geopolitical risk ratings firm

PRL Volume XXXII, Number 9 September 2010


Fissures in the Regime
President Ian Khama recently acknowledged what had been apparent for quite some time: The ruling BDP is troubled by internal divisions.
Declaring his party to be “at war” with itself and that factional strife had reached an “unhealthy level,” but the president did not mention the fact that the BDP’s troubled state is largely the result of his governing style, one his critics characterize as autocratic.

Khama refuses to tolerate any challenges to his authority from members of his own party, and that has caused the most trouble, as in June 2010, when a group of disaffected BDP members formed a new party, the BMD, under the leadership of Gomolemo Motswaledi, a former BDP secretary-general.
By the end of July, the BMD’s ranks in the National Assembly had swelled to the point that the new party replaced the BNF as the official opposition party, but traditional opposition leaders will not work with the BMD, calling it nothing more than the BDP under a different name.


Scandals Spoil Support
A criminal complaint filed by Françoise Bettencourt-Meyers has shed light on evidence that campaign financing rules may have been violated, dealing a blow to President Nicolas Sarkozy’s popularity and political credibility, such that he might not recover before the 2012 presidential election.
These revelations followed the resignations of two junior ministers involved in spending scandals of their own, and many UMP members were angered by Sarkozy’s uncharacteristically slow response to the scandal.
However, the presidential vote is still some way off, and a promised Cabinet reshuffle in October will likely include appointments of well-known and trusted figures that might help to shore up the executive.
Of more immediate concern is that the weakening of the president’s support comes at a crucial time in policy terms, since the government is set to introduce a set of reforms to the national pension system, with the aim of closing a budget deficit of about 8% of GDP.


Squeeze Play
Turkey and Brazil tried to negotiate a uranium swap deal so that Iran could avoid a tightening of sanctions of UN Resolution 1929, but when the P5+1 countries were not interested in pursuing the arrangement, Iran reacted defiantly to the UN’s mixed signals and offered to restart talks.
Against a backdrop of skepticism over the potential effectiveness of 1929, the US imposed much stronger unilateral sanctions, extending both existing US restrictions on trade with Iran and imposing tougher penalties on non-US companies and subsidiaries of American firms doing business with Iran.
Although President Mahmoud Ahmadinejad says the economy is strong and growing, no official growth figures have been issued for two years, since responsibility for reporting these data was shifted, a move that may have been prompted by a central bank refusal to manipulate the data.
Anecdotal evidence suggests that the sanctions are having an effect; insurance companies have stopped insuring Iranian shipments, citing fears of damaging their business in the US, and foreign firms have pulled out of the development of South Pars, the world’ largest gas field.


Few Shifts in Leadership
Prime Minister Mohamed Najib bin Abdul Razak’s June reshuffle of his Cabinet, for the first time since taking power in April 2009, was limited in nature of the changes made, despite furious speculation for weeks ahead of the event, raising questions about the potential for significant reform.
Razak’s popularity amid a burgeoning economic recovery, as well as the cracks beginning to show in the unity of the opposition People’s Alliance, reduce any threat from a potential confidence vote for the governing BN coalition, and a general election is not required until early 2013.
Still, having inherited the post of prime minister after replacing Abdullah Ahmad Badawi as leader of UMNO, Najib has yet to secure a popular mandate to govern in his own right.
Taking various clues into consideration—such as a recent internal suggestion that an early poll would be “suicide” for the regime—Najib seems unlikely to call a general election before the next state election in Sarawak, which must be held by July 2011.


PDP Unity at Risk
The People’s Democratic Party (PDP) may well be facing a test of its ability to survive without relying strictly on the principle of north-south rotation of the presidency, and there is a significant risk of an open split in the party if either faction fails to accept the results of a presidential primary election.
The May death of President Umar Yar’Adua upset the sensitive and essential balance of regional and personal interests that maintain the unity of the ruling PDP, and the party has not yet decided on a presidential candidate for the election that must be held by April 2011.
The PDP’s leaders long ago agreed for the presidency to alternate between Nigeria’s mainly Christian south and its mostly Muslim north.
Yar’Adua, a northerner, succeeded Olusegun Obasanjo, a southerner who served for two terms, and the PDP’s northern faction says it’s entitled to hold the presidency for another four years, assuming that Yar’Adua would have stood for a second term had he lived.
Goodluck Jonathan, who succeeded Yar’ Adua at his death is a Christian, and while he has not announced whether he plans to run, he has bolstered his position in just a few months, and divisions among northern politicians could improve his chances in a primary.


