Americas: Brazil’s presidential runoff on track to become the most polarised in country’s history

Sectors: all
Key Risks: policy continuity; regulatory uncertainty; political instability; political violence; civil unrest

In Brazil, the presidential runoff scheduled for 30 October is on track to become the most polarised in the country’s history. Although former leftist president Luiz Inacio Lula da Silva remains the frontrunner over far-right President Jair Bolsonaro, Lula’s lead has continued to narrow since he won the first round on 2 October. Recent polls suggested a statistical tie between the two contenders and a significant number of voters remain undecided. Neither Bolsonaro’s nor Lula’s supporters will take defeat quietly. The risk of unrest particularly after the vote is high. Should Lula win and Bolsonaro accept defeat – the most likely scenario – the latter is still expected to remain the leader of the largest opposition bloc in Congress. The coming vote will be tight and political polarisation will remain the norm regardless of who takes office in January 2023. 

Asia Pacific: Chinese President Xi Jinping remakes the Communist Party in his image

Sectors: all
Key Risks: political instability; policy continuity; economic risks

In China, on 23 October the Central Committee of the Chinese Communist Party elected President Xi Jinping for a historic third term as General Secretary at the conclusion of its 20th National Congress. The move broke decades of tradition and fundamentally shifted the Party’s leadership structure back towards a one-man rule era last seen during Mao Zedong. Xi also presented the new composition of the powerful Politburo Standing Committee (PBSC), now stacked with loyalists and posing no significant rival or obvious successor to his leadership. As expected, the PBSC did not include Premier Li Keqiang – a protégé of former president Hu Jintao – who is likely to be succeeded by Shanghai Party Secretary Li Qiang when he retires in March 2023. With this accruement of political power, Xi Jinping will likely be able to guide the country’s future development with near absolute authority.

Eurasia: Russia’s, Armenia’s and Azerbaijan’s leaders to reportedly meet in Sochi

Sectors: all
Key risks: war on land

On 23 October reports emerged of a possible summit between Azerbaijani President Ilham Aliyev, Armenian Prime Minister Nikol Pashinyan and Russia’s President Vladimir Putin. Russia’s newspaper Vedomosti reported that the meeting could take place in the last days of October in Sochi, adding that work on the summit had started following the 14 October Commonwealth of Independent States (CIS) summit in Astana, Kazakhstan. The reports came amid the EU’s efforts to strengthen its role as a mediator in the Nagorno Karabakh (NK) conflict and amid Russia’s weakened position in the region caused by its invasion of Ukraine. On 20 October the EU announced that its two months-long monitoring mission to the Armenian side of the border with Azerbaijan had become operational. Russia is likely to attempt to balance the EU’s strengthening role in the region. 

Europe: Rishi Sunak becomes UK Prime Minister

Sectors: all
Key Risks: economic instability, political instability

In the United Kingdom, former chancellor Rishi Sunak replaced Liz Truss as prime minister on 24 October. Truss resigned after six weeks in office, largely due to the collapse in the value of the pound and gilts following her mini-budget. Sunak won the support of the majority of Conservative MPs, with both Leader of the House Penny Mordaunt and former prime minister Boris Johnson pulling out of the contest. Sunak will first need to produce a set of measures to repair the country’s finances and mitigate the cost of living crisis. Rising interest rates are also likely to cause difficulties for those with mortgages. While he may temporarily have the support of the majority of Conservative MPs, the party has several internal fractures – including over relations with the EU – which will make it difficult to maintain unity. 

MENA: Tensions escalate following Huthi attack at oil facility in Hadhramaut province

Sectors: all; oil and gas
Key Risks: war on land; political violence; political stability

In Yemen, on 21 October Iran-backed Huthi militants launched a drone attack at an oil terminal in the southern province of Hadhramaut. Although the attack was repelled by the Aden government’s military, it was the first significant attack on civilian infrastructure since the expiration of the UN-backed ceasefire on 2 October. The drones were intercepted as a Greek oil tanker was preparing to dock in al-Dhabbah oil terminal. Both the UN special envoy and the Yemeni government blame the breakdown in ceasefire negotiations on the Huthis and, although both had remained confident that an agreement to renew the ceasefire could be reached, this latest escalation is likely to increase tensions and jeopardise the prospect of a restored truce.

Sub-Saharan Africa: Ethiopian government to hold peace talks with TPLF rebels in South Africa

Sectors: all
Key Risks: war on land

In Ethiopia, a delegation from the federal government and representatives of the TPLF rebel group arrived in Pretoria, South Africa, to begin African Union-mediated peace talks. The latter came after an escalation of the conflict triggered concerns in the international community. A TPFL spokesman stated that the talks would focus on an immediate ceasefire, unfettered humanitarian access and the withdrawal of Eritrean forces who have fought alongside the federal government since the war broke out in November 2020. The federal government stated that it would engage with the TPLF whilst pursuing its strategic objectives in the Tigray region. The escalation in the conflict is likely to complicate the talks, as the federal government and allied Eritrean forces have captured several strategic towns and increased the rate of airstrikes in the Tigray region in recent weeks.