Americas: Argentina to speed up debt restructuring talks

Sectors: all
Key Risks: sovereign default; policy continuity

In Argentina, the Economy Minister is expected to meet IMF and US Treasury officials in the US as negotiations to restructure around US$100bln in sovereign debt continue. President Alberto Fernandez recently stated that the country needs a ‘relatively quick’ solution to the debt crisis. On 28 January the lower house of Congress will debate legislation on the restructuring plans in an attempt to speed up the process and show signs of unity as negotiations with creditors unfold. Speculation about the likely solution has included the possibility of substantive haircuts, extending maturities and even defaulting, particularly in the light of recent developments in Buenos Aires province, which was forced to extend a deadline for creditors to agree or reject a plan to delay a US$250m January 2021 bond repayment due on 26 January. The risk of default persists.

Asia-Pacific: Chinese authorities expand measures aimed at containing coronavirus

Sectors: all
Key Risks: economic risks; business, travel disruption; civil unrest; 

In China, authorities extended the Lunar New Year holiday to 2 February and announced suspended visa and passport services for its citizens in Wuhan until 30 January. 15 cities have reportedly been placed under full or partial lockdown. As announced by the Shanghai government, no companies in the city will be allowed to resume operations before 9 February, affecting businesses including Tesla, General Motors and Volkswagen. The closure aims to slow down the spread of coronavirus, which has so far claimed the lives of 81 people. Confirmed cases across China have risen to 2,744. There are concerns that the pandemic may affect Chinese GDP projections for 2020. Plans are being made to evacuate foreign nationals from Wuhan and other cities by their governments. Further travel restrictions, business disruption and spread of the disease in the region remain likely.

Eurasia: Surkov’s resignation could signal changes in Russia’s Donbas policy; elite infighting in Turkmenistan

Sectors: various
Key Risks: political stability; political risks; war on land

Russian state media reported the resignation of long-serving Kremlin advisor Vladislav Surkov, who has overseen Russia’s policies in the so-called People’s Republics of Donetsk and Luhansk in de jure Ukraine for more than six years. Dmitry Kozak has been rumoured to be his successor in overseeing the breakaway regions, which could indicate the Kremlin is seeking to de-escalate tensions in the region in negotiations in the coming months. It is too early to say so definitely. Meanwhile, in Turkmenistan President Gurbanguly Berdymukhamedov sacked Yaylym Berdyev as national security minister, which might be connected to a case involving the former interior minister Isgender Mulikov and the ex-head of Berdymukhamedov’s security detail Meylis Novatov, who are both jailed for alleged corrupt dealings with Turkmen businessman, Charymukhammed Kulov. Berdymukhamedov’s purge of security chiefs suggests elite infighting might be brewing in the country.

Europe: The end of the beginning of Brexit; risk of snap election in Italy tumbles 

Sectors: all
Key Risks: trade frustration; regionalised political instability and unrest

The UK is set to leave the EU on 31 January, though it will effectively continue to follow all EU rules until the end of the year. Negotiations on the future relationship will be tense. Although both sides have in principle said they want no tariffs and no quotas, this will in full not be achievable given Westminster’s red lines over freedom of movement. Meanwhile, tensions in Northern Ireland may spike as evidenced by the 25 January assassination attempt on a prominent Irish Republican leader in East Belfast. The issue of Gibraltar’s future relationship with the EU will also attract increased prominence. Within the EU, the major risk of a destabilising snap in Italy has fallen after the Democratic Party held on by a surprisingly comfortable margin over the far-right League in bellwether elections in Emilia-Romagna on 26 January.

MENA: Middle East ‘peace plan’ announced; Libya escalation; potential US retaliation in Iraq

Sectors: oil & gas; all
Key Risks: strikes and unrest; business disruption; political violence; war on land 

Israeli Prime Minister Benjamin Netanyahu and opposition leader Benny Gantz are in Washington for talks with the White House in advance of the expected announcement of the US’s Middle East ‘peace deal’ on 28 January. A military commission is to be deployed in Libya to determine battle lines and monitor ceasefire implementation after two peace conferences did not yield results. Such events appear contributing factors to the collapse of the 12 January ceasefire as the Libyan National Army advance on Misrata and seek to further erode UN-backed Government of National Accord’s territory before the commission. Following the 26 January rocket attack on the US embassy in Baghdad, in which three US embassy staff were injured, some form of US retaliatory action may occur. This may destabilise Iraq’s security situation further, but inaction would further embolden the perpetrators.

Sub-Saharan Africa: Burundi’s ruling party names Evariste Ndayishimiye as presidential candidate

Sectors: all
Key Risks: civil unrest; political violence; political instability

Burundi’s ruling CNDD-FDD nominated its secretary-general Evariste Ndayishimiye as its candidate for the upcoming presidential election in May. Ndayishimiye, who has served as minister of the interior and security and currently heads the department of military affairs, is widely seen as an acolyte of incumbent President Pierre Nkurunziza. Nkurunziza, whose controversial re-election for a third term in 2015 plunged the country into an ongoing political crisis, had promised not to stand again. However, Nkurunziza is expected to retain significant influence after parliament passed a bill in mid-January elevating him to “supreme leader”. Ndayishimiye is widely expected to win amid a brutal government crackdown on dissent. Attacks by exiled opposition groups are likely to increase in the run-up to the vote. Political turmoil is likely to persist as Ndayishimiye is expected to continue Nkurunziza’s repressive policies.