This month’s reporting in the Americas includes a new report on Cuba, where the implementation of market-based reforms aimed at shoring up the economic foundation ahead of a planned generational transfer of power within the governing PCC has yet to generate a substantial increase in private investment, in part because of the government’s failure to address key weaknesses of the business climate, including inadequate infrastructure and the lack of independence in the legal system. The report will discuss the risks associated with President Raúl Castro’s planned departure in 2018 and reforms of island’s social safety net, and what those portend for the ongoing liberalization of the socialist economy.
Turning to the Middle East and North Africa, PRS will examine the political landscape in Israel following the recent military operation in Gaza, assessing the impact of recent developments on the stability of the unwieldy coalition government and the prospects for ensuring a secure environment for business operations against a backdrop of rising regional turmoil. In the latter regard, analysis will focus on the implications of the latest setbacks for the Israeli-Palestinian peace process, the lack of substantive progress in international negotiations over Iran’s nuclear program, and the initiation of a multinational military effort to combat Islamic State extremists in neighboring Syria.
With protestors taking to the streets in Hong Kong, China’s Special Administrative Regionis facing its biggest test of the “one country, two systems” guarantee promised during the handover from British to Chinese rule seven years ago. This month’s detailed report follows up on our previous warnings of escalating tensions to evaluate how the spiralling pro-democracy movement spearheaded by students and other activists will shape Hong Kong’s political and policymaking agenda, and its relationship with the Chinese Communist Party displaying an unyielding desire to influence the elections for Chief Executive in 2017. Our report looks at the various alternative scenarios as embattled chief executive Leung Chun-ying considers his next moves to calm an explosive situation with the potential for unpredictable outcomes. We discover whether this will mean more populist policy gestures eroding Hong Kong’s longer term fiscal strengths, and if the business operating environment will be damaged at a time when question marks are already hovering over China’s breakneck expansion and financial stability.
Our coverage of Africa this month leads with Nigeria, the region’s most-populated and promising emerging market, where Goodluck Jonathan’s bid to contest the presidency for a second successive term at the general election in February 2015 is under threat from political opponents and rising insecurity in parts of the country falling under the control of the extremist Islamist Boko Haram insurgency. We look at the delicate and evolving balance of power within the ruling party, the legislature and the various tiers of government organisation, as the federal government faces an impending legal challenge from the 36 state level authorities protesting the alleged unconstitutional diversion of fuel subsidies to the National Petroleum Company amid serious fraud identified within the oil marketing business. Our report also assesses the gradual spread of Ebola across Western Africa, which has now reached Lagos, the capital, and Port Harcourt the centre of its hydrocarbons industry. We evaluate what it means for Nigeria’s fast-growing economy with such huge potential and capital market reforms enticing investors but where political and social risks are ever present in the background.
Our Western Europe coverage casts the spotlight on Sweden, as we analyze the implications of a closely fought election ousting the centre-right coalition from its comparatively successful yet controversial eight years in power, characterized by hit-and-miss business-friendly market reforms and periods of sluggish economic growth resulting from the wider European crisis. The new Prime Minister Stefan Lofven, an old-school trade unionist, is in a quandary from the outset with his Social Democrats failing to gain sufficient seats to govern alone. That leaves him requiring not only the parliamentary support of both the Green Party and the Left Party (both traditional allies) to carry the budget, but also the more uncomfortable proposition of granting concessions to the far-right Sweden Democrats. We evaluate how these political difficulties will be resolved, and their impact on the Social Democrat manifesto promising some radical shifts. Will a centrist consensus be formed to carry legislation, or will the government’s first budget merely result in an immediate political crisis? What will it all mean, too, for Sweden’s economy, its fiscal sustainability and investor reputation, with the government planning to roll back its predecessor’s tax cuts and public sector reforms?
Looking at Eastern Europe, PRS will issue a new report on Ukraine, where a recently concluded truce with separatist rebels in the eastern Donetsk region already appears to be unraveling, and the ratification of an association agreement with the EU has contributed to another round of threats from Russia, pointing to significant challenges for the caretaker regime that will remain in place until the formation of a new government following parliamentary elections scheduled for later this month. Analysis will focus on the prospects for forming a stable government under crisis conditions, which include economic strains created by disruption to flows of Russian gas supplies, as well as the implications of the agreement with the EU for investment and trade policies over the medium term.