On Shaky Ground
An already gloomy outlook for political stability has worsened markedly since late July, when heavy monsoon rains caused massive flood damage that will require billions of dollars in foreign assistance to repair.
Trust in the main governing PPP has been badly undermined by the weak response to the disaster, but the main opposition PML-N has also come under heavy criticism for its handling of the crisis in Punjab, where the provincial government is headed by the brother of PML-N leader Nawaz Sharif.
Despite its loud criticism of the PPP-led government’s response to the disaster, the PML-N has displayed a surprising inclination to work cooperatively with President Asif Ali Zardari and Prime Minister Yousaf Raza Gillani, suggesting that Sharif’s party has little desire to make a play for power that would leave it chiefly responsible for cleaning up the economic, social, and health crises left in the wake of the floodwaters.
Gen. Ashfaq Kayani has so far lived up to his billing as a military leader who possesses none of the political ambition of his predecessor, Pervez Musharraf. However, it is unlikely that he will stand idly by if domestic stability is seriously compromised.
In any case, the diversion of military resources to post-disaster relief and recovery efforts will create a distraction from the central task of battling extremist forces operating in the tribal western areas along the border with Afghanistan and in the disputed territory of Kashmir.
Beyond creating a threat of stepped-up terrorist attacks inside Pakistan itself, there is also a danger that a relaxation of pressure on armed groups in the west will lead to friction with the US and NATO members battling the Taliban and Al Qaeda in Afghanistan, and that increased violence in Kashmir could trigger an escalation of tensions between Pakistan and India.


Embattled President
Among the many failures recorded by President Fernando Armindo Lugo Mendez since his stunning election victory in 2008, the most significant may well be his inability to deliver on his promise to get Brazil to pay much more for Paraguay’s share of electricity generated by the Itaipú dam.
Powerful forces inside Brazil lobbied against their president’s agreement to triple the payments, delaying ratification by Brazil’s legislature, and now a closely fought presidential contest in Brazil will delay a decision until after the October election, and the deal might even be discarded outright.
Lugo also suffered a damaging setback when the Senate voted once again to delay (for three years) introducing a personal income tax, which was originally scheduled to take effect in January 2010 as a means of generating additional revenues to finance the social programs of the Lugo regime.


Renewed Instability
Prime Minister Michael Somare adjourned Parliament until November 26, preventing a confidence vote being pushed by the opposition, who claimed to have had the requisite votes to stop it, but the speaker refused a vote count, prompting opponents to accuse Somare of ruling by dictatorship.
The latest failed attempt to topple Somare’s government came on the heels of the Supreme Court’s unanimous ruling to nullify provisions of the Organic Law on Integrity of Political Parties and Candidates (OLIPPAC).
Somare has used Cabinet vacancies created by the defections to solidify the support of crucial allies, and several lawmakers who crossed the floor with then-Deputy Prime Minister Puka Temu have subsequently returned to the government fold, claiming they were “misled” into deserting the coalition.
The political maneuvering that took place before the planned no-confidence vote suggests that the post-OLIPPAC era will still see the party loyalty of lawmakers extending no further than the ability or willingness of a given party to satisfy their ambitions.
Although Somare, Polye and other key NAP figures insist that they will face the electorate united in 2012, the more likely scenario is a return to the instability that was characteristic of PNG politics in the quarter century that followed independence.


Land Deal Has Benefits
Based on a 1990 plan to deal with a chronic source of tension, Prime Minister Lee Hsien Loong and his Malaysian counterpart, Najib Razak, agreed to jointly develop six parcels of land, formerly used by Malayan Railways and stretching across Singapore from north to south.
Under a 1918 colonial ordinance, the railway was granted exclusive use to some 217 hectares of land for 999 years, but the market value of that land has skyrocketed since the colonial period ended.
Several million square feet of potential build-up area will be developed by for commercial use by M-S Pte Ltd., a joint venture to be formed by the state-investment agencies of Malaysia and Singapore.
While the opposition in Malaysia criticized the agreement, that government effectively defended its position, noting that the deal opens the way for a rapid transit link between the two countries and substantial flows of Singaporean investment into Malaysia.


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