Table of Contents

The European Commission will endorse Italy’s post-pandemic recovery plan. Peru’s presidential election results are still being reviewed. The EU will agree sanctions against Belarus. Meanwhile, the pandemic is worsening in Indonesia, Germany’s cabinet will agree on its budget, anti- government protests took place in Brazil, and parliamentary and regional elections were held in Ethiopia.

CHART OF THE WEEK

WEEKLY POLITICAL COMPASS 1The improved relationship between the Biden administration and the EU has translated into progress on multiple fronts, including the tackling of climate change, the reform of global taxation, and a more unified approach towards China. However, differences between the US and the EU persist on how to approach China on economic and political issues. A US-style bipartisan consensus on China does not exist across EU countries. Given the low levels of politicization of China in Europe outside policy elites, citizens often follow party cues to form opinions on these issues. This partly explains the cross- country differences observed in the graphs above. In Spain, Poland, and Italy around 40% of the people perceive China more as a partner than as a rival, while in the US, France, and the UK most people view China as a rival. In addition, a glance at public opinion data reveals that the “hawkish consensus” is more evident in some policy areas (human rights and climate) than in others (trade and technological innovation). This also reflects the position of party elites across Europe: trade and tech relations with China are more politically divisive than human rights and climate issues. However, these topics are becoming ever harder to unbundle.

WHAT TO WATCH

Italy

European Commission President Ursula von der Leyen will be in Rome on 22 June to announce that Italy’s national recovery plan has been approved by Brussels. Italy is set to receive EUR 191.5bn in grants and low-interest loans in the period 2021-26. A first tranche worth EUR 25bn could be released as early as next month.

Peru

The JNE electoral board continues to review appeals against rejected vote annulment requests as the slow and messy aftermath to the 6 June presidential run-off drags on. Keiko Fujimori continues to allege – without any clear evidence – that she was deprived of a victory by electoral fraud. Tensions will remain high over the coming days, though a judge’s decision yesterday, 21 June, not to return Fujimori to pre-trial custody as part of corruption investigations against her is positive since an arrest order at this point could have set off protests. Last week, dozens of retired military officers signed a letter calling for the armed forces not to recognize Pedro Castillo as the election winner.

Belarus

EU leaders are expected to agree on sanctions targeting several economic sectors of Belarus at the European Council meeting on 24-25 June. Preliminary statements from EU leaders suggest that the bloc will target seven economic sectors, including banking, fertilizers, refined fuels, and tobacco. On 21 June, the EU – in coordination with the US, the UK, and Canada – imposed sanctions on 78 Belarusian individuals and eight entities over the forced landing of a Ryanair flight in Minsk on 23 May, continued human rights violations, and the regime’s repression of civil society. The growing Western pressure on Belarus will likely exacerbate the country’s reliance on Russia.

ON THE HORIZON

ASIA

India

On 24 June, Prime Minister Narendra Modi will convene an all-party meeting to discuss the delimitation exercise – the process of redrawing constituencies – in Jammu and Kashmir. This could mark the first step towards conducting assembly elections in a region that was given a new constitutional status in August 2019. It is not yet clear if local Kashmir parties will join the meeting.

Indonesia

President Joko Widodo will come under increasing pressure to expand business and movement restrictions nationally, instead of the current community level controls. The daily new case count is expected to continue to rise this week, possibly to their worst levels since the start of the pandemic. Meanwhile, the ministry of health has issued triage guidelines for the hospitals, signaling decreasing bed capacity.

EUROPE

Armenia

On 20 June, the ruling Civil Contract (KP) party led by acting Prime Minister Nikol Pashinyan won the snap parliamentary elections by an unexpectedly large margin. The ruling party received nearly 54% of votes and will have 72 out of 105 seats in parliament, allowing it to form a government without any coalition partners. Pashinyan’s renewed mandate will not quell domestic tensions as the opposition Armenia Alliance – which won 21.1% of votes, or 27 seats – does not recognize the election outcome and intends to challenge the results in the constitutional court. Pashinyan has also pledged “political vendettas” against his opponents after the vote. In terms of the Nagorno-Karabakh conflict, Pashinyan’s immediate priority will be to get security guarantees from Russia, with a visit to Moscow likely in the near future.

Germany

On 23 June, the cabinet will officially adopt the 2022 budget and the five- year fiscal outlook. Reports suggest that new debt could be close to EUR 100bn next year, up from an initially envisaged figure around EUR 80bn. Passage of the budget will only occur after the September Bundestag elections, however. Until then, fiscal policy will create political debate. In its manifesto presented on 21 June, Chancellor Angela Merkel’s Christian alliance (CDU/CSU) promises a quick return to its “black zero” policy.

LATIN AMERICA

Brazil

The week will see repercussions of the protests held on 19 May in more than 100 cities nationwide against President Jair Bolsonaro and his government’s handling of the pandemic and the vaccine rollout. Meanwhile, an executive order for the privatization of giant power utility company Eletrobras was approved by the House on 21 June (one day before the deadline) after clearing the Senate with additional controversial modifications to the original text. It now moves to presidential sanction.

MIDDLE EAST AND AFRICA

Ethiopia

Parliamentary and regional elections took place on 21 June. Voting did not take place in regions mired in insecurity, particularly Tigray. Results are only expected within ten days. Prime Minister Abiy Ahmed’s Prosperity Party (PP) is widely expected to win both the parliamentary and the regional polls. Yet a more significant question is whether the process will be considered more credible than past elections, which Abiy badly needs to boost his legitimacy, counter internal instability, and begin to repair Ethiopia’s badly bruised foreign relations.

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WEEKLY POLITICAL COMPASS

The European Commission will endorse Italy’s post-pandemic recovery plan. Peru’s presidential election results are still being reviewed. The EU will agree sanctions against Belarus.