May 17, 2021

Macro

WEEKLY POLITICAL COMPASS

BY Teneo Macro

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African and European leaders will gather in Paris. The foreign ministers of Russia and the US will meet in Iceland. Chinahas landed its first rover on Mars. The recent elections in Chile will have varied implications. Meanwhile, India’s PM will hold consultations with district magistrates, a cabinet reshuffle is expected in Ukraine, Brazil’s former health minister will testify in the Covid-19 senate inquiry, and elections will be further delayed in Ethiopia.

CHART OF THE WEEK

WEEKLY POLITICAL COMPASS 1

Governments across the globe, from Greece to the UK, have introduced different certificates and schemes aimed at restarting international travel ahead of summer in the Northern Hemisphere. In most countries, citizens are generally favorable to the introduction of vaccine passports for travel purposes. However, countries are struggling to agree on a coordinated approach to the new travel requirements. The European Union is still finalizing the details of the new “digital green certificate”, which is supposed to be operational by the end of June. Regardless of the effectiveness of digital solutions to restart social and economic life, which was proven limited in the past with the failure contact tracing apps, governments are also introducing these certificates to encourage people to get vaccinated. Lastly, developing economies highly dependent on tourism are unlikely to see tourists returning to their countries in the coming months. The resurgence of Covid-19 infections in Southeast Asia further deteriorates the summer outlook in countries like Thailand and the Philippines.

 

WHAT TO WATCH

Africa

On 18 May, French President Emmanuel Macron will host a summit in Paris to discuss ways of providing more support to African countries hit hard by the Covid-19 pandemic. With some two dozen African heads of state expected to attend, it will be one of the biggest in-person top level meetings held during the pandemic. The meeting is aimed at securing donor pledges concerning debt relief and to counter a funding gap which the IMF estimates at USD 300bn to fuel a post-pandemic recovery.

US/Russia

Foreign ministers Antony Blinken and Sergei Lavrov are set to hold their first face-to-face meeting since the Biden administration came to office. The talks will take place on the sidelines of the Arctic Council Ministerial on 20 May in Reykjavik, Iceland. Amid high bilateral tensions, the foreign ministers will discuss a wide range of bilateral and international issues in preparation for a bilateral US-Russia summit, which is expected in June.

China

China became the second country after the US to land on Mars after an unmanned spacecraft landed there on 15 May. The Tianwen-1 spacecraft landed on a plain known as Utopia Planita, prompting President Xi Jinping to send congratulations to the crew overseeing the mission.

Chile

The shock of the (preliminary) results from the weekend’s mayoral, municipal council, gubernatorial, and constituent assembly elections will have multiple implications. In the first instance, the governing Chile Vamos(CV) coalition failed to obtain a one-third bloc in the constituent assembly vote, which raises the risk of the constituent assembly taking a more radical route to a new constitution. What the results mean for efforts to forge a cross-party agreement on new economic support measures through the pandemic is unclear. A cabinet reshuffle could be in the offing. The results will also affect the presidential race; candidates have until 19 May to register for the primaries that are scheduled for July.

 

ON THE HORIZON

ASIA

India

On 20 May, Prime Minister Narendra Modi will hold consultations with 54 district magistrates from the ten states worst hit by the pandemic. India has seen an exponential rise in Covid-19 infections and deaths over the past month, although cases appear to have peaked now. The meetings are unusual because they leapfrog the chief minister (India’s regional leaders) and violate the spirit of federalism, enabling the federal government to interact directly with the heads of districts. The meetings will help the PM play a hands-on role in managing the Covid-19 pandemic but could take a political turn as chief ministers are expected to protest.

Indonesia

Health authorities will be on alert for a possible spike in Covid-19 cases over the next two weeks as Indonesians return from their annual travel to their hometowns, called mudik. The exodus is common around the Idul Fitri holidays. The government had sought to ban the practice this year and seemed relatively successful in blocking air and sea transportation. However, an estimated 1mn Indonesians reportedly still took to the road.

 

EUROPE

Ukraine

A cabinet reshuffle is expected this week. Upon request by Prime Minister Denys Shmyhal, parliament will vote on 18 May to dismiss Maksym Stepanov (Servant of the People, SN) as the health minister. Stepanov’s removal is associated with the sluggish vaccination campaign. He is expected to be replaced by his deputy Viktor Lyashko (independent). There are unconfirmed reports that the Minister of Economic Development, Trade, and Agriculture Ihor Petrashko (independent) and the Minister of Infrastructure Vladyslav Krykliy (SN) will leave their posts as well. The cabinet reshuffle is expected to be followed by President Volodymyr Zelensky’s press conference on 20 May discussing the results of his first two years in office.

 

LATIN AMERICA

Brazil

Former health minister, Army General Eduardo Pazuello, will testify in the Senate inquiry on the handling of the pandemic on 19 May. Pazuello was the longest serving health minister in the Bolsonaro administration and put into practice the denialist narrative of the president during the pandemic. Most senators taking part in the inquiry believe that they have already compiled enough evidence for the indictment of President Bolsonaro for health-related crimes and crimes against life. On another front, the leaders of the House and the Senate will meet on 17 May to explore ways of moving forward with a tax reform, which remains a tall order.

 

MIDDLE EAST AND AFRICA

Ethiopia

The National Electoral Board of Ethiopia (NEBE) has announced another election delay. Originally scheduled for August 2020, the polls had been rescheduled for 5 June due to the pandemic. The latest postponement stems from delayed polling preparations and voter registration (with only 36.2mn of an expected 50mn registered). Officially, NEBE expects a delay of only two to three weeks. However, Prime Minister Abiy Ahmed’s chances of reestablishing his dented credibility are diminishing fast: voting will not take place in the conflict-torn Tigray and other areas; various opposition parties have vowed to boycott the polling “farce”; and the EU has abandoned an observer mission.

Kenya

On 13 May, the high court ruled the Building Bridges Initiative (BBI) amendment bill was initiated illegally. The court ruling represents a major loss for President Uhuru Kenyatta and opposition leader Raila Odinga in their battle to amend the constitution and sideline Deputy President William Ruto ahead of the 2022 presidential succession race. Even if Kenyatta’s administration were to win a planned appeal, at a minimum the legal setback may further delay the public referendum planned for mid-2021.

South Africa

Eskom is implementing fresh “stage 2” load-shedding from Sunday until Tuesday evening. The latest power cuts are the result of outages at 10 generating units at seven power stations. They coincide with a second round of wage talks scheduled for 17-20 May. A reported unplanned capacity loss of 16.1GW underscores the increasingly unreliable performance of Eskom’s aging power plants and the downside risk the utility poses to South Africa’s economic recovery.

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