Americas: Peru’s crisis deepens as PM’s resignation triggers second cabinet reshuffle in a week

Sectors: all; mining; oil
Key Risks: political stability; governability; business and economic risks

In Peru, on 5 February Hector Valer resigned as prime minister after only days in the post, triggering a second cabinet reshuffle in a week. Far-left President Pedro Castillo said the day prior that he would shuffle his cabinet after local media reported on police complaints from 2016 filed by Valer’s daughter and late wife claiming that he had beat them. On 31 January Castillo appointed Valer as his premier and replaced another 17 ministers amid a major reshuffle that marked his third cabinet since July 2021. Valer’s predecessor Mirtha Vasquez had resigned citing the ‘impossibility of reaching consensus’ within the government days after now former interior minister Avelino Guillen stepped down over disagreements with Castillo. Further details over new appointments are expected in the coming days. Lack of governability and instability risks will remain the norm throughout Castillo’s presidency.

Asia Pacific: China’s CNPC finalises gas deal during Russian President Putin’s state visit

Sectors: all; oil & gas
Key Risks: business risks

In China, China National Petroleum Corporation (CNPC) and Gazprom signed a 30-year deal during which Gazprom would supply China with 10bcm of gas annually. The deal would make Moscow the country’s largest gas supplier amid Beijing’s trade frictions with Australia and as Qatar, a major Chinese supplier becomes a non-NATO ally. The new gas deal, which would be settled in Euro as both countries diversify from the US dollar, came as Russian President Vladmir Putin met his counterpart Xi Jinping in Beijing where the two leaders reaffirmed their strongest ties in decades. Both leaders also condemned NATO expansion and the West’s ‘Cold War mentality’, a main reason behind mounting tensions with the West from Moscow’s and Beijing’s perspective. The bilateral relations are expected to continue to deepen although mutual suspicion and mistrust run deep in both Moscow and Beijing.

Eurasia: Russia’s Chechen leader Kadyrov intensifies campaign against his opponents 

Sectors: all
Key risks: political stability; human rights

In the Russian republic of Chechnya, on 2 February thousands rallied against activist and human-rights lawyer Abubakar Yangulbaev and his family members. According to local independent media, the Chechen government organised the rally and mandated state employees and students to participate. The rally was an escalation of a series of steps taken by Chechen leader Ramzan Kadyrov to silence Yangylbaev who has openly criticised Kadyrov and his government. On 20 January members of the Chechen security services kidnapped Yangulbaev’s mother in central Russia’s Nizhny Novgorod and forcibly took her to Chechnya. Yangulbaev’s other family members fled Russia and Yangulbaev left Georgia, fearing persecution. The campaign against Yangulbaev indicates that Kadyrov has intensified efforts to silence his opponents. Although Russia’s President Vladimir Putin reportedly held talks with Kadyrov on 2 February, he is unlikely to restrict Kadyrov’s activities. Further attacks on Kadyrov’s opponents are expected.

Europe: French, German leaders in Russia, US in push to defuse tensions over Ukraine

Sectors: all; economy; defence
Key Risks: sanctions; trade; business risks; war on land

In Russia, on 7 February France’s President Emmanuel Macron will meet Russian President Vladimir Putin in Moscow for talks on de-escalating tensions over Ukraine. Macron has held several phone calls with Putin in recent days, more than any other European leader. With upcoming presidential elections in April, Macron will hope to be seen to play a constructive role in ensuring peace in Europe. Meanwhile, Germany’s Chancellor Olaf Scholz is in the US where he will hold talks with President Joe Biden during his inaugural visit. In recent weeks Scholz has been personally criticised for failing to show leadership and to clearly communicate Germany’s position on the Ukraine crisis. Whilst Scholz has stated that all options are on the table in the event of any potential Russian aggression towards Ukraine, he has so far been reluctant to discuss the Nord Stream 2 pipeline.

MENA: Tunisia’s president dissolves Supreme Judicial Council

Sectors: all
Key Risks: civil unrest; political stability

In Tunisia, on 6 February President Kais Sa’id dissolved the Supreme Judicial Council, the body responsible for judicial appointments, raising fears for the judiciary’s independence. The dissolvement came after months of Sa’id’s criticism of the council’s judges and followed his revocation of its financial privileges in January. The president had formerly accused the body of bias, corruption and of delaying rulings in corruption and terrorism cases. Council head Youssef Bouzakher denounced the move as ‘illegal’. The body was formed in 2016 and is regarded as an independent and constitutional institution. Its powers include ensuring the independence of the judiciary, disciplining judges and granting professional promotions. The dissolution will likely undermine judicial independence in a further test to the resilience of the decade-old Tunisian democracy following Sa’id’s power grab in July 2021.

Sub-Saharan Africa:  Burkina Faso’s junta signals cooperative stance to avoid ECOWAS sanctions

Sectors: all
Key Risks: sanctions; policy uncertainty

In Burkina Faso, the country’s military leadership led by Colonel Paul-Henri Damiba successfully avoided the implementation of regional economic sanctions following an emergency summit of the Economic Community of West African State (ECOWAS) on 3 February. After deliberations, ECOWAS issued a statement claiming that military leaders led by Damiba, who deposed President Roch Kabore on 24 January, had demonstrated sufficient willingness to work towards the restoration of constitutional rule. It is likely that the junta is hoping to avoid regional economic sanctions the likes of which are significantly harming Mali’s economy and public finances. Despite promising signs, relations remain fragile and could rapidly deteriorate – with risks of both sanctions and disruptions affecting international counter-terrorism efforts – should Damiba fail to propose a credible election timetable, refuse to release Kabore or appear to be seeking to indefinitely prolong military rule.