Ones to Watch, 14 October 2019

Americas: Bolivia’s President Morales runs for controversial re-election on 20 October

Sectors: all
Key Risks: political stability; election-related violence

In Bolivia, leftist President Evo Morales will seek to extend his 13-year long presidency by running for a controversial fourth term on 20 October. Frontrunner Morales and his nearest challenger, former president Carlos Mesa from the Citizen Community alliance, have consolidated their positions since September, raising the likelihood of a 15 December run-off. Polls suggest that Morales is likely to win the first round by a close margin, failing to reach the required majority to avoid a second round. Mesa has closed the gap on Morales, whose controversial re-election bid and the management of recent Amazon fires have triggered massive protests in recent weeks that are expected to continue in the lead up to and following the upcoming vote, particularly in opposition strongholds such as Santa Cruz. Uncertainty and politically-motivated violent incidents will remain a risk over the coming weeks.

Asia-Pacific: China and US agree on ‘mini-deal’ in latest round of trade war negotiations

Sectors: various
Key Risks: trade war

On 11 October US President Donald Trump declared a “Tentative ‘Phase One’ Trade Pact” with China after meeting with Chinese Vice Premier Liu He at the White House. The preliminary deal in principle includes commitments from China to purchase US$40-50bln in US agricultural products and to open itself further to international financial services. Indeed, Beijing announced a timetable for carrying out its pledge to allow full foreign ownership for futures firms, mutual fund companies and securities firms in 2020.  While this partial truce puts a US tariff increase on US$250bln of imports scheduled for 15 October on hold, the deal does not lower existing tariffs, nor does it address contentious issues such as intellectual property rights, subsidies for Chinese SOEs and Washington’s ‘Entity List’. New levies scheduled for December have not yet been called off either.

Eurasia: Afghanistan peace talks may resume; trial of ex-Kyrgyz president begins 

Sectors: all
Key Risks: war; terrorism; political stability; sovereign credit; political stability

Media reports confirmed that US Special Envoy to Afghanistan Zalmay Khalilzad met with a Taliban  representative in Pakistan earlier this month as a renewed effort to secure peace talks is reportedly  underway after US President Donald Trump spiked such talks at the beginning of September. However, although further talks are expected, the US is reportedly demanding the Taliban engage in a ceasefire as a confidence building measure, which they have previously refused. The trial of Kyrgyzstan’s former president Almazbek Atambayev began on 11 October, and while Atambayev’s political influence has waned, the trial could lead to charges against other allies and may herald the concentration of power by President Sooronbai Jeenbekov, which some in the opposition have warned could lead to a decline in democratic norms in the country.

Europe: Key Brexit deadlines loom; Catalan issue returns to fore in Spain 

Sectors: all
Key Risks: political stability; trade frustration

The coming week will be make-or-break for UK Prime Minister Boris Johnson’s Brexit strategy, with intense talks ongoing ahead of an EU summit on 17-18 October. There still remains a very serious risk no deal will be agreed. By law, Johnson would have to request a Brexit extension if no path forward has been approved by Parliament by then, but cabinet members have threatened to seek to circumvent the Benn Act. Parliament may attempt to tighten up the legislation ahead of the summit. There is a risk of significant political turmoil, including no-confidence votes and parliamentary votes exploring a second referendum. The pound may fluctuate heavily as well. Spain is also likely to see a repeat of some of its recent political turmoil after judges sentenced 12 Catalan independence leaders to jail on 14 October.

MENA: US sanctions on Turkey imminent; pro-regime troops deployed for Kurdish support

Sectors: oil & gas; various
Key Risks: war on land,  political stability

The Syrian Arab Army will deploy along the Turkish border, with localised Russian ground support, following a deal with Kurdish-led forces, although it is unclear what the deal entails. This is unlikely to deter the Turkish incursion that began on 10 October and raises the real risk of engagement between the Syrian Arab Army, Russian forces and the Turkish army. US President Donald Trump tweeted that he was preparing sanctions on Turkey, while EU threats to impose sanctions and arms embargoes failed to gain concessions from President Erdogan, who retaliated by threatening to ‘open the gates’ for 3.6 million refugees to Europe. Sanctions imposed in August 2018 caused the Turkish economy to shrink. Further sanctions will likely be wider ranging.

Sub-Saharan Africa: Ethiopia’s Abiy receives Nobel Peace Prize

Sectors: all
Key Risks: external conflict; internal conflict; political violence

On 11 October Ethiopia’s Prime Minister Abiy Ahmed was awarded the Nobel Peace Prize for his role in ending a border conflict with neighbouring Eritrea 20 years after fighting erupted between the two former archrivals. Since his unexpected rise to power in April 2018, Abiy has championed regional peace initiatives in the Horn of Africa and domestic democratic opening. However, despite his personal popularity,  Abiy’s choice has not been met with universal praise, with some critics calling the accolades premature. Implementation of the peace deal with Asmara has stalled, while the proliferation of ethno-nationalist organisations precipitated by his political reforms has fuelled violence and religious strife. Time will tell whether Abiy is the peacemaker he has set out to be.