Ones to Watch, 24 December 2018

Americas: US besotted with political turmoil driven by Trump, Chile protests likey

Sectors: all
Key Risks: political instability; civil unrest; business disruption

Following the US government shutdown on 22 December prompted by President Donald Trump’s decision not to approve any budget bill that does not include at least US$5bln in spending for his desired ‘border wall,’ disruption should be expected. Democrats take control of the House of Representatives on 3 January and are all-but-guaranteed to refuse his demands, which means the shutdown could be extended. Additional policy turmoil from the US government is to be expected after Trump fired Defense Secretary Jim Mattis days after he announced plans to retire in protest at Trump’s desired Syria withdrawal. Concerns over the US economy after Treasury Secretary Steve Mnuchin issued a mercurial statement on 23 December. Major protests in Chile are likely after the indigenous Mapuche communities issued a call for mobilisation on 27-28 December and they may result in significant unrest.

Asia-Pacific: China’s legislature drafts proposal to prohibit forced technology transfers

Sectors: all 
Key Risks: sanctions; trade-war; technology

China’s legislature began deliberation over a draft proposal that will prohibit the forced transfer of foreign technology to domestic companies through administrative measures. The ban is Beijing’s attempt to alleviate some of the US’ concerns as the two countries attempt to address trade imbalance ahead of a 1 March deadline. However, the draft can be seen as merely an official declaration of Beijing’s official stance that the technology transfers are ‘voluntary’. Most companies have been willing to part ways with their technological advancements in order to gain market share, so long as it isn’t their latest innovation. President Trump has voiced concerns that Chinese companies will overtake their US counterparts in the high-tech fields if such practices are allowed to continue. While it is still unclear how effective the draft will be in practice, it is unlikely to affect foreign companies’ decision to ‘voluntarily’ transfer its technology.

Eurasia: Lukashenko-Putin meeting set for 25 December; martial law to expire in Ukraine 

Sectors: oil and gas; energy; metals 
Key Risks: trade disruption

Belarusian and Russian presidents Alexander Lukashenko and Vladimir Putin are due to meet on 25 December in what may prove to be a rather controversial tete-a-tete. Russian officials have called for Belarus to advance with long-frozen plans to advance the ‘unity state’ between the two countries under which they formally agreed to ultimately use the same currency and agree a joint administration. Lukashenko has pushed back of late, though he has himself been the one to call for the agenda to be advanced in the past. Disputes over the effort could lead to disruption in the oil and gas trade in particular given Russia’s use of these exports as instruments of political leverage. Meanwhile the martial law announced in Ukraine last month is due to formally expire on 26 December, though last minute extensions cannot be ruled out.

Europe: Anti-government marches in Hungary & Serbia continue, vow further protests in 2019

Sectors: all
Key Risks: protests; civil unrest; political stability 

On 21 December, several thousand Hungarians protested in a march from parliament to the presidential palace in Budapest. Police refrained from cracking down however, unlike previous weekends. Notably smaller demonstrations also took place in smaller towns and cities. The protests are against a series of efforts by the ruling Fidesz government and Prime Minister Viktor Orban which they deem anti-democratic, such as overtime labour laws and Orban’s allies’ control of the media. Organisers vowed to continue the protest movement into 2019. So too did protest organisers in Serbia where on 22 December thousands protested in Belgrade to condemn the government of President Aleksandar Vucic. Similar protests took place on 8 and 15 December. their supporters have vowed to continue the movement into 2019 though the fact the protests appear to be increasingly led by urban liberal groups may mitigate their chances of gaining support outside Belgrade.

MENA: Increased deployment of troops despite postponement of military operations

Sectors: all
Key Risks: all

Turkish President Recep Tayyip Erdogan announced the postponement of a military operation against Syrian Kurdish fighters in north-east Syria as reports come of increased Turkish weaponry and military power deployed to the Syrian border. The operation to clear both Kurdish and Islamic State (IS) forces from Syria was declared on 12 December, but delayed following the US announcement withdrawing troops from the region.  Brett McGurk announced his resignation as US Special Envoy to the coalition fighting the Islamic State (IS) in protest. Increased deployment of troops suggests that Ankara will fill the void caused by the US withdrawal. Turkish forces have concurrently increased operations against Kurdistan Workers’ Party (PKK) positions in Iraqi and Kurdish territory. Turkish anti-Kurdish operations in Syria will be detrimental to anti-IS operations in both Syria and Iraq at a time when studies show IS is reconstituting.

Sub-Saharan Africa: DRC vote postponed to 30 December

Sectors: all
Key Risks: political instability; civil unrest; political violence; internal conflict

The Democratic Republic of Congo’s electoral commission CENI postponed presidential and legislative elections, previously scheduled for 23 December, by a week until 30 December following a fire that destroyed thousands of voting machines on 13 December. The delay marks a u-turn for CENI, which previously vowed the vote would go ahead regardless. The announcement was greeted by violent protests across the country with many fearing the postponement could foreshadow further attempts by the government to obstruct the vote, which was originally due to be held in 2016. Opposition candidate Martin Fayulu announced his voters would not accept any further delays. Even if the elections go ahead on 30 December, peaceful polls are far from guaranteed. With free and fair elections a distant hope and anti-government sentiment close to boiling point, the DRC could be headed for chaos.