Americas: Pedro Castillo expected to win Peru’s presidential runoff, pending results

Sectors: all

Key Risks: political instability; governability; economic risks; policy continuity; civil unrest

In Peru, far-left presidential frontrunner Pedro Castillo is expected to be declared the winner of the 6 June presidential runoff in the coming days. His conservative opponent, Keiko Fujimori, has so far refused to concede. On 11 June the electoral tribunal ruled that most of Fujimori’s requests to nullify around 200,000 votes due to alleged fraud were made after the legal deadline, suggesting that the votes under review would be insufficient to turn Castillo’s marginal lead of 0.28 percentage points. On 12 June thousands of supporters of both Castillo and Fujimori demonstrated in Lima as tensions over the extremely polarised election continued to mount. Castillo’s probable victory would likely result in Fujimori’s preventative detention over her involvement in the Odebrecht graft scandal. Irrespective of the final results, unrest and instability risks will remain high for the foreseeable future.

Asia Pacific: China’s NPC adopts Anti-Foreign Sanction Law

Sectors: all

Key Risks: sanctions; business risks

China’s National People’s Congress passed the Anti-Foreign Sanctions Law on 10 June amid an increasingly hostile external environment. The new law has two main objectives. First, it aims to create the legal foundation for Beijing to sanction foreign government officials, think tanks and NGOs involved in the process of coordinating and implementing punitive measures against the country. Second, the law prohibits any companies operating in the country, domestic or foreign, from complying with Western sanctions while exposing them to possible civil lawsuits for damages caused by such compliance. One of the provisions does allow certain companies to apply for an exemption, although it is believed this will be subject to interpretation and possible political manipulation. Furthermore, a special leading group was also established to coordinate sanctions and identify options to retaliate against foreign entities that threaten Chinese sovereignty.

Eurasia: Putin to meet Biden at Russia-US summit; snap elections in Armenia

Sectors: all

Key Risks: policy continuity; political stability; civil unrest

Russian President Vladimir Putin will meet his US counterpart Joe Biden at a hotly-anticipated bilateral summit in Geneva on 16 June. While the US president has conspicuously avoided the invariably unsuccessful ‘reset’ narrative popular amongst many of his predecessors, both Biden and Putin have described relations as extremely poor and any drastic improvement is highly unlikely. There is some potential for amelioration on arms control, climate change and select foreign policy issues. Meanwhile, snap elections in Armenia are scheduled for 20 June in what will be a significant event in the ongoing fallout from the late 2020 flare-up of the Nagorno-Karabakh conflict. Incumbent and Acting Prime Minister Nikol Pashinyan lost considerable support following Yerevan’s human and territorial losses to Azerbaijan, though polls put his Civil Contract party just ahead of former president Robert Kocharyan’s Armenia Alliance.

Europe: UK Brexit negotiations; Germany’s Green Party chancellor candidate; Spain’s Catalan pardons

Sectors: all   

Key Risks: political stability; economic risks

UK Prime Minister Boris Johnson threatened to invoke emergency measures in the Northern Ireland protocol of the Brexit deal if no solution is found to a dispute with the EU over the trade of chilled meats in Northern Ireland. Further talks are expected. On 13 June Germany’s Green Party confirmed Annalena Baebock as its chancellor candidate for upcoming elections in September. The Green Party could be influential in the formation of the next government, although Baebock’s candidacy trails behind her Christian Democratic Union and Social Democratic Party rivals. In Spain, on 13 June 25,000 people rallied in Madrid against plans to pardon 12 Catalonian separatists convicted for their involvement in a failed secession attempt in 2017. The government maintains that the pardons are likely to happen soon, despite the Supreme Court’s opposition. Further unrest is expected should the pardons be issued.

MENA: Ultra-conservative favourite to win Iranian elections; first week for new Israeli premier

Sectors: all ; hydrocarbons

Key Risks: political risks; political instability; policy disruption

Iranian presidential elections are due to occur on 18 June, with ultra-conservative Ebrahim Raisi the favourite to win. A close ally of Supreme Leader Khamenei, Raisi runs virtually uncontested after the Guardian Council barred most rivals from the race to replace outgoing ‘moderate’ President Hassan Ruhani. The elections come amid nuclear negotiations between Iran and the United States (US) on Tehran’s nuclear activity, reportedly in their final stages. Raisi’s victory may signal increased roadblocks during ongoing rounds of nuclear discussions in Vienna. In Israel, the new ‘Change’ government headed by ultra-nationalist Naftali Bennett was sworn in on 13 June under a premier rotation agreement with centrist Yair Lapid. The coalition is ideologically diverse and will seek to reduce possible sources of dispute by focussing on economic and social issues rather than the Palestinian question, which risks fragmenting the fragile alliance.

Sub-Saharan Africa: Zambian Constitutional Court approves President Lungu’s re-election bid

Sectors: all

Key Risks: political risks; economic risks; political continuity

In Zambia, the Constitutional Court ruled on 11 June that President Edgar Lungu’s candidacy in the upcoming 12 August presidential election was legal. The ruling followed two legal challenges on Lungu’s re-election bid by the opposition, who claimed that he had exceeded his two-term limit. Lungu, who first took office in 2015 following the death of his predecessor Michael Sata, has faced multiple economic crises during his tenure. A fall in the price of copper, the country’s main export, has exacerbated economic woes and pushed Lusaka into recession as global commodity prices collapsed in early 2020. In November 2020 Lusaka defaulted on a US$42.5m Eurobond loan, which forced the government to seek emergency IMF assistance. The approval of Lungu’s candidacy, which also comes amid creeping democratic backsliding by the government, is likely to heighten political tensions ahead of the vote.