Americas: Bolsonaro to be inaugurated on 1 January 2019
Key Risks: political instability; civil unrest; business disruption
Brazil’s far-right president-elect Jair Bolsonaro will take office on 1 January amid continuous controversy surrounding his forthcoming administration. Bolsonaro’s policies include promises save the country’s crumbling economy, expand activity in protected Amazon reserves, drain the country’s political wetland in a corruption crackdown, increase security for Brazilian citizens and protect traditional family values. Bolsonaro finished his cabinet appointment on 9 December with one-third of ministers being from the armed forces, adding to lingering concerns about the military’s role in the incoming administration. While some investors remain optimistic that Bolsonaro’s administration can successfully cut the towering deficit, manage a controversial pension reform and ultimately restore the economy, Bolsonaro will likely face and battle several issues, including a divided Congress, pleasing the assorted groups that make up his composite voter crowd, and the moribund security situation in several parts of the country.
Asia-Pacific: South Korea announces revised FTA with the US
Key Risks: trade deficit; business disruption
South Korea’s Ministry of Trade, Industry and Energy announced that its revised Free Trade agreement (FTA) with the United States is set to take place by the end of the week. While the revised South Korea-US FTA is aimed at improving commerce and investment, the US used it to mainly address their deficit in the auto industry. Under the revised accord, the US will hold on to its 25 per cent tariff on South Korean pickup trucks until 2041. In addition, Seoul is required to double the 25,000 vehicle unit threshold for US imports that do not have to adhere to domestic industry regulations. Seoul has also agreed to ease its vehicle emission standards for cars shipped between 2021-2025 due to complaints from US manufacturers that Seoul’s environmental regulations act as a non-tariff barrier for US cars. South Korea continues to search for an economic spark as its economy continues slowdown.
Eurasia: Ukraine heads to presidential election; Belarusian-Russian spat continues
Sectors: oil and gas; energy; metals
Key Risks: trade disruption; protests
Russian President Vladimir Putin hosted his Belarusian counterpart, Alexander Lukashenko, on both 25 and 29 December for talks over the pricing of oil and natural gas shipments from Russia to Belarus. Putin was widely seen as putting pressure on Lukashenko to agree new efforts to tighten the political ties between the two countries – which under a largely dormant agreement are technically supposed to be moving towards forming a ‘unity state’ though no real progress has been made over the past fifteen years – call that Lukashenko attempted to deflect. New tensions could develop. Ukraine’s campaign season for the March presidential elections began on 31 December, a development that could see protests become more frequent, particularly as some of the leading candidates are highly controversial.
Europe: Brexit debates to resume, UK reportedly to push for new military bases abroad
Key Risks: political instability; trade disruption
British Defence Secretary Gavin Williamson is reportedly pushing a plan for the UK to build two new military bases, one in the Caribbean, and another in south-east Asia. Williamson said the country must seek to end the 1968 ‘East of Suez’ strategy that effectively led to the end of the British Empire. However, it is doubtful there would be parliamentary majority to pursue related funding, though it cannot be ruled out as such calls become more popular in line with Brexit. The Telegraph reported that Singapore or Brunei and Montserrat or Guyana were being considered for the plan. Brexit will return to the headlines as parliament reconvenes after its Christmas and New Year’s recess and while there have been some additional reports that the European Union could agree on a rough date for implementing a planned future trade agreement, it remains doubtful that this would convince hardline Brexiteers to back Prime Minister Theresa May’s negotiated EU Withdrawal Agreement.
MENA: Huthi forces withdraw from Hudaidah in first step of ceasefire agreement
Key Risks: all
Huthi forces have reportedly started to withdraw from Yemen’s vital port city of Hudaidah as part of the UN-sponsored peace settlement which came into effect on 17 December. Huthi forces alongside the Saudi-backed Hadi government agreed to implement a ceasefire in Hudaidah and withdraw their respective forces. Patrick Cammaert, the head of the UN advance team charged with monitoring the ceasefire, arrived in Hudaidah on 22 December. The agreement includes UN oversight of the port as well as opening humanitarian corridors for aid distribution and withdrawal of troops so as to enable the flow of supplies into the starving nation and prevent further bloodshed. Hadi-government forces are denying Huthi withdrawal claims. The ceasefire is fragile and may not hold due to a lack of mutual political will and continued allegations of ceasefire breaches.
Sub-Saharan Africa: Moxambique’s ex-finance minister arrested; Democratic Republic of Congo holds presidential elections
Key Risks: political instability; civil unrest; political violence; internal conflict
Mozambique’s ex-finance minister Manuel Chang was arrested on 29 December at Johannesburg’s OR Tambo International Airport on a US warrant. Reports claimed that Chang’s charges – money laundering, securities fraud, and wire fraud – were not related to corruption involved in the scandal over the Mozambican government’s ‘hidden debts,’ which plunged the country into default in 2017 and then two restructurings in 2017-18. However, Chang was finance minister at the time the guarantees were signed. His trials could result in further revelations around the debts. The Democratic Republic of Congo held presidential elections on 30 December but some regions were barred from participating amid concerns over an ebola outbreak and insecurity, though the opposition decried this as an attempt to stack the elections in favour of outgoing president Joseph Kabila’s favoured candidate, Emmanuel Ramazani Shadary, though local media reported that opposition figure Martin Fayulu is leading in initial results.