Sponsored by Exensor
www.exensor.com
————————————————————————-
08 Apr 22. Pakistan: Supreme Court Verdict. On 7 April, Pakistan’s Supreme Court (SC) issued a verdict stating that the dismissal of the no confidence motion and subsequent dissolving of the National Assembly (NA) on 3 April on the part of Prime Minister Imran Khan’s Pakistan Tehreek-e-Insaf (PTI) government was unconstitutional. It has subsequently called for the NA to be reconvened on 9 April at 1030 local time (0530 GMT) to vote on the no confidence motion against Khan’s PTI government.
SIGNIFICANCE
- The government will most likely fall in the no-confidence vote, if it takes place. After the dissolution of the parliament, more than 190 lawmakers voted against Khan in an apparent mock session which accounted for a two third majority in favour of the motion to dismiss the prime minister. Voting patterns will likely be similar which will result in Leader of the Opposition Shebaz Sharif becoming the next Prime Minister. While Imran Khan has vowed to “fight till the last ball”, Interior Minister Sheikh Rasheed told local media that he had advised Khan to resign before he faces the motion. Khan is expected to make a key announcement before Saturday’s vote, which may include an en mass resignation of all PTI members from provisional assemblies and the NA which will cause immense administrative issues at local levels.
- Embattled Khan may urge his supporters to take to the streets in large numbers to protest the no confidence motion. In fact, after the SC’s verdict Khan’s supporters protested in Islamabad raising anti-America slogans while opposition supporters celebrated.
- Any new government will likely remain in power until at least October 2022 as the Pakistan Election Commission has said it cannot hold polls before then. Pakistan is also slated for general elections in October 2023 which Khan will most likely contest. Indeed, Khan and the PTI will relentlessly criticise the opposition as being corrupt and part of an alleged international conspiracy to garner support for the next election and will do everything in their power to disrupt the running of the new government.
- The intensifying political instability has further crippled Pakistan’s economy which has already been reeling under high inflation and a free-falling Pakistan rupee. Despite a small rise after the SC’s verdict, the currency depreciated by nearly 10 percent since 4 March, prompting the central bank to raise interest rates as an emergency precaution to help stabilise the economy. However, sectors such as automotives have been hit significantly with Toyota’s local distributor even suspending bookings of new cars indefinitely due to currency volatility and market uncertainties.
FORECAST
The risk of domestic unrest will remain elevated in Islamabad where heightened police presence will cause significant transport disruptions due to additional security checks and possible road closures around the Parliament House Building in the Red Zone.
The PTI government’s strategy tomorrow will mainly involve in attempting to disrupt and delay the parliament session on the vote as much as possible. Minister of Information and Broadcasting Fawad Chaudhry told local media that a letter that shows an international conspiracy to bring about regime change will be presented to the NA tomorrow, in what is a move by the PTI to ask the speaker to adjourn the NA. The PTI has indicated that it will not accept the outcome of the no confidence motion if it indeed unseats Imran Khan. Chaudhry also announced that a cabinet led by a retired army officer had been formed to probe into claims of the said foreign conspiracy, adding that the PTI has evidence that eight dissident provincial lawmakers had been in contact with foreign dignitaries. It is currently unclear about whether the probe into alleged foreign interference could provide the Khan government an escape route from the crisis. Regardless of the prospects, however, such action will only sustain government instability over the coming weeks.
If the incumbent administration falls, the new government, likely to be consisted of several political parties united until now in their common cause to remove Khan, must find an amicable power sharing arrangement that will keep it together. Internal politics, including fighting for important ministries, will likely threaten the stability of the Sharif’s government at least over the short term. The new prime minister will also need to form a new alliance with the army that holds immense sway in Pakistan’s domestic politics. (Source: Sibylline)
08 Apr 22. Mexico: Recall Referendum.
- On 10 April, Mexico will hold a first ever presidential recall referendum to decide whether incumbent President Andrés Manuel López Obrador stays in office. At least 40 percent of the registered electorate needs to participate in the referendum in order to make its result legally binding.
- It is highly likely that López Obrador will avoid being recalled and remain in power after the referendum as he retains a high level of public support and the political opposition is unconvinced about taking part in the vote. This will likely embolden López Obrador to push his political agenda, including interventionist economic policies. The prospect of the López Obrador administration pursuing more market unfriendly policies coupled with Mexico’s weak economic recovery from the Covid-19 pandemic, will likely dampen investor sentiment in the country.
