Americas: Paraguay faces heightened instability as corruption allegations into top officials mount
Key Risks: political instability; corruption; sanctions
In Paraguay, mounting corruption allegations against former and current top government officials risk stoking instability risks. On 12 August Vice President Hugo Velazquez announced that he would resign shortly after Washington blacklisted him for “significant corruption”. The US sanctioned Velazquez and his business associate Juan Carlos Duarte, who had reportedly offered over US$1m as a bribe to a public official to “obstruct” a probe threatening Velazquez’s financial interests. Velazquez has denied any wrongdoing, adding that the decision to step down and withdraw his planned presidential candidacy was taken to protect the ruling Colorado party. The scandal erupted weeks after Washington sanctioned former president Horacio Cartes, claiming that he had “obstructed a major international investigation into transnational crime” and that he was involved with “foreign terrorist organizations”. Further similar corruption-related fallout is likely to erode trust in institutions ahead of the 2023 general elections.
Asia Pacific: Sri Lanka caught between China and India in diplomatic standoff over military ship
Key Risks: political instability; economic risks; civil unrest; security
In Sri Lanka, on 13 August a Chinese surveillance vessel was finally granted permission to dock at the strategic and Chinese-run Hambantota Port. The vessel is suspected to be equipped with China’s new generation space and satellite tracking capabilities able to monitor rocket and intercontinental ballistic missile launches. Colombo had previously asked Beijing for the Yuan Wang 5 to defer its original visit after diplomatic protests were raised by neighbouring India, who insisted it posed a relevance to its “security and economic interests”. Beijing is the main creditor of Colombo’s infrastructure investments whose debt restructuring efforts would be crucial in its attempt to secure an IMF bailout. Meanwhile, New Delhi has provided around US$4bln in economic assistance to Colombo. A prolonged diplomatic standoff between Beijing and New Delhi is likely to deteriorate Sri Lanka’s capacity to grapple with the worst economic crisis since its independence.
Eurasia: At least six killed, 61 injured in explosions at Surmalu market in Armenia’s capital
Key risks: non-compliance with safety standards; civil unrest
In Armenia, on 14 August at least six people were killed, 61 were injured and 17 remained missing due to a fire caused by two explosions at a fireworks storage area in the Surmalu market in Yerevan. The casualty toll is expected to further rise as rescue operations were ongoing. The exact cause of the explosions remained unknown. However, speculations emerged that the fireworks were being stored incorrectly or that there were other safety regulations violations. Authorities ruled out that the incident was a terror attack. The fire was extinguished by 15 August, but Minister of Emergency Situations Armen Pambukhchyan warned that strong winds posed a serious threat and that the remaining part of the exploded building was at risk of collapse. The incident is likely to increase pressure on authorities to intensify checks on safety compliance.
Europe: Leaders of Serbia and Kosovo to hold talks in Brussels on 18 August
Key Risks: enlargement fatigue; trade friction; political impasse
On 18 August Serbia’s President Aleksandr Vucic and Kosovo’s Prime Minister Albin Kurti plan to hold talks with EU foreign policy chief Josep Borrell in a bid to revive the EU-led Belgrade-Pristina dialogue on normalising relations between the two countries. Serbia refuses to acknowledge Kosovo’s sovereignty since the former province declared independence in 2008 and relations have been strained ever since. The talks come amid high tensions between the two sides. On 31 July protesters in Kosovo’s ethnically Serb-dominated Mitrovica region blocked border crossings and some reportedly fired shots at police officers in response to new rules requiring all citizens to use car registration plates issued by Kosovar authorities. Pristina delayed implementing the new rules but the rhetoric employed by both Pristina and Belgrade remains accusatory. There is little optimism that the talks will deliver a major breakthrough.
MENA: Rival protests heat up in Iraq; Jewish worshippers attacked by gunman in Israel
Key Risks: political violence; terrorism; civil unrest
In Iraq, on 12 August thousands took to the streets during rival protests in Baghdad. Followers of Shi’ah cleric Muqtada al-Sadr rallied near parliament to demand fresh elections and to support his ultimatum to the Supreme Judicial Council to dissolve the legislature by 19 August. Supporters of the rival Iran-aligned Shi’ah Coordination Framework launched a counter-protest near the Green Zone. Al-Sadr subsequently called for a ‘million-man march’ to be held in Baghdad on 20 August. With tensions rising, the risk of violence between rival Shi’ah factions is elevated. Meanwhile, in Israel on 14 August eight Jewish worshippers were injured when their bus was attacked by a Palestinian gunman near Jerusalem’s Old City. This came a week after Israeli air strikes killed 49 Palestinians in the Gaza Strip between 5-7 August. There is a heightened risk of attacks in retaliation against the strikes.
Sub-Saharan Africa: Sierra Leone’s top military officials replaced following wave of unrest
Key Risks: security; political stability, political violence; civil unrest
In Sierra Leone, on 13 August President Julius Maada Bio replaced several top military officials and promoted seven soldiers to strategic positions in the army. The reshuffle followed riots in Freetown, Makeni and Kamakwie between 10 and 12 August during which hundreds of protesters demanded Bio’s resignation and denounced rising living costs. At least 21 civilians and four police officers were killed. Bio claimed that the riots were an attempted insurrection and blamed unnamed politicians. The sudden change of top military officials suggests that Bio disapproves of the military’s response to the unrest rather than him being concerned over the potential for a military coup. Bio is a former soldier and maintains control over the security forces. Although the risk of a coup remains low, there is potential for opportunistic low ranking soldiers to capitalise on growing public discontent.