and corruption allegations. Sirisena suspended parliament until 16 November. Wickremasinghe claims his removal is unconstitutional and has refused to step down. According to the constitution, the president does not have the power to change prime ministers without the approval of parliament. While the person appointed prime minister should have a parliamentary majority, it was not clear that Rajapaksa enjoyed majority support. However, Rajapaksa is already summoning senior military leaders to garner their support, with some previously uncommitted MPs believed to be crossing to his side. On 28 October one person was killed and two others injured when the Petroleum Minister’s bodyguard fired at protesters showing their support for Sirisena.

Eurasia:  Georgian elections head to runoff

Sectors: all
Key Risks: political infighting, protests

The 28 October Georgian presidential election failed to end with a clear winner, and will head to a runoff, due to be held by 1 December. Salome Zurabishvili, an independent backed by the ruling Georgian Dream party, received 39 per cent of votes, just above the 38 per cent won by her runoff opponent, Grigol Vashadze, of the opposition United National Movement (UNM). The result was unexpectedly strong for the UNM. If the UNM and European Georgia can unite and garner additional opposition support, Vashadze would be the favourite. Campaigning will be tense and there is a moderate risk of protests before the run-off. A victory by Vashadze would result in the second-ever democratic transition of power at the presidency level in the country, though tensions between Vashadze and the Georgian Dream – which holds a parliamentary super majority – would likely come to dominate politics for the medium term.

Europe: The end of the Merkel era begins

Sectors: all
Key Risks: political instability, snap elections, European unity

German Chancellor Angela Merkel – arguably also the most influential politician in the European Union for much of the past two decades – announced on 29 October that she would not run for re-election as head of her party, the Christian Democratic Union (CDU). The announcement will lead to jockeying by other CDU leaders to succeed her as chair of the CDU at the party’s 7-8 December conference, though the favorite is the party’s current secretary, Annegret Kramp-Karrenbauer. However, Kramp-Karrenbauer is not seen as particularly charismatic and has a low profile, which could open the door to challengers such as the more right-leaning Jens Spahn or other ex-CDU grandees. Merkel also said she would not seek re-election when the next parliamentary vote occurs, due by 2021. However, that election could be moved up as the CDU’s current coalition with the centre-left Social Democrats is already fraying.

MENA:  Developments expected in Jamal Khashoggi case, sanctions unlikely

Sectors: defense, oil & gas
Key Risks: sanctions, business interruption, contract frustration

Developments in the Jamal Khashoggi case may see further punitive measures on Saudi Arabia announced. US President Donald Trump met with CIA Director Gina Haspel on 26 October regarding the findings of her visit to Turkey during which she listened to the audiotape purported to contain a recording of Khashoggi’s interrogation and murder. Canadian Prime Minister Justin Trudeau hesitated over cancelling arms sales to Riyadh after German Chancellor Angela Merkel halted approval of future arms sales indefinitely. Trudeau posited that cancelling a US$15bln deal with Riyadh would cost Ottawa ‘billions of dollars’. HSBC, Europe’s largest bank, stated that the affair was unlikely to have much of an impact on trade and investment with the kingdom, given its strategic position in global energy markets. US visa restrictions imposed on 21 Saudi nationals are purely symbolic.

Sub-Saharan Africa: Conakry clashes could foretell political instability

Sectors: mining
Key Risks: political violence; political instability

At least 30 people were injured in clashes between security forces and opposition supporters in Guinea’s capital Conakry on 25 October. The unrest broke out after opposition leader Cellou Dalein Diallo claimed police had fired at his car a day earlier and comes amid rising political tensions in the instability-prone country. One person was killed on 16 October in protests over delays in the appointment of officials elected in February’s municipal elections, which the opposition claims were rigged. While riots have long been a common feature of Guinea’s political landscape, President Alpha Conde’s 13-year rule has been marked by relative political stability and impressive economic growth rates. The recent spike in political tensions indicates that could now be coming to an end, however. With Conde hinting he may abolish term limits, violent clashes are only likely to become more frequent.