Americas: First lawsuits hit Cuba after US Helms Burton Act Title III took effect on 2 May
Key Risks: business disruption; lawsuits; confiscation; diplomatic fallout
In Cuba, bilateral tensions with the US are expected to further increase after the controversial activation of Title III of the 1996 Helms Burton Act on 2 May. Title III allows US citizens whose property was confiscated after the 1959 Cuban revolution to sue individuals or companies profiting from those assets in US courts. The activation of Title lll, which had so far been waived by US presidents to avoid myriad lawsuits and to protect the interests of US allies including Canada and the EU, triggered the first lawsuit filed by two Cuban-Americans against cruise operator Carnival on 2 May. On 3 May, US oil giant ExxonMobil sued Cuban state-owned oil company CUPET and CIMEX seeking US$280m in compensation over expropriated assets. Exxon is the first corporation to sue Cuban companies. Other similar lawsuits will likely follow.
Asia-Pacific: Political turmoil continues in PNG as government faces no-confidence vote
Sectors: oil and gas; various
Key Risks: political stability; contract frustration
The government of Prime Minister Peter O’Neill is set to face a vote of no-confidence on 16 May as more members of Papua New Guinea’s tumultuous government resign from the ruling coalition. Senior ministers and coalition parties cited a growing lack of trust in the prime minister, including failure to consult on key issues. The main complaint relates to what is perceived as an unfavourable US$16bln deal to expand a major gas project. On 6 May the opposition declared recently resigned Finance Minister James Marape, who hails from the resource-rich Highlands region, as their prime ministerial candidate. Both the ruling party and the opposition claim to have a majority in the 111-seat parliament. The PNG government will remain fluid over the coming days, with further resignations expected. There is also a high risk of civil unrest in Port Moresby.
Eurasia: Data on Turkmenistan gas reveals likely value of Russia sales, flights to EU resume
Sectors: oil; aviation
Key Risks: sovereign credit risks; political stability
Turkmenistan’s national air carrier, Turkmen Airlines, quietly revealed on 1 May that it would resume flights to Europe on 1 June, bringing a key earner of foreign exchange for the cash-strapped state online. Turkmenistan Airlines has a unique niche, it primarily serves as a moderate-cost carrier for Sikhs travelling to Amritsar, India, with multiple direct flights between Amritsar and Ashgabat, the Turkmen capital per day although Turkmenistan does not have any notable Sikh community. The country also has resumed gas exports to Russia via Kazakhstan, and data from Kazakhstan’s national pipeline operator, KazTransGas, put such flows at 15 million cubic metres (bcm) of gas per day. If rumours that Gazprom is paying a bargain basement price of $110 per 1,000 cubic metres are true, this would make the deal worth only US$1.6m a day to Ashgabat.
Europe: North Macedonia overcomes yet to Greece name deal
Key Risks: political stability; trade disruption
The May 5 election election of Stevo Pendarovski of North Macedonia’s governing Social Democratic Union (SDSM) as president with 52 per was widely seen as a positive vote in what was effectively another referendum on the 2018 Prespa agreement between Greece and North Macedonia for the latter to add ‘North’ to its name in exchange for normalisation of relations. Pendarovski’s election means it is increasingly unlikely the deal will be challenged, although Greece’s own upcoming October elections – where the issue is due to be divisive – could cast doubt on that. However, AKE believes that ultimately even Greece’s centre-right New Democracy Party, which leads in the polls and voted against accepting the Prespa pact will likely back it.
MENA: US deploys aircraft carrier to “send message” to Iran
Key Risks: war
US National Security Advisor John Bolton said that the US is deploying its USS Abraham Lincoln aircraft carrier and battle group to the Arabian/Persian Gulf in response to indications that land and maritime preparations were being made by Iran and proxies for a possible attack on US forces in the region. The carrier was in Europe for war games with US allies which occurred during April, but the deployment to reinforce US land-based assets in the Gulf is unusual. Oil waivers for sanctions on imports of Iranian oil came to an end on 2 May, further heightening tensions.Bolton said the US did not want war but that it was ready to respond to Iran with force if attacked. Tensions between the two have been ratcheting up over recent months and are at a peak after Iran’s military unit the Iran Revolutionary Guards Council was designated a terror organisation by the US, following which Iran designated the US army a terror organisation, sparking alarm over such attacks on US forces in the region.
Sub-Saharan Africa: South Africans vote in watershed election
Key Risks: investment climate; CEND
On 8 May South Africans will vote in a general election that could decide the future of the ruling African National Congress (ANC) – and that of South Africa’s economy. Whilst the ANC is widely expected to hold on to power, polls point toward a significant decline in support to around 50 per cent, an unprecedented 12 per cent drop from the 2014 elections. The populist far-left Economic Freedom Fighters (EFF), meanwhile, are expected to more than double their result to around 15 per cent, with the traditional main opposition, the Democratic Alliance, on course for a repeat of its 2014 result of around 22 per cent. A poor showing for the ANC, combined with a strong result for the EFF, would undermine reform-minded Ramaphosa’s authority and embolden intra-party rivals sympathetic to the EFF’s calls for more radical economic transformation, likely forcing Ramaphosa to water down or abandon structural reforms seen as necessary to revive economic growth.