Ones to Watch, 29 April 2019

Americas: Panama’s upcoming general elections unlikely to significantly alter main policies

Sectors: all
Key Risks: political stability; corruption; economic and business risks

In Panama, general elections to choose a new president, all 71 members of Congress and 81 mayors will take place on 5 May. The presidential candidates from the three main parties are expected to maintain a pro-business stance and continue supporting ongoing major infrastructure projects. The two main opposition parties, the centre-left Democratic Revolutionary Party (PRD) and centre-right Democratic Change (CD), are currently leading the polls and have benefitted from incumbent President Juan Carlos Varela’s high disapproval ratings. Laurentino Cortizo from the PRD remains the frontrunner with around 50 per cent of support, followed by CD’s Romulo Roux. The ruling right-wing Partido Panamenista candidate Jose Blandon trails heavily behind. The elections are unlikely to significantly alter the incumbent government’s policies. The new administration is likely to intensify the fight against corruption and to focus on measures to boost economic growth.

Asia-Pacific: Sri Lanka braces for new attacks, emergency powers likely to stoke further tensions

Sectors: all
Key Risks: terrorism; political stability

Sri Lankan authorities issued internal warnings about an imminent “new wave” of attacks on 28 and 29 April, allegedly involving extremist Islamist militants disguised in military uniforms. The assumed threat is believed to target Batticaloa, which saw fatal bombings on 21 April, and four other undisclosed locations. Heightened security measures remain in place as of 29 April, particularly around places of worship. Emergency powers introduced on 23 April have intensified large-scale security operations against the National Thawheedh Jamaath (NTJ) and Jammiyathul Millathu Ibrahim groups suspected of being responsible for the violence. Between 26 and 29 April authorities reported 48 new arrests. Further attacks cannot be ruled out, while tensions are likely to be compounded by political infighting surrounding President Sirisena’s overhaul of the security leadership and concerns that security measures targeted at Sri Lanka’s Muslim population could reignite communal tensions.

Eurasia: Russian gas companies post extremely strong results; Tajik debt concerns

Sectors: energy; mobile networks
Key Risks: credit risks; political interference in business; corruption

On 26 April Russian LNG producer Novatek, largely owned by oligarch Leonid Mikhelson, reported profits increased to US$5.8bln in Q1, up 666 per cent from the previous year. State-owned Gazprom similarly reported its profit had doubled to US$7bln in the same period, led by record sales to Europe. Novatek is the largest private gas producer in the country but has close ties to the Kremlin. Gazprom’s market cap remains depressed due to concerns over potential future sanctions, which could affect Novatek as well. In Tajikistan, President Emomali Rahmon unexpectedly cancelled a major increase of mobile phone and data tariffs that had engendered public opposition, rare in the tightly-run dictatorship. He also released the ex-CEO of Tajik Air, a detention seen as politically motivated, but there is little reason to believe the moves will see Rahmon and his nepotistic family loosen their grip of the country.

Europe: Spain likely to see tortuous coalition talks; new effort to form Northern Irish coalition  

Sectors: all
Key Risks: political stability; separatist tendencies

Spain’s incumbent Socialist Party (PSOE) won roughly 29 per cent of votes, obtaining 123 seats in the 350-person legislature, up from 85, in the 28 April elections. The main right-wing Popular Party (PP) saw its worst result in decades, winning 66 seats. PSOE leader Pedro Sanchez faces coalition negotiations likely to end in another minority government with the far-left Podemos, on 42 seats, backed by Basque regional and smaller parties and possibly with the support of Catalan separatists. The issue of Catalan independence and autonomy will cause continued political strains. Meanwhile the 26 April relaunch of government-formation talks in Northern Ireland, backed by both Irish and British governments, has dim prospects given British Prime Minister Theresa May’s dependency on the Northern Irish Democratic Unionist Party on a national level. Brexit tensions could exacerbate violence in the region.

MENA: Turkey’s Erdogan to take on AKP opponents

Sectors: all; oil and gas
Key Risks: political stability

Turkey‘s President Recep Tayyip Erdogan said he would start fighting opponents in his own Justice and Development Party (AKP) after it lost major cities Ankara and Istanbul to the opposition Republican People’s Party (CHP) in the 31 March local elections. Blame for this failure has been attributed to unspecified external groups and has lodged a number of legal appeals against the CHP. A new upsurge in arrests and hate speech has also been reported, with over 150,000 civil servants and military personnel sacked in recent years over accusations of involvement in the attempted 2016 coup. As many as 210 servicemen were arrested on 26 April for links with Fethullah Gulen, an outlawed cleric, and pro-AKP supporter who attacked the head of the opposition CHP party at a funeral on 21 April. A further deterioration and polarisation of the democratic situation is expected.

Sub-Saharan Africa: Risk of civil unrest elevated in aftermath of Benin’s parliamentary elections

Sectors: all
Key Risks: civil unrest

On 28 February parliamentary elections proceeded peacefully in Benin despite the exclusion of all opposition parties. In March the electoral commission decreed that only two parties – both allied to President Patrice Talon – met the admissibility criteria stipulated by a new electoral code passed in 2016. Opposition figures and international observers have levelled accusations of creeping authoritarianism against President Talon. Last week, security forces clashed with protestors in Cotonou after attempting to disperse impromptu demonstrations led by two former presidents, Nicephore Soglo and Thomas Bonu Yayi. Both men called for nationwide protests, raising concerns of civil unrest in the coming weeks. Nevertheless, the risk of violence is mitigated owing to a blanket ban on demonstrations, restrictions on social media and messaging apps, and the opposition’s inability to challenge the government as a cohesive entity.