- Ongoing tensions between López Obrador and Mexico’s National Electoral Institute (INE) will continue after the referendum, with López Obrador likely to use the political advantage of retaining office to advance his campaign to bring the INE under the executive’s control, which will increase the likelihood of political tensions leading to government instability in the next two years.
Context
On 10 April, Mexico will hold a presidential recall referendum to decide whether President Andrés Manuel López Obrador should remain in office. At least 40 percent of the registered electorate needs to participate in the referendum for its result to be legally binding. This is a high participation threshold that is unlikely to be reached as opinion polls show that less than 30 percent of the electorate is planning on voting in the referendum.
López Obrador himself introduced presidential recall referendums in Mexico as way to make presidents more accountable and to encourage participatory democracy. He is also the main proponent of the current referendum and has promised to resign if he loses the vote even if the participation rate does not reach the required threshold to make it legally valid. The president wants to use the referendum to show that he retains majority public support and reinforce his popular mandate to advance his proposed political agenda in the second half of his six-year term ending in 2024.
However, the main political opposition parties have voiced their scepticism about the referendum and have refused to endorse or campaign for it, claiming that it is an unnecessary political stunt. Indeed, a poll published by El Financiero on 1 March found that 52 percent of respondents thought the referendum was unnecessary. Instead, López Obrador’s opponents have called on people not to take part in the referendum so as not to give the vote any relevance and limit any political boost that López Obrador might get from it. On 3 April, civil society groups led by Ciudadanos con Causa Justa demonstrated across the country, urging the public not to vote in the referendum and to defend the integrity of the National Electoral Institute (INE).
Ongoing tensions with the INE
The referendum has been an ongoing source of tension between López Obrador’s and the INE. The INE, an autonomous federal government entity, has been reluctant to organise a national vote that it says it did not plan for and for which it has no budget. Putting the cost of organising the referendum at USD80 million, the INE requested that the López Obrador administration transfer it additional funds to stage the vote. López Obrador’s response was to accuse the INE of being profligate and of trying to find excuses not to hold the referendum. López Obrador has long accused the INE of being inefficient and of not having a strong commitment to promoting participatory democracy in Mexico. He has also accused the INE leadership of being politically biased against his Movimiento Regeneración Nacional (Morena) party and his government.
Since coming to office, López Obrador has proposed abolishing the INE and for its responsibilities to organise and stage elections to revert to the interior ministry. But critics have warned that this would represent a major setback for democracy in Mexico, as it would again give the executive the ability to exert undue influence on electoral authorities, significantly undermining the integrity of the electoral process and public confidence.
After its budgetary requests were rejected, the INE announced that it would stage the referendum but said that the budget constraints meant that would not be able to do so on the same scale as other national votes with fewer polling stations set up and fewer election officials employed. By law, 161,000 polling stations must open for a national referendum vote. But the INE said on its current budget it could only open 57,000. The INE acknowledged that this would limit its ability to ensure that people can exercise their right to vote, as the reduced number of polling stations would mean that some will have to travel further to cast their votes.
López Obrador and Morena reacted by accusing the INE of trying to “sabotage” the referendum and of failing to fulfil its obligations. The Supreme Court corroborated the INE’s budget short-fall and issued a resolution protecting the INE against any lawsuit brought against it for holding the recall referendum without fulfilling all legal requirements. But López Obrador continues to insist that the INE is not fit for purpose and should be replaced.
Forecast
López Obrador is unlikely to be recalled and will therefore remain in power after the referendum. This will likely embolden him to push his political agenda. This includes continuing to advance his interventionist economic policies such as reforming the country’s energy and other strategic economic sectors to ensure that the state is the dominant player and retains control. The prospect of the López Obrador administration pursuing more market unfriendly policies coupled with Mexico’s weak economic recovery from the crisis produced by the Covid-19 pandemic, will further undermine the business environment in the country and likely dampen investor confidence.
The referendum is thus likely to sustain heightened policy risks. A convincing victory for López Obrador in the referendum with high participation levels will increase policy risks, as López Obrador will use this as justification for advancing his political agenda. A level of participation well below the binding 40 percent threshold in the referendum will only modestly limit the political boon that López Obrador could draw from it, therefore only slightly, but not significantly reduce policy risks.
