Americas: Mexico’s President AMLO confirms fresh support for debt-stricken Pemex
Sectors: oil and gas
Key Risks: business risk; non-payment
In Mexico, on 27 January leftist resource-nationalist President Andres Manuel Lopez Obrador (AMLO) stated that his government would provide further support to debt-stricken state-owned oil company Pemex to guarantee that the firm pays its debts. He stated that the goverment had a plan to ensure that pending bond payments in 2023 are met. Such a plan reportedly includes further reducing the tax rate on Pemex, among other measures, to ensure the company’s survival. Pemex’s debt payments due in Q1 2023 stand between US$5.5bln and US$6bln. AMLO did not indicate how much additional support Pemex would require, but assured that the limits authorised by Congress for 2023 would be respected. Payment delays will remain a risk despite the announced financial support, which will likely continue throughout the remainder of AMLO’s six-year presidential term ending in December 2024.
Asia Pacific: New electoral law poised to reinforce military rule in Myanmar
Sectors: all
Key Risks: political stability; civil unrest; political violence
In Myanmar, on 27 January the military government promulgated a new Political Parties Registration Law which imposed restrictive requirements on the participation of parties ahead of a planned election which will likely be held by August. The requirements include a minimum membership of 100,000 – up from the current 1,000 – and a minimum deposit of MMK100m (US$47,500) at a state-owned bank. Under the law, only the military proxy Union Solidarity and Development Party (USDP) and Aung San Suu Kyi’s National League for Democracy (NLD) have the resources and capacity to participate nationally. However, any party could also be dissolved if it is declared unlawful or is alleged to have connections with ‘terrorist organisations’ – an accusation that will likely be made against the NLD. Ultimately, the law heavily favours the USDP and will effectively ensure continued military control through the electoral process.
Eurasia: EU’s ban on refined Russian petroleum products set to further cut Russia’s revenues
Sectors: oil and gas
Key risks: business risk
On 5 February the EU’s ban on imports of refined Russian petroleum products and a G7-backed global price cap on the latter will take effect. The forthcoming ban will effectively cut the EU’s ties with its biggest foreign supplier of diesel and follows the EU’s ban and price cap on Russian crude oil, which took effect in December 2022. The ban has generated concerns of energy shortages and a spike in global oil prices at a time when China’s economic reopening will likely boost demand for oil. At the same time, the December ban and price cap did not lead to the dramatic disruptions originally anticipated and were followed by a decline in global oil prices, curtailing Russia’s energy export revenues. Given this precedent, the EU’s ban will likely force Russia to trade its refined oil products at a discount without causing severe disruption in global markets.
Europe: Strikes over pension reform expected to cause disruption in France on 31 January
Sectors: transportation; oil and gas; service
Key Risks: civil unrest; business and economic risks
In France, on 31 January labour unions will hold nationwide strikes and protests against the proposed pension reform – which would raise the retirement age from 62 to 64 years. Travel disruptions are expected, with rail operator SNFC recommending that passengers cancel or postpone trips if possible. Strikes are also expected to block refineries and curb power generation. The first day of strikes and demonstrations took place on 19 January when more than a million people marched against the reform. The government – which claims that the proposal is necessary to keep the pension system financially viable – stated that it was open to talks with the unions, but insisted on the need to increase the retirement age. Further strikes and protests are expected, with some unions already calling for further strike action in February including at commercial ports, refineries and power stations.
MENA: Israeli government facing challenges on all fronts
Sectors: all
Key Risks: civil unrest; political violence; political stability
In the West Bank, on 27 January a Palestinian gunman killed seven Israeli civilians in an East Jerusalem settlement. The previous day, Israeli forces killed nine Palestinians in Jenin, West Bank. In response to the escalation of violence, Prime Minister Benjamin Netanyahu hinted at controversial security measures, including the possibility of arresting Palestinian militants’ family members. Such measures are likely to raise tensions with the Palestinians, just as the Palestinian Authority has halted its security cooperation with Israel. Concurrently, thousands of Israelis again marched against Netanyahu’s judicial reform, denouncing the government’s plans as a threat to democracy. Since Netanyahu took office, financial markets have also shown signs of concerns about the country’s political and economic stability. Netanyahu will remain under pressure to keep the security situation under control while trying to reassure markets of the stability of his government.
Sub-Saharan Africa: M23 advance comes amid heightened tension between DRC and Rwanda
Sectors: all; mining
Key Risks: war on land
In the Democratic Republic of Congo, on 26 January the March 23 Movement (M23) rebel group captured the strategic town of Kitshanga, North Kivu province. The offensive violates the ceasefire agreed by the M23 and the East African Community (EAC) in November 2022 and came amid heightened tensions between Kinshasa and Kigali – the latter of which supports the M23, according to a UN investigation. On 24 January the Rwandan Defense Forces (RDF) fired at a Congolese Sukhoi-25 fighter jet after the aircraft allegedly violated Rwandan airspace. The aircraft sustained minor damage and safely landed at Goma International Airport in North Kivu province. Kinshasa stated that the RDF’s actions amounted to an act of war. Inflammatory rhetoric has heightened between both countries and there is an increased risk of retaliation, including severing diplomatic ties, border closures and low-level cross border attacks.
