Ones to Watch, 22 July 2019

Americas: Puerto Rico to face further protests, heightened political instability risks

Sectors: all
Key Risks: civil unrest; protests; political stability

In Puerto Rico, Governor Ricardo Rossello remains defiant to massive protests calling for his resignation over the so called ‘chatgate’ scandal. On 21 July Rossello announced he would not seek re-election in 2020 and resigned as president of the ruling New Progressive Party (PNP) in an attempt to defuse tensions, but reiterated his refusal to step down from the governorship. Thousands are expected to continue to demonstrate for the tenth consecutive day on 22 July, when a general strike is also scheduled to take place. Protests erupted on 13 July after the publication of private group chat messages between Rossello and members of his administration, which included misogynist, homophobic and other offensive comments. The scandal followed the 10 July arrest of two former top government officials over corruption accusations. Further protests and heightened political instability risks should be expected.

 

Asia-Pacific: Suspected pro-Beijing triad members attack protesters in Hong Kong SAR

Sectors: all
Key Risks: civil unrest; protests; gang crime; political stability

On 21 July dozens of men, suspected of being triad members, attacked protesters, journalists and bystanders at Yuen Long MTR station in the New Territories in Hong Kong SAR. The men were armed with clubs, rods and bamboo sticks. The attack came hours after a violent protest in the city centre on Hong Kong island over the highly contentious extradition bill. The violence at Yuen Long has opened up new fronts in Hong Kong’s widening political crisis. The triad members are pro-Beijing and Hong Kong’s triad networks have been linked to political intimidation and violence targeting pro-democracy activists and Beijing critics since the 2014 pro-democracy Umbrella Movement. Police were criticised for failing to take action and no arrests were made. There remains a high risk of violent outbreaks in Hong Kong, including indiscriminate attacks carried out by pro-Beijing thugs.

 

Eurasia: President Zelensky’s party to win big in Ukrainian parliamentary elections, protests in Russia

Sectors: all
Key Risks: political stability; civil unrest

Initial results from Ukraine’s 21 July parliamentary election show president Volodymyr Zelensky’s party, Servant of the People, set to be the first political party in post-independence history to win a majority. Should the party not win a majority, Zelensky stated he would commence coalition talks with Golos, whose leader, the musician Svyatoslav Vakarchuk, is rumoured to be aiming to become prime minister. A parliamentary majority would allow Zelensky to appoint his chosen ministers and freely implement his agenda, with his first priority lifting a law granting lawmakers immunity from prosecution. However, his party consists entirely of newcomers and there are concerns it may be beholden to special interests. Week-long protests in Russia over the disqualification of candidates for the Moscow City Council elections culminated in a demonstration of at least 20,000 people on 20 July, with further protests in the coming weeks expected.

 

Europe: Boris Johnson expected to become UK prime minister; key week ahead for Spain 

Sectors: all
Key Risks: political stability; trade disruption

Boris Johnson is widely expected to be announced the winner of the Conservative Party leadership contest that concludes today, meaning he is expected to become Britain’s prime minister on 23 July. Two key members of Prime Minister Theresa MAy’s outgoing cabinet will move to the backbenches, raising the possibility that Johnson’s slim parliamentary majority – dependent on support from the hardline Northern Irish Democratic Unionist Party (DUP) – could evaporate. There is a high possibility of snap elections even before the next Brexit deadline, 31 October, as sufficient Conservative MPs have indicated they could back moves to bar a snap election. Whether Spain will also head to snap elections will become clear this week, although acting Prime Minister Pedro Sanchez’s chances of forming at least a minority government were boosted by the fact Podemos leader Pablo Iglesias has withdrawn his demand for a senior ministership.

 

MENA: Punitive action expected over detained British tanker; nuclear deal falters; escalation looms

Sectors: oil & gas; shipping 
Key Risks: sanctions; business disruption; war at sea

Iran’s Revolutionary Guard Corps (IRGC) seized British-flagged oil tanker Stena Impero and Mesdar, a Liberian-flagged, British-operated tanker, near the Straits of Hormuz. Mesdar was quickly released but Stena Impero was taken to Bandar Abbas port after a UK Navy warship failed in its attempt to prevent the seizure, seemingly in retaliation for Britain’s detention of an Iranian tanker off of Gibraltar since 4 July over alleged sanctions violations. Tehran may be also trying to take advantage of Britain’s political turmoil. Nonetheless, new sanctions could occur which would further erode the ability of signatories to uphold the last vestiges of commitment to the 2015 Iran nuclear deal. Further hostile action from all parties in the Gulf is expected given recent incidents and given the growing number of military vessels and troops deployed to the region.

 

Sub-Saharan Africa: Ethiopia’s Sidama row back on threat to declare regional state, but risk of violence remains

Sectors: all
Key Risks: ethnic violence; political instability 

At least 17 people were killed in weekend clashes between security forces and protesters calling for a separate regional state for the Sidama people in and around southern Ethiopia’s Hawassa city. Ethiopia has seen a proliferation of ethnic-based political movements, some of them heavily militarised, since Prime Minister Abiy Ahmed eased rules on public gatherings and made it easier for opposition parties to operate. Activists had threatened to unilaterally declare a separate region for the Sidama, the largest among the ethnic groups currently subsumed in the Southern Nations, Nationalities and Peoples region on 18 July, but rowed back after the central government promised to hold a referendum on the matter in December. The Sidama’s demand for statehood could inspire further separatist movements in the Southern Nations region and elsewhere in Ethiopia, threatening political stability as elections in 2020 approach.