PRS’ coverage of the Americas this month includes updates on Venezuela, Haiti, and Trinidad and Tobago, and features a fully revised report on Cuba, where a watershed transfer of political leadership is scheduled to take place early next year.  The report will assess the risk of a revision to the announced timeline for the handover of the presidency from the Castro dynasty to a younger generation of Communist Party officials in light of the shift in policy announced in June by President Donald Trump, who pledged to reverse his predecessor’s moves to loosen restrictions on the flow of funds, goods, and people between the US and Cuba.

Although Washington has yet to formally restore restrictions, the most likely near-term changes are expected to involve renewed constraints on the freedom of US citizens to travel to the island and a reduction in the amount of US dollars that can be remitted to family members still living in Cuba, which will have negative implications for job creation, the purchasing power of ordinary Cuban families, the country’s external balances, and the central bank’s supply of foreign-exchange reserves.  PRS will analyze the potential for a renewed bilateral chill to adversely affect economic performance in 2017–2018, a prospect that could make President Raúl Castro and other top leaders reluctant to loosen their grip on power.

Turning to the Middle East and North Africa, PRS will issue an update on Egypt, where popular support for President Abdel Fattah al-Sisi, already eroded amid discontent over austerity measures imposed to satisfy the terms of a lending agreement with the IMF, is at risk of collapsing following a controversial move by the pro-government majority in the Parliament to cede control of two Red Sea islands to Saudi Arabia.  The clear evidence of widespread outrage over what many perceive to be a case of Sisi effectively selling sovereign territory for cash to keep his financially troubled regime afloat means that the possibility that Egypt might be convulsed by a third popular uprising in the space of less than seven years cannot be ruled out.

At the very least, the president’s disregard for a court ruling earlier this year that determined the transfer of territory to be unconstitutional cannot help but undermine confidence in the government’s commitment to the rule of law, a factor that will complicate the challenge of attracting the foreign investment required to revive a faltering economy.  The update will analyze the options available to officials as they attempt to navigate the political and economic hazards, and what the various paths will mean for the climate for investment and trade in the medium term.

Our coverage of West European countries this month includes reports on Belgium and Luxembourg, as well as Switzerland, where we look at the political ramifications of the decision by Foreign Minister Didier Burkhalter to step down as one of the seven members of the cross-party Federal Council, the government’s executive decision-making body.  We assess how this move for “personal reasons” may be linked to the recent difficulties involved in sealing a new treaty to replace the complex arrangement of approximately 100 bilateral agreements that define Switzerland’s relationship with the EU.

The push to create a more stable foundation for Swiss-EU relations is closely tied to the thorny issue of immigration, which has long been a source of tension within the ideologically diverse governing coalition, but especially so since a 2014 referendum in which voters approved a tightening of restrictions of the entry of workers from EU member states.  The issue is likely to figure prominently in the general election campaign in 2019, with the far-right Swiss People’s Party proposing to stage a repeat plebiscite with the aim of forcing the government to implement stronger restrictions on immigration from the EU.  Our report also assesses the economic trends, and prospects for the Swiss franc in the light of the central bank’s monetary policy and interest rate differentials.

The regional coverage also includes a report on Denmark that will assess the fragility or otherwise of the minority three-party coalition formed towards the end of last year by Prime Minister Lars Lokke Rasmussen’s Liberal Party (Venstre) with the Liberal Alliance and Conservative People’s Party. Our report looks at the difficulties the government faces in forging consensus among its members on policy, as well as how the opposition is shaping up ahead of elections that may take place earlier than the expiration of the current term in in June 2019.  We evaluate progress on the 2025 Growth Plan, property tax reform, and the EU referendum pact, what legislative barriers lie ahead, and how all these issues are likely to affect Danish assets.  Recent economic trends and prospects through to 2018 are also reviewed, including fiscal control underlying debt management.

Shifting to Eastern Europe, we will update our assessment of political risk in Russia, focusing on how the diminishing prospects for a détente with the US under President Trump will affect Russia’s investment and trade strategy in the coming years.  The analysis will focus on how policy makers in Moscow are likely to manage the inherent tension between President Vladimir Putin’s foreign policy objectives and the need for aggressive diversification if Russia is to overcome the constraints on domestic economic potential created by a heavy dependence of exports of oil and other natural resources.

Turning to sub-Saharan Africa, our coverage this month includes risk assessments of Botswana, Côte d’Ivoire, Mozambique, and Tanzania, and features a report on Ghana that offers a critical assessment of the first six months in office for President Nana Akufo-Addo, and his New Patriotic Party (NPP) government, which was swept to power last year on the back of an economic crisis produced by the commodity price crunch.  Our report will examine how the government is coping with slower real GDP growth, high inflation, a bloated fiscal deficit, and an external payments imbalance, identify the policy strategy being implemented in an effort to restore stability, and assess the likelihood that targets will be hit and confidence revived.  As part of that analysis, we will look at the political challenges awaiting President Akufo-Addo and discuss the potential threats to government stability in 2017-2018, and how those factors will impact on currency volatility, debt sustainability, and commodity-related assets, including the key cocoa, gold, and oil industries.

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