Japan will soon have a new prime minister. Chinese officials allegedly rejected demands by the US climate envoy. Germany’s Social Democrats continue to lead the polls. The presidents of Russia and Belarus will meet amid joint military exercises. Meanwhile, India’s prime minister will chair the BRICS summit, Italy’s government might extend the scope of the Covid-19 green pass, Colombia’s revised tax reform is ready to be voted by parliament, and uncertainty continues to prevail in Guinea after the coup d’ etat.
CHART OF THE WEEK
Globalization appears to be entering a new phase in the post-pandemic world. The graph above shows that globalization has lost appeal in most advanced economies, but it is still widely supported across emerging markets. While in France only 27% of respondents think that globalization is a good thing for their country, this figure is close to 60% in South Africa, Peru, and Brazil. Export dependent economies such as South Korea, Japan, Sweden, and Germany are somewhere in between – but even in these countries about half of respondents are skeptical about the consequences of globalization. After a series of deep crises and increased economic and political volatility, a new consensus is emerging around the idea that globalization must go beyond its traditional economic dimension to incorporate answers to new challenges. Although there are signs that some progress might be taking place (i.e., 130 countries agreed in July a global minimum corporate tax rate of at least 15%), the globalization of governance is yet not a reality in most policy areas.
WHAT TO WATCH
Japan will have a new prime minister within weeks, after Yoshihide Suga announced that he would not seek re-election in the ruling LDP’s 29 September leadership contest. The current favorite to replace him is Taro Kono, a quirky former defense and foreign minister known for his ties to the US. Another ex-foreign minister Fumio Kishida and Sanae Takaichi, aligned with ex PM Shinzo Abe, are also in contention. The winning candidate will lead the party into the upcoming Lower House election due in October or November.
Chinese officials reportedly rejected a call by US climate envoy John Kerry during meetings in Tianjin last week to publicly announce more ambitious climate goals at COP26 in November. Kerry wants China to commit to achieving peak carbon emissions before 2030 and to endorse the 2015 Paris Agreement’s goal of limiting the global temperature rise to 1.5 degrees Celsius.
Less than three weeks ahead of the Bundestag elections, the Social Democrats (SPD) of Finance Minister Olaf Scholz continue to build out their lead in the polls. Speculation continues about a potential left-of-center government with the Greens and the post-communist Left, but this is unlikely to materialize. More interesting will be the demands made by the center-right Liberals (FDP) before they join a government with the SPD and the Greens. This coalition prospect does not bode well for (European) expectations of fiscal expansion and greater investment.
Russian President Vladimir Putin and his Belarusian counterpart Alexander Lukashenko are scheduled to meet in Moscow on 9 September to finalize a package of 28 bilateral integration roadmaps. The integration documents are set to be approved by the Russian and Belarusian governments on 10 September. On the same day, the two countries will begin the week-long military drill “Zapad-2021” (West-2021) along their western borders, which raises concerns about potential provocations/incidents particularly in the Baltic States, Poland and Ukraine.
ON THE HORIZON
On 9 September, Prime Minister Narendra Modi will chair the 13th BRICS Summit in virtual format. The meeting will be attended by the President of Brazil, Jair Bolsonaro; President of Russia, Vladimir Putin; President of China, Xi Jinping; and President of South Africa, Cyril Ramaphosa. Geopolitics and regional tensions, including India’s border standoff with China and diverging approaches on the rise of the Taliban in Afghanistan, are likely to be discussed at the meeting.
President Rodrigo Duterte’s party, PDP-Laban, will hold its convention on 8 September to select the party’s presidential and vice-presidential candidates for the 2022 elections. Duterte is considering running for the vice-presidency, but this could be a feint to deflect attention from the potential candidacy of his daughter, Sara, who is running under her own party. The convention is unlikely to be the last word on the pro-administration slate for next year’s elections.
The government is considering extending the Covid-19 “Green Pass” requirement to all private sector workers and state employees. Discussions about further expanding the scheme are in the early stages, and no date has been suggested for any changes to come into force. The health authorities will begin issuing a third dose of vaccines later this month, beginning with the most vulnerable groups.
The opposition-controlled Senate will likely reject on 9-10 September amendments to the broadcasting act, known as Lex TVN . The act would restrict the granting of radio and television broadcasting licenses to entities located within the European Economic Area. The Senate’s rejection could be overridden by an absolute majority of deputies in the lower house of parliament (Sejm). Such a vote would show whether the ruling Law and Justice party still has sufficient support in parliament to advance its policy agenda after the departure of a junior coalition partner Agreement in August. The contentious bill could also be vetoed by President Andrzej Duda.
The political crisis in the coalition government led by Prime Minister Florin Citu (National Liberal Party, PNL) will continue this week. Today, six ministers from the junior coalition member USRPLUS have resigned, which means that the Citu’s cabinet must now obtain parliament’s confidence by an absolute majority of votes within 45 days. Separately, the USRPLUS and the opposition party Alliance for the Unity of Romanians are seeking to initiate a vote of no confidence in the Citu cabinet, which could be held in the second part of this week or more likely next week. The government crisis is unlikely to be resolved at least until PNL leader elections on 25 September.
Protests against the Supreme Court (STF) and Congress will take place on 7 September, Brazil’s Independence Day. President Jair Bolsonaro will deliver a speech in both Brasilia and Sao Paulo where the two biggest crowds are expected. The protests should look much better for the president than current polling numbers suggest, with the government facing a 63% rejection. There is no guarantee that the demonstrations will be peaceful, however. As a precautionary measure, there will be no sessions this week of the House or Senate plenaries, or of the Senate inquiry committee (CPI) on the handling of the pandemic. Meanwhile, the STF will resume historical deliberations on 8 September on whether land claims by indigenous people should have a cut-off date.
The government’s revised tax reform initiative is ready to go to plenary votes in both congressional chambers from today, 7 September. The new USD 3.95bn package was extensively reworked by Finance Minister Jose Manuel Restrepo after the original version triggered a public backlash and weeks of violent protests, which forced the resignation of Restrepo’s predecessor, Alberto Carrasquilla. Not only is this reform more modest, but it also shifts the burden onto business, with nearly half of new revenues coming from a four- point increase in corporate income tax. VAT and income tax are untouched in the new reform, which should help ensure its passage in Congress. Approval would help patch a looming fiscal hole next year but the next government, which will take office in August 2022, will be under immediate pressure to undertake its own tax reform.
MIDDLE EAST AND AFRICA
The volatile situation following the coup d’ etat against President Alpha Conde on 5 September will continue to dominate the news. A group of special forces soldiers led by Col Mamady Doumbouya had detained Conde on Sunday night, after hours of gunfire in the capital Conakry. During a subsequent broadcast on state TV, the soldiers announced the dissolution of the constitution, the closure of the borders and a nationwide curfew. Furthermore, a’union government’ would be formed in weeks. However, it remains still unclear if the entire military backs the coup.