Americas: Prime Minister Trudeau’s Liberal Party likely to win 20 September snap elections

Sectors: all
Key Risks: political stability; economic risks; governability

In Canada, on 15 August Prime Minister Justin Trudeau called for snap federal elections to be held on 20 September after requesting the governor-general to dissolve the parliament, citing the need to secure voter approval for his government’s COVID-19 plans. Recent polls suggest that Trudeau’s Liberal Party – which currently holds a minority in the House of Commons – would likely win a third consecutive term in office but may fall short of a majority. The party lost its legislative majority in 2019. Trudeau’s government has spent heavily on COVID-19-related support programmes and a legislative majority would give Trudeau a mandate to push forward policies to tackle climate change and to potentially further increase social and public healthcare spending. The opposition Conservative Party condemned the decision as an attempted power grab. Political tensions will remain high ahead of the vote.

Asia Pacific: Malaysian Prime Minister Muhyiddin resigns as political crisis persists

Sectors: all
Key Risks: political instability

In Malaysia, Prime Minister Muhyiddin Yassin resigned following months of political turmoil which first saw a public feud between the premier and the monarchy over the Parliament’s suspension. This was followed by the revocation of support from United Malays National Organisation (UMNO), the largest party within the ruling coalition on 3 August. Muhyiddin, whose legitimacy has been persistently questioned since taking power in March 2020, is set to remain in caretaker capacity whilst there is little indication as to who would succeed him or what comes next. A snap election cannot be ruled out although the country’s resurging COVID-19 infections pose both a political and health challenge. Alternatively, the monarchy could appoint an interim leader who is believed to command a majority. Muhyiddin’s resignation is anything but a solution to the current political crisis. Further instability is expected.

Eurasia: Taliban set to return to power after seizing Kabul

Sectors: all
Key Risks: war on land; political violence; policy uncertainty; political instability

Taliban militants are set to return to power after they entered Afghanistan’s capital Kabul and overran the presidential palace on 15 August, 20 years after the US-led coalition ousted the group in 2001. Militants have established a security presence in the city whilst US-led forces evacuate military and diplomatic personnel. Reports indicate former president Hamid Karzai and powerbrokers Abdullah Abdullah and Gulbuddin Hekmatyar will travel to Doha to arrange a formal transition of power after President Ashraf Ghani fled the country. The Taliban’s political leadership will seek international recognition, although this is unlikely to be successful in the West given the group’s extremist ideology and affiliations with organisations including al-Qaeda. While prominent anti-Taliban powerbrokers have either fled or surrendered, local security dynamics are likely to remain factionalised and armed resistance to Taliban rule is likely in the medium term.

Europe: Political manoeuvring in Poland; Germany’s election race heats up

Sectors: all
Key Risks: judicial reform; political instability; policy uncertainty;

Poland’s ruling Law and Justice party will seek to win over individual MPs and other right-wing groups in parliament in order to pass legislation following the loss of its parliamentary majority after junior coalition partner Accord left the government on 10 August. PiS will have secure cross-parliamentary support ahead of September’s debate on its ‘Polish Deal’, a set of tax and spending pledges which PiS aims to use to boost its prospects in the 2023 elections. Meanwhile, Germany’s election contest heats up as support for the ruling Christian Democrats (CDU) continues to fall according to 13 August opinion polls. Catastrophic flooding nationwide in July helped elevate the Green Party’s electoral prospects, and the party is still seen as a potential kingmaker. The contest for the 26 September Bundestag elections is likely to intensify in the coming weeks.

MENA: Pressure rises in Lebanon on political inertia, fuel explosion, shortages and hyperinflation

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

President Michel Aoun rebuffed calls to resign amid inertia in government formation with Lebanon’s new Prime Minister-designate Najib Miqati. Miqati was appointed on 26 July, after former premier-designate Sa’ad al-Hariri resigned his post on 15 July, having failed to agree with Aoun on a proposed cabinet after eight months. This comes as the country grapples with a worsening fuel crisis. Hospitals warn of full shutdowns, risking deaths of those in intensive care. Anger is further rising after at least 28 people were killed and dozens injured on 15 August when a fuel tanker exploded as the Lebanese Army was distributing confiscated fuel in northern Akkar province. Fuel subsidies were removed on 11 August, raising the price of fuel which is in scarce supply as hyperinflation and dollar shortages prevent imports. Aoun is unlikely to resign and the country’s myriad crises will continue escalating.

Sub-Saharan Africa: Opposition candidate Hichilema wins Zambian presidential elections

Sectors: all
Key Risks: policy uncertainty; political stability; economic risks

In Zambia on 16 August, opposition leader Hakainde Hichilema was declared the winner of the 12 August presidential elections after securing 2.8 m votes – 1 m more than incumbent President Edgar Lungu of the Patriotic Front (PF). Hichilema, who leads the United Party for National Development, defied expectations amid alleged gerrymandering measures by the PF including restrictions on movement, political campaigning and internet disruptions. Lungu claimed that the vote was neither free nor fair before official results were announced amid reported violence toward PF voters in several provinces. An African Union observer mission dismissed Lungu’s claims as inaccurate. There is a risk that Lungu will formally contest the result although a legal bid would likely fail due to Hichilema’s landslide victory. Despite the country’s strong democratic traditions, there is a risk of political instability yet widespread unrest is unlikely.