Americas: Colombia’s presidential elections likely to result in June runoff, political uncertainty

Sectors: all
Key Risks: political violence and uncertainty; policy continuity; business and economic risks

In Colombia, presidential elections scheduled for 29 May are expected to lead to a 19 June runoff between leftist frontrunner Gustavo Petro and either centre-right Federico Gutierrez or independent businessman Rodolfo Hernandez. Recent polls suggest that either of them could challenge Petro in the second round as no candidate is expected to reach the 50 per cent threshold to win outright. While the prospect of a Petro victory continues to rattle the markets, any radical reforms – including potential regulatory changes to the country’s investor-friendly policy framework – would most likely be challenged by a highly fragmented Congress. The 13 March legislative elections seem to have indicated that the country is gearing towards a left-leaning administration amid a wider regional shift towards the left, as recently seen in Chile and Peru. Heightened uncertainty and political violence risks will mark the coming weeks.

Asia Pacific: US president Biden launches IPEF with 12 Asian countries; pledges to defend Taiwan

Sectors: trade; energy; infrastructure
Key Risks: geopolitical tension

In Japan, US President Joe Biden launched the Indo-Pacific Economic Framework (IPEF) alongside Japanese Prime Minister Fumio Kishida. The agreement will include the US and its allies such as Japan, Australia, New Zealand and South Korea, as well as India and seven non-China-aligned ASEAN countries. Taiwan was excluded due to concerns among Asian countries that its inclusion would antagonise Beijing. IPEF is centred around trade; supply chains; clean energy and infrastructure; and tax and anti-corruption but was criticised by members for lacking transparency and access to the US market. With many IPEF members already part of the China-backed RCEP and the CPTPP agreements, that the US left in 2017, there is continued pressure on the US to increase economic engagement with the region. President Biden also pledged to defend Taiwan by force if necessary, a move that has angered Beijing.

Eurasia: EU-led joint border demarcation committee to meet on Armenia-Azerbaijan border

Sectors: all
Key risks: war on land; trade; civil unrest

On 22 May European Council President Charles Michel announced that the first meeting of an EU-led joint commission on border demarcation would be held in the ‘coming days’ on the Armenia-Azerbaijan border. The announcement came after Michel held bilateral meetings with both Armenian Prime Minister Nikol Pashinyan and Azerbaijani President Ilham Aliyev, before a trilateral meeting was held during which a peace plan for the disputed Nagorno-Karabakh (NK) region was discussed. Since late-April Pashinyan has faced ongoing protests in Armenia’s capital, Yerevan, including calls for his resignation due to his perceived concessions to Azerbaijan over NK. At least 600 protesters have been detained so far in May. Protests against Pashinyan could easily gain momentum should the commission meeting take place as planned.

Europe: Germany backs possible EU ban on Russian oil imports that excludes Hungary

Sectors: energy; oil and gas
Key Risks: business risks; trade; sanctions

In Germany, Economy Minister Robert Habeck stated on 23 March that Berlin would be willing to forgo Hungary’s participation in an EU embargo on Russian oil imports to speed up the process of imposing a sixth round of sanctions on Moscow over its invasion of Ukraine. Hungary has continued to withhold support for a possible oil embargo and is seeking to opt out over piped supplies and more time to phase out imports. This has thwarted the imposition of an EU-wide oil embargo, which would be the centrepiece of a sixth package of sanctions, as such a ban would require unanimity among EU member states. It remains unclear whether the EU will move forward with Habeck’s proposal as the bloc has sought to present a united front against Moscow over the war in Ukraine.

MENA: IRGC colonel killed in Tehran by suspected Israeli operatives

Sectors: all
Key Risks: political violence

In Iran, Sayad Khodai, a colonel in the Revolutionary Guard Corps (IRGC) was killed by two armed men on a motorcycle near his home in Tehran. Tehran has accused Israeli secret intelligence operatives of carrying out the attack. Local media reported that the IRGC had discovered and arrested members of an Israeli intelligence service in Iran. Both Tel Aviv and the Mossad declined to comment. High level assassinations are rare in Iran as the government maintains a formidable security apparatus. However, this is not the first time an Iranian official has been assassinated in Iran, with the last attack killing top nuclear scientist Mohsen Fakhrizadeh in 2020. Since 2010, at least six officials or scientists have been killed or attacked in Iran. Tehran will likely retaliate against Tel Aviv, however a direct attack on Israel is unlikely.

Sub-Saharan Africa: IMF approves three-month extension of aid following presidential election

Sectors: debt risks; economic risks
Key Risks: political stability; policy continuity

In Somalia, the IMF approved Mogadishu’s request for a three-month extension of a three-year, US$400m aid package on 21 May that will give newly-elected President Hassan Sheikh Mohamud’s government time to evaluate planned reforms. The aid package was set to expire on 17 May if the country failed to hold elections. President Mohamud – who served as president between 2012 and 2017 – won a clear majority from parliament representatives through the country’s indirect voting system in the long-delayed elections on 15 May. Under the terms of the IMF programme, the country’s debt could fall to US$557m as early as 2023. The Fund’s proposed reforms could support Mogadishu to attract further international funding and develop its private sector. However, insecurity – primarily stemming from Islamist militant group al-Shabaab – and severe drought will remain downside risks to development.