Americas: Mexico’s AMLO to continue to prioritise state over private sector despite major defeat

Sectors: all; electricity; mining; oil and gas
Key Risks: regulatory changes; contract frustration; nationalisations

In Mexico, President Andres Manuel Lopez Obrador (AMLO) will continue to prioritise the state over private players in the country’s key sectors despite a major defeat in the lower house of Congress. On 17 April AMLO’s flagship and controversial energy reform failed to reach the two-thirds majority needed to become law. The reform included constitutional amendments to strengthen the state’s role vis-á-vis the private sector, a move which will remain amongst AMLO’s priorities. Denouncing “treason” from those who voted against the reform, AMLO submitted changes to the 1992 Mining Law which were approved on 18 April with the required simple majority. The changes set the stage for the nationalisation of lithium resources by prohibiting private participation in the lithium market. Mexico does not have commercial lithium production but is believed to have lucrative deposits. Policy direction is not expected to change.

Asia Pacific: China’s GDP expanded by 4.8 per cent in Q1 year-on-year

Sectors: all
Key Risks: economic risks

In China, GDP grew by 4.8 per cent in Q1 year-on-year despite localised lockdowns in industrial cities including Shenzhen that have stifled already-weak household consumption, which expanded by only 3.3 per cent. This indicates how poorly consumption has continued to perform as a source of growth. Exports grew by 13.4 per cent along with a 7.5 per cent growth in imports, another indication of weaker demand. The distribution of Chinese growth is a direct result of Beijing’s persisting emphasis on supply-side policies to boost growth that would continue to worsen its already deep demand imbalances and substantially increase the debt burden. Barring major COVID-19 outbreaks in H2 2022, Beijing should be able to meet its growth target of around 5.5 per cent, although this is likely to be achieved through the implementation of supply-side policies.

Eurasia: Russian major offensive in eastern Ukraine has begun

Sectors: all
Key risks: war on land

In Ukraine, on 18 April President Volodymyr Zelensky stated that the long-anticipated Russian offensive in the east of the country had begun. The country’s top security official, Oleksiy Danilov, added that Russian forces attempted to break through Ukrainian defences ‘along almost the entire front line in the Donetsk, Luhansk and Kharkiv Oblasts’. The announcement was later confirmed by Russian Foreign Minister Sergei Lavrov, who acknowledged that the ‘new and very important phase of the operation’  was beginning. Lavrov added that the goal was to ‘liberate Donetsk and Luhansk’ – Ukraine’s separatist republics located in the east of the country. Russian forces have been preparing for the offensive to take the entire Donbas region since end-March, when Moscow withdrew its forces from Kyiv, Chernihiv and Sumy Oblasts. While fighting will be concentrated in the east, Russian forces are likely to continue targeting infrastructure facilities across the country.

Europe: Finland to start discussion over NATO membership 

Sectors: all; defence
Key Risks: war on land

In Finland, on 13 April the government presented a security report to parliament focusing on the discussion on whether the country should join NATO. Parliament is expected to start such discussion in the coming days, with Finnish Prime Minister Sanna Marin claiming that Helsinki would take the decision “within weeks”. The announcement came amid increasing support for NATO membership among the populace. In the latest poll, 68 per cent of respondents stated that they were in favour of joining while only 12 per cent were against it – a significant shift from pre-invasion average polling of 20-30 per cent in favour. As a response, on 14 April a close ally of Russian President Vladimir Putin, Dimitry Medved, warned of nuclear and hypersonic deployment to Russia’s Baltic exclave of Kaliningrad should Finland join the Alliance. Further similar threats are likely during the official discussion over NATO membership.

MENA: Rocket fired from Gaza, Israel conducts air strikes on the strip

Sectors: all
Key Risks: war; civil unrest

On 18 April a rocket was fired into southern Israel and sirens were heard in Kissufim and Ein HaShlosha areas. The Israeli military stated that the Iron Dome had intercepted the rocket and that no casualties or material damages were reported. On 19 April the Israeli military conducted air strikes on Hamas’s weapons manufacturing sites in Khan Yunis inside Gaza. No casualties have been reported. In retaliation, Hamas fired Russian-made surface-to-air missiles known as Strela for the first time to fend off Israeli fighter jets. Hamas has warned Israel to stop its raids in Al-Aqsa mosque and the West Bank which have led to dozens of killings and hundreds of injuries and arrests in recent weeks. Further Israeli violence against Palestinians in Jerusalem and the West Bank will likely result in rocket attacks from Gaza, which can potentially lead to a full-fledged war.

Sub-Saharan Africa: Sudanese military announces release of political detainees ahead of dialogue 

Sectors: all
Key Risks: civil unrest; political instability 

In Sudan, on 16 April the Head of the ruling Sovereign Council General Abdel Fattah al-Burhan announced that procedures to release political detainees would begin to create a favourable atmosphere for dialogue. Al-Burhan also stated that the military was prepared to step down and transfer power to civilians if an agreement is made with political forces, most notably the opposition Forces of Freedom and Change (FFC) coalition. The announcement came after the FFC stated that it would not proceed with any political process without the release of political detainees and the abolition of the state of emergency. The release of political prisoners could mark a key development in the country’s political crisis and pave the way for negotiations. However, previous statements of ‘goodwill’ by the military have failed to lead to meaningful negotiations or compromise. Further anti-military protests will continue.