While the referendum is unlikely to increase government stability risks in the immediate term, it will likely do so in the next two years. Whatever the outcome of the referendum, López Obrador is likely to move to bring the INE under the executive’s control following the referendum. The replacement of the INE by a new electoral authority that is part of the executive branch and not fully independent from it will erode public confidence in Mexico’s democracy. It could lead to potentially violent confrontations ahead of the 2024 presidential elections if López Obrador’s opponents no longer feel that the electoral authorities can guarantee that these will be free and fair, driving up government stability risks in the next two years. (Source: Sibylline)
07 Apr 22. Canada Budget 2022 marks $8bn more for defence: 2 TSX stocks to buy.
Highlights
- Canada’s Federal Budget 2022 earmarked a new funding of more than C$ 8bn for over five years to immediately strengthen its national defence.
- This funding, the budget noted, is aimed at bolstering the country’s contributions to its core alliances, its armed forces, among other things.
- Some defence stocks like CAE Inc (TSX: CAE) and Magellan Aerospace (TSX: MAL) could gain some attention as Canada plans to increase its defence spending.
Canada’s Federal Budget 2022, unveiled on Thursday, April 7, earmarked a new funding of more than C$ 8bin for over five years to immediately strengthen its national defence.
This funding, the budget noted, is aimed at bolstering the country’s contributions to its core alliances, its armed forces, among other things. This spending is set to be on top of the increases planned in association with Canada’s defence policy. FM Freeland said that the budget proposes an “immediate, additional investment” in Canada’s armed forces and a “swift” review of its defence policy to strengthen the country for threats. The Canadian government also announced a direct contribution of more than C$ 1.2bn in support of Ukraine and its people to fight against the Russian invasion. In addition to this, it has also offered a loan support of C$ 1.6bn to the Ukraine’s government. The budget also includes military help of more than C$ 90m, and lethal and non-lethal military aid to Ukraine. Some stocks like CAE Inc (TSX: CAE) and Magellan Aerospace Corporation (TSX: MAL), which provide aerospace and defence solutions, could gain some attention as Canada plans to increase its defence spending. (Source: Google/https://kalkinemedia.com/)
07 Apr 22. Israel: Escalating Security Threats. On the evening of 7 April, at least one gunman shot and killed two people, injuring at least eight others, on Dizengoff Street, Gordon Street and nearby areas in central Tel Aviv. Reports indicate that the perpetrator was subsequently killed. At the time of writing, Israeli police are leading a manhunt in search for a possible second gunman remaining at large.
SIGNIFICANCE
- In the aftermath of incident, Israeli police have advised citizens to return home or remain indoors and report any suspicious individuals to authorities. Tel Aviv police chief Ami Eshed reported that there are “signs this was [a] terror” incident, with suspected nationalist motivations, though the situation remains ongoing and the identity of the attackers remains unknown at the time of writing.
- The incident marks the fourth deadly assault in Israel in recent weeks, following three successive attacks since 22 March. After the most recent shooting in Bnei Brak on 29 March, this represents the first shooting in central Tel Aviv since 2016. (Source: Sibylline)
07 Apr 22. RoK’s president-elect vows ‘strong deterrence’ amid N. Korea nuclear test signs. South Korea’s president-elect Yoon Suk-yeol said on Thursday strong deterrence was crucial in the face of nuclear and missile threats from North Korea amid a renewed warning by a top U.S. envoy of a potential nuclear test as early as next week.
Yoon, who has pledged to boost defence capability to counter the North’s threats, spoke to U.S. Forces Korea (USFK) Commander Gen. Paul LaCamera during a rare visit to Camp Humphreys in Pyeongtaek, the command centre of the 28,500-strong U.S. military stationed in South Korea.
“We can never stress enough the importance of strong deterrence based on the South Korea-U.S. military alliance and the combined defence posture,” Yoon said, citing the alarm raised by the North’s test launch of an intercontinental ballistic missile (ICBM) last month.
Officials in Seoul and Washington have indicated Pyongyang may resume testing nuclear weapons for the first time since 2017, possibly around the birth annivesary of state founder Kim Il Sung, which the North celebrates on April 15.
“I don’t want to speculate too much, but I think it could be another missile launch, it could be a nuclear test,” Sung Kim, the U.S. special representative for North Korea, told reporters on a teleconference on Wednesday in Washington when asked about the holiday next week.
Signs of preparations for a nuclear test included activity near the North’s Punggye-ri nuclear site, U.S. officials said.
