Americas: Congress gives green light for new constitutional process in Chile

Sectors: all
Key Risks: political instability; policy and regulatory uncertainty

In Chile, on 11 January Congress approved a bill to launch a new constitutional process after 61.86 per cent of voters rejected the first draft constitution – which was deemed to be too left-leaning and unwieldy – in a public referendum held on 4 September 2022. The new draft will be prepared by 24 experts appointed by Congress before being finalised by 50 ‘constitutional advisors’ elected by direct vote before being put to a public referendum scheduled for 17 December. The approval came after three months of political standstill due to disagreements between President Gabriel Boric’s government and opposition parties. On 20 October 2020 Chileans overwhelmingly voted to draft a new constitution to replace the current one, which dates back to Augusto Pinochet’s dictatorship. Policy uncertainty and political instability risks will remain heightened throughout the constitutional process.

Asia Pacific: Workers’ clash raise concerns over Indonesian government’s nickel ambitions

Sectors: mining
Key Risks: violent clashes; business risks; business disruption

In Indonesia, on 15 January a Chinese and an Indonesian worker were killed following clashes between local and foreign workers at a nickel smelter operated by PT Gunbuster Nickel Industry (GNI) – a unit of China’s Jiangsu Delong Nickel Industry Co. – in North Morowali regency, Central Sulawesi province. The clashes were reportedly preceded by a protest by workers demanding better pay and safety standards. The unrest resulted in several company vehicles burnt and extensive damage to the workers’ quarters. Security forces arrested 71 people and operations at the smelter have been suspended. The resource-rich province has seen an increase in anti-Chinese sentiment in recent years amid an influx of Chinese capital and workforce in the nickel industry. The incident will likely raise investor concerns and impede government efforts to attract foreign investment in nickel processing projects in the region.

Eurasia: Former Turkmen president to consolidate power with parliament reform

Sectors: all
Key risks: political instability

In Turkmenistan, on 13 January former president Gurbanguly Berdymukhammedov announced plans to turn the parliament back into a single-chamber legislature, reversing his 2020 decision to establish a bicameral parliament. Berdymukhammedov ruled the country for 16 years until 2022, when he was replaced by his son, Serdar. He retains significant political power as he currently heads the People’s Council – the upper chamber of parliament. The planned reform will turn the People’s Council into a separate body with the power to supervise all government branches, change the constitution and determine domestic and foreign policy. This will further centralise Gurbanguly Berdymukhammedov’s totalitarian rule and dissipate hopes that his son’s presidency would lead to reforms. Although protests against the government are rare, public discontent has grown amid a protracted economic crisis. Sporadic civil unrest cannot be ruled out.

Europe: Bulgaria getting closer to fifth general election in less than two years 

Sectors:  all
Key Risks: political instability; policy uncertainty

In Bulgaria, on 15 January President Rumen Radev announced that he would request the Socialist Party to form a government in a last attempt to avoid a fifth general election in two years. The GERB and We Continue the Change parties – which finished first and second in the October 2022 snap elections, respectively – have failed to form a coalition government. Should the Socialist party fail as well, snap elections would be called. The GERB and Democratic Bulgaria parties already stated that they would not back a socialist-led government. The country has been in a political crisis since April 2021 when former prime minister Boyko Borissov lost the general election following protests over alleged corruption. Subsequent elections either failed to generate a government or produced an ideologically diverse government coalition which collapsed in less than a year. Political instability is expected to persist.

MENA: Egyptian pound falls to all-time low, economy in distress

Sectors: all
Key Risks: economic; civil unrest; political violence

In Egypt, on 11 January the Egyptian pound fell to an all-time low against the US dollar, bringing the total loss of its value since March 2022 to 51 per cent. The central bank was forced to move to a flexible exchange rate as a condition of the US$3bln IMF assistance package finalised in December 2022. This has raised the risk of currency volatility. In addition, Cairo approved an IMF-mandated privatisation plan that will see the state withdraw from 62 economic activities. The economy has been struggling amid fiscal austerity measures, rising wheat prices due to the war in Ukraine and an annual inflation rate of over 18 per cent. With almost a third of Egyptians now living in poverty, the risk of civil unrest is expected to increase and the authoritarian rule of President Abdel Fattah el-Sisi is likely to be questioned.

Sub-Saharan Africa: IS-affiliated ADF kills 17 people, injures 39 in DRC church bombing

Sectors: mining; all
Key Risks: terrorism; war on land

In the Democratic Republic of Congo (DRC), on 15 January at least 17 people were killed and 39 were injured after an IED detonated inside a church in Kasindi, North Kivu province. The Allied Democratic Forces (ADF), an affiliate of the Islamic State Central Africa Province (ISCAP) – an administrative division of IS – carried out the attack. IS later claimed responsibility for the incident.  Authorities arrested a Kenyan national for allegedly orchestrating the attack, which was likely in response to the high number of casualties suffered by the ADF in recent months amid the ongoing joint security force operations by the Congo Armed Forces (FARDC) and the Uganda Peoples’ Defense Forces (UPDF). These operations, which started in November 2021, have weakened the ADF, which now operates in small mobile cells. FARDC and allied troops will likely increase operations against the group in the coming weeks.