Americas: Government to support mining sector as local referendums loom in Ecuador
Sectors: mining; extractive industries
Key Risks: FoP; local referendums; judicial instability
In Ecuador, on 13 June the government announced that Australia’s SolGold’s Cascabel project in Imbabura province could become one of the largest mines in the world. Cascabel is in an advanced exploration phase, with reserves of 10.9m tonnes of copper and over 23m ounces of gold. Cascabel and Lundin Gold’s Fruta del Norte are two of the most relevant projects Ecuador has been trying to develop amid efforts to boost mining activity, which the government expects will account for 4 per cent of GDP by 2021. Despite government support, local opposition to many projects persists. Imbabura locals have asked the Constitutional Court to allow a referendum on whether mining should take place in the province, with a ruling expected on 24 June. Recent judicial decisions against extractive activities indicate that the risks of judicial instability and potential project delays or cancellations remain.
Asia-Pacific: Financial policymakers in China try to calm market nerves after Baoshang takeover
Key Risks: non-payment
On 16 June China’s leading brokerages discussed options to address liquidity risks, proposing that counter-parties should be rationally proceed and recommending that institutions do not suspend their repo lending businesses. The meeting comes amid growing concerns about the health of small banks after regulators took over Baoshang Bank on 24 May due to “serious” credit risks. Despite marked unease, financial policymakers have repeatedly emphasised that the Baoshang case was an isolated incident. Meanwhile, regulators are planning to evaluate Baoshang’s assets with the aim of restructuring it as soon as possible. The winding down of the bank’s assets instead of bailing it out is a new approach, and the Baoshang case could mark a pivotal moment for the banking industry’s consolidation.
Eurasia: Tajikistan fosters Chinese ties, Armenia’s ruling party seen to concentrate power
Key Risks: economic stability; political stability
On 15 June Tajikistan’s President Emomali Rahmon and his Chinese counterpart, Xi Jinping, signed a series of bilateral agreements. Dushanbe owes as much as 50 per cent of its public debt to Beijing, and quietly allowed China to build a series of military bases in its Gorno-Badakhshan province, near the border with Afghanistan, in 2014, although only evidence of one such base has since been publicly revealed. While the details of the latest agreements were not released, Dushanbe will become increasingly dependent on Beijing, with its only other major source of foreign exchange coming from remittances from Russia. Meanwhile in Armenia, Prime Minister Nikol Pashinyan’s Civic Contract party held its first Congress on 16 June but many pro-reform activists saw it as a major disappointment and have begun to elucidate concerns about the country’s path one year after its democratic revolution.
Europe: Moldova overcomes constitutional crisis but many challenges remain
Key Risks: constitutional crisis; economic stability; divided coalition
On 14 June Moldova’s Democratic Party allowed a coalition of the anti-corruption ACUM and pro-Russian Socialist parties to take power after a week-long constitutional crisis. Pavel Filip stepped down as acting prime minister and president, effectively allowing Maia Sandu to take up the former position while Igor Dodon will resume his role as president. The Democrats’ eminence-grise, oligarch Vlad Plahotniuc, reportedly fled to London while another oligarch, Ilan Shor, was rumored to have fled as well. The ACUM-Socialist coalition could prove short-lived, however, as all that unites them is their antipathy towards Plahotniuc. Dodon has said the new coalition will be oriented towards Russia while Sandu, his former opponent in the 2016 presidential election, has called for closer ties with Brussels. Plahotniuc and Shor could seek their revenge by undermining the nation’s economy, a large share of which is under their control.
MENA: 100 UK marines sent to Gulf after tanker attacks
Key Risks: war on land; war at sea; oil disruption
100 Royal Navy marines will be sent to the British naval base in Bahrain to defend British warships following the 13 June attacks on two oil tankers in the Strait of Hormuz. The Marines comprise a rapid reaction force operating on ships that will patrol the region from a new naval base in Bahrain. British Foreign Secretary Jeremy Hunt said Iran was “almost certainly” behind the 13 June attacks, which Tehran has denied. Hunt has received wide criticism for his remarks, but the comment indicates that incidents in the Gulf are proving worrying to countries still perceived to be Iran’s allies. Bilateral relations between European countries and Iran have dwindled under US President Donald Trump’s “maximum pressure” policy. Relations are likely to decay further given the 13 June incidents and the diplomatic feud over Iran’s imprisonment of British-Iranian citizen Nazanin Zaghari-Ratcliffe.
Sub-Saharan Africa: Riot police forcibly disperse anti-corruption protest in Senegalese capital
Key Risks: civil unrest
On 14 June riot police forcibly dispersed protesters in Senegal’s capital Dakar who were demonstrating over a BBC report implicating President Macky Sall’s brother Aliou in a corruption scandal. The allegations relate to two offshore gas blocks awarded to a virtually unknown company called Petro-Tim in 2012, which subsequently sold the licenses on to BP. Among other allegations, Aliou Sall has been accused of accepting a bribe of US$250,000 from Romanian-Australian tycoon Frank Timis, the owner of Petro-Tim. Protests over the original deal first erupted in Dakar in 2016 during President Sall’s first term. The government’s promise to open an impartial investigation into the allegations is unlikely to assuage public anger. Further unsanctioned anti-corruption demonstrations are possible in the coming weeks and are likely to be met with a heavy-handed police response.