North Korea launched a new ICBM last month after leader Kim Jong Un threatened to break his self-imposed moratorium on ICBM and nuclear testing.
Kim’s powerful sister, Kim Yo Jong, has warned Pyongyang could use nuclear weapons if the South attacked, with South Korea and the United States expected to stage regular springtime exercises that Pyongyang has long denounced as a war rehearsal. read more
Yoon’s visit to Camp Humphreys, the largest U.S. overseas military base, also comes as his foreign policy and security aides discussed possible redeployment of U.S. strategic assets to the peninsula with U.S. officials in Washington. Yoon is set to be sworn in on May 10. (Source: Google/Reuters)
07 Apr 22. India: Al Qaeda chief’s comments on the Hijab row raises security concerns for authorities. In a video released on 5 April, Al Qaeda chief Ayman Al Zawahiri spoke extensively on the Hijab row that occurred in February this year in Bengaluru, asking Muslims in the subcontinent to fight for Islam. His appearance and referencing of a recent issues confirms he is alive despite rumours that he died of natural causes in 2020. He not only criticised India’s “mirage of Hindu democracy” but also France, Holland and Switzerland for similar Hijab bans. The Indian security established has reacted with concern stating that “devoting so much time on a single issue is a development that cannot be ignored”. Indeed, Zawahiri’s message will likely energise cadres and sleeper cells in India and indicates that Al Qaeda may well view India as a serious ground for recruitment and a region to devote more resources to, at a time of heightened ethno-religious tensions that raises the threat of terrorism. (Source: Sibylline)
07 Apr 22. Ethiopia-Kenya-Somalia: Likely fourth consecutive failed rainy season to exacerbate political crises. On 6 April, the US Agency for International Development announced USD 114m in humanitarian aid for Ethiopia, Kenya and Somalia as concerns of a fourth consecutive failed rainy season mount. On 5 April, the UN Office for the Coordination of Humanitarian Affairs stated that La Nina conditions would most likely prompt a fourth below-average rainy season while the World Food Programme’s East Africa regional director claimed that rains had already failed to materialise. The statements have dampened earlier optimism that the drought might break, with rising levels of food insecurity now set to worsen, increasing the number of critically food insecure people to around 20 m (see Sibylline Situation Update Brief 9 March). This will significantly increase the funding needs of humanitarian groups who were requesting USD 4.4bn even before the Ukraine conflict prompted price rises. Inability to meet this challenge will drive intercommunal conflict, further exacerbating political crises across the region.
07 Apr 22. Burkina Faso: Kidnap of American nun underlines threats to the safety of NGO staff in the north. On 5 April, a local Bishop announced that armed men kidnapped Sister Suellen Tennyson, an 83 year-old US nun from the parish of Yalgo, in the northern Namentenga Province, on Monday night. The US Embassy announced that it is currently working with local authorities to monitor the situation. Since November, jihadists have escalated operations in the north of the country, launching attacks on communities and elevating threats to civilians. The expansion of jihadist activity will sustain elevated threats to NGOs active across rural areas of the north and east of the country in particular. As demonstrated by the kidnapping of Sister Tennyson, foreign nationals will face an elevated kidnap threat, particularly those in roles considered to be opposed to the objectives of jihadist groups, such as missionaries or those who might serve as alternative forms of authority such as teachers. (Source: Sibylline)
06 Apr 22. Israel: Coalition’s loss of parliamentary majority increases the likelihood of new elections. On 5 April, Idit Silman announced her resignation from the Yamina party, a member of Prime Minister Naftali Bennet’s governing coalition. The move now leaves Bennet’s coalition in the Knesset without a majority, increasing the possibility of fresh elections. However, the parliament is currently in recess, making it unclear if the opposition will be able to rally enough backing for a no-confidence vote which would trigger new elections. As such, a viable scenario also remains the formation of a new majority within the current make-up of the parliament, between governing coalition parties such as Benny Gantz’s Blue and White and the opposition. Furthermore, legislation will now only be able to pass with support from opposition lawmakers or from Joint List of Arab factions, which risks alienating potential coalition partners on the right. Silman’s resignation is likely to stall Bennet’s legislative agenda and elevate government instability in the coming weeks. (Source: Sibylline)
06 Apr 22. Sri Lanka: Despite revocation of state emergency domestic unrest will likely continue as economic crisis drives dissent. On 5 April, President Gotabaya Rajapaksa ended a state emergency imposed on 1 April, reducing arbitrary powers of the military (see Sibylline Alert- 2 April, 2022). However, protests continue across the country demanding Rajapaksa’s resignation over Sri Lanka’s ongoing economic crisis. Simultaneously, health workers continue to protest over the perilous state of the country’s health system which they warn could collapse in the coming weeks due to dwindling access to essential drugs and electricity to run hospitals. Additionally, on 6 April, Highways Minister Johnston Fernando stated that “the president will not resign under any circumstances”, a statement that will likely harden the resolve of protestors to stage further demonstrations. As a result, state security forces will remain deployed in large numbers across the country, sustaining security threats to bystanders, while protest activity will disrupt operations and supply chains. Demand for early elections will grow, particularly following the president’s loss of his majority in parliament, with government instability set to persist in the coming weeks. (Source: Sibylline)
06 Apr 22. South Korea: Increase in commercial flights to boost socio-economic health, economic growth. On 6 April, South Korea’s Minister of Interior Jeon Hae-cheol announced that the number of weekly international flights to the US, Europe, and other Covid-19 quarantine-free and visa-free countries, will increase by 100 flights per month from May, and by 300 from July. International flight services will also be normalised at regional airports from May, and flight-related policies will be normalised around October, when the pandemic is expected to reach the endemic phase. The decision comes amid the third consecutive week of falling Covid-19 infections and growing demand for overseas travel. Moreover, the decision comes before most pandemic-related restrictions and measures are expected to be lifted this month. The number of flights is expected to reach about 50% of 2019 levels, suggesting that South Korea is gradually moving out of the pandemic and the associated restrictions. The decision will benefit the aviation and tourism sectors, thereby providing a boost to economic growth, and consequently improving national socio-economic health over the short- to medium-term. (Source: Sibylline)
06 Apr 22. Russia: Further Western sanctions likely to prompt retaliatory Russian countersanctions. The US will likely announce additional sanctions against Russia on 6 April amid international condemnation over revelations of apparent war crimes and summary executions committed by Russian forces in the Ukrainian town of Bucha, northeast of Kyiv. The US, G7 and European Union (EU) are coordinating planned new sanctions, which are set to include an EU ban on Russian coal imports and a US ban on investments into the country, in addition to plans to strengthen punitive measures against Moscow’s state-owned enterprises and financial institutions. Meanwhile, European governments including Germany, Denmark and Italy have expelled approximately 200 Russian diplomats in recent days. These developments will intensify Moscow’s diplomatic and economic international isolation, increasing the risk of Russian retaliation and countersanctions, particularly on energy and grain exports, though an EU ban on gas imports still remains unlikely at this stage, though public and political pressure to do so will continue to mount. (Source: Sibylline)
06 Apr 22. Peru: Curfew triggers riots and looting, elevating physical risks to assets and staff. On 5 April, thousands of protesters violated the curfew imposed by President Pedro Castillo in Lima and demonstrated against rising living costs and demanded the president’s resignation. The curfew sought to mitigate the effects of a national truck drivers’ strike that has severely disrupted supply chains and exports over the past week (see Sibylline Alert on 5 April). However, Castillo’s imposition of the curfew triggered violent protests and looting in Lima, with at least 10 people reported injured. The unrest prompted Castillo to end the curfew a few hours early yesterday. Protests will likely continue throughout the week, with private and public property destruction likely in central Lima. Repressive actions by security forces are also likely as they seek to restore public order, representing moderate risks to staff. A severe crackdown against the protestors remains unlikely due to the limited political capital available to the Castillo administration. Castillo is likely to face new impeachment attempts, increasing the likelihood that he fails to see out his term in office. (Source: Sibylline)
06 Apr 22. Argentina: Córdoba truckers strike to produce supply chain disruptions ahead of national strike. On 5 April, a group of truck drivers blockaded several routes in the south of Córdoba province, protesting rising fuel prices and a government measure to limit diesel purchases amid a severe local shortage. A national truck drivers’ strike has been called for 11 April over these issues (see Sibylline Daily Analytical Update – 1 April). Argentina’s soy and maize harvest is starting, and the strike will seriously harm the country’s economy and produce operational risks for agribusinesses. The effect of the diesel shortage across the agribusiness industry will likely lead to moderate support for protesters in rural areas, increasing unrest risks. The financial assistance agreement that the government has reached with the International Monetary Fund is partly conditioned on the reduction of fuel subsidies putting the Alberto Fernández administration in a difficult position. However, the government will likely increase the price cap on oil sold to domestic refineries to reduce export incentives in a bid to increase supply. Fuel tax slashes are also possible. (Source: Sibylline)
06 Apr 22. Gulf: Yemen Ceasefire Offers Little Long-Term Security For Gulf States. Key Takeaways:
- The UN-backed two-month truce agreed by warring parties in the Yemen conflict is unlikely to constitute a step towards a long-term solution to the conflict. Fundamental disagreements surrounding a political resolution will sustain the intensification of the conflict and cross-border attacks on Saudi Arabia and the UAE.
- Gulf states will seek to utilise concerns over global energy security as leverage to maintain a transactional relationship with the US and Western allies. Saudi Arabia and the UAE will continue to balance pressures from Washington to stabilise oil output whilst bolstering defensive capabilities.
- Failure to secure a nuclear deal between Western allies and Iran threatens to exacerbate regional instability, resulting in greater tit-for-tat hostilities and the intensification of proxy warfare. Flared hostilities between Iran, Saudi Arabia and Israel will likely materialise in the form of cyber attacks and low-level strikes on critical infrastructure.
Context
Yemen’s Iran-backed Houthis and Saudi-led Coalition forces have agreed a two-month ceasefire as of 2 April. This goes beyond the unilateral suspension of military operations by Saudi-led Coalition forces as of 30 March due to the start of the holy month of Ramadan. After an extended period of elevated conflict levels since mid-January, fighting between warring parties in Yemen had reached a stalemate in recent days, with critical food and fuel shortages likely driving the agreement as both sides seek respite.
The ceasefire also comes after notable cross-border escalations, including the launch of Houthi drones which struck Saudi Aramco’s North Jeddah bulk plant facility on 25 March, causing a large fire at the depot. The attack also coincided with the F1 Grand Prix weekend in Jeddah, with the targeted facility located approximately 11 km east of the F1 circuit. As such, though the ceasefire is expected to result in a short-term de-escalation during the religious period, it is likely to have a limited long-term impact on effective conflict resolution. Despite Muhammed Abdel-Salam, the Houthi’s primary spokesperson, expressing support for the truce, concerns remain that warring parties will utilise the break in fighting as an opportunity to recuperate.
Ceasefire likely to be short term with limited impact, sustaining the risk of cross-border aerial attacks
The shift in diplomatic rhetoric comes amid persistent fighting between warring parties in the Yemen conflict, as well as cross-border attacks. In late March, Houthi forces increased the frequency of strikes on Saudi Arabia, with the recent strike on Jeddah representing the second time in a week that the same fuel depot was targeted. Additional attempted strikes reportedly targeted Aramco facilities in Jizan and Najran, as well as water tanks in Dhahran al Janub and an electric substation in Samtah.
Moreover, whilst the agreement included compromises on prisoner swaps and the release of fuel ships at Yemen’s Hodeidah port, failed peace negotiations in 2016 and 2018 between warring parties strongly suggest that current discussions will fail to yield tangible progress. Notably, the Houthi leadership rejected an invitation to attend peace talks held by the Gulf Cooperation Council (GCC) in Riyadh, with talks set to last until 7 April. As such, continued disagreements over a long-term political solution will continue to undermine the longevity of the ceasefire, sustaining the risk of cross-border attacks.
Ultimately, the ceasefire is most likely an attempt by both sides to secure a military advantage to improve their negotiating position and dictate talks on their terms. Furthermore, whilst recent assaults have resulted in limited damage, with Saudi oil output remaining largely unaffected, such strikes signal a possible return to the targeting of critical infrastructure in major cities, particularly if conflict resurges in the coming weeks. Moreover, recent developments indicate consistent Houthi access to unmanned aerial vehicles (UAVs), high explosives and surface-to-surface missiles, likely due to greater state-backing and transfer of technology from Iran. This elevates concerns for companies operating in or within critical infrastructure, particularly in southern provinces in Saudi Arabia, though strikes also sporadically target major urban centres. (Source: Sibylline)
06 Apr 22. US-Gulf relations remain highly transactional amid global energy insecurity, increasing the likelihood of bilateral defence pacts. Years of perceived US disengagement have prompted several Arab leaders to pursue assurances from Eastern powers, primarily regarding security. The withdrawal of US military personnel from Afghanistan