Americas: Indigenous protests against oil-related activities intensify in northern Peru

Sectors: oil and gas
Key Risks: civil unrest; business disruption

In Peru, indigenous-led disruptive unrest against oil-related activities appears set to intensify in the northern Loreto region. On 6 July around 400 indigenous protesters took over Station 5 of the state-owned Petroperu’s Norperuano pipeline in Manseriche district. The protesters paralysed the facility after cutting off the power supply. Petroperu called on authorities to intervene to restore order at the station. Indigenous communities are demanding the government address the damages that an oil spill reportedly caused on their water and food supplies on 18 June. They are also demanding increased benefits from oil-related activities in the area. A meeting between government representatives, Petroperu and indigenous leaders and organisations to address the grievances is scheduled for 9 July after 54 indigenous federations announced an indefinite strike on 5 July. Further disruptive unrest with potential to turn violent remains likely.

Asia-Pacific: ADF tracking Chinese surveillance ship headed for Australian coast

Sectors: maritime
Key Risks: military conflict; diplomatic fallout

Reports emerged that a Chinese surveillance vessel is heading towards international waters off Australia’s north-eastern coast, where Australia and the United States (US) will be holding the bi-annual Talisman Sabre war games. Australian Defence Force (ADF) officials said on 8 July that they are tracking the Chinese vessel, which is expected to position itself in the area to monitor the military exercises first-hand. About 25,000 Australian and US military personnel on board battleships are participating in the games over the next month. The suspected Chinese surveillance operation comes amid tensions over the trade and tech war and China’s perceived assertiveness in the Pacific, where it claims most of the South China Sea. Australia and China are also competing for influence in the resource-rich South Pacific. Beijing is seeking to extend its power and influence in the maritime area.

Eurasia: Ukraine-Russia talk proposals, and Turkmengaz agrees on a supply deal with Gazprom

Sectors: diplomacy; energy
Key Risks: political stability; diplomatic fallout; economic stability

Ukrainian President Volodymyr Zelensky proposed internationally-mediated talks with his Russian counterpart, Vladimir Putin, in order to break the deadlock over Russia’s continued occupation of Crimea and its backing for separatist forces in eastern Ukraine. The Kremlin said it would consider the proposal, but even if such talks proceed they are unlikely to result in any immediate agreement on the territories given ongoing hostilities and the intractable nature of the two countries’ myriad disputes. Meanwhile, Turkmenistan’s Turkmenngaz and Russia’s Gazprom agreed a five-year deal for Ashgabat to supply Russia with 5.5 billion cubic metres (bcm) of gas annually for the next five years. The volume of gas to be sold is only a fraction of what Turkmenistan once delivered Russia, and the sales are likely insufficient to significantly improve the economy.

Europe: Domestic benefits of New Democracy’s victory in Greece likely limited, regional risks rise

Sectors: all 
Key Risks: political stability; economic stability 

Greece’s 7 July elections saw the centre-right New Democracy party win a parliamentary majority, returning it to power after four years of government by the leftist Syriza party. However, New Democracy is likely to face continued challenges in stimulating growth even if its early months are welcomed by a honeymoon of increasing FDI. Overall, however, New Democracy’s election is likely to improve macroeconomic stability in the country. It also makes it more likely that North Macedonia and Albania will not be invited to start European Union (EU) accession talks after the bloc reviews their applications in October, and tensions with Skopje in particular could escalate if New Democracy actually does move to scrap the Prespa Agreement finalised by its Syriza predecessor and the North Macedonian government earlier this year. Snap elections should be considered likely in North Macedonia.

MENA: Shipment of Russian S-400s to Turkey expected imminently, US sanctions may follow 

Sectors: defense
Key Risks: sanctions; diplomatic fallout; business disruption

Russian and Turkish news sources indicate that Turkey is expected to take possession of Russian S-400 anti-aircraft system as early as this week possibly in the next couple of days. This delivery could trigger certain sanctions and contract renegotiation for over 90 different parts F-35 parts which are manufactured in Turkey. The US has warned that the integration of S-400s into Turkey’s defence system would jeopardise the F-35 fighter jet programme and allow Russia access to F-35 jet technological intelligence – Washington offered Turkey the US Patriot missile defence system after Ankara sealed the S-400 deal with Russia. US President Donald Trump attempted to alleviate fears of multilateral sanctions in June, saying that Turkey was treated unfairly in the spat, but sanctions’ impositions under the Countering American Adversaries Through Sanctions Act (CAATSA) could still occur.

Sub-Saharan Africa: African Continental Free Trade Area enters operational phase 

Sectors: all
Key Risks: economic integration; economic growth

The heads of state and governments of African Union member states officially launched the operational phase of the African Continental Free Trade Area (AfCFTA) after Nigeria, the continent’s largest economy, became the latest country to sign the agreement. AfCFTA creates the world’s largest free-trade zone by population. The pact aims to boost intra-African trade by over 50 per cent by 2022 compared to a 2010 baseline. However, near-term benefits could be smaller than anticipated after the timeline for the gradual elimination of internal tariffs was extended to 13 years and given that a full harmonisation of external tariffs is unlikely within the next year. Non-tariff barriers, largely untouched by the agreement, will further hamper regional integration.  Nonetheless, if properly implemented, the agreement is likely to have a significant positive economic impact in the medium-to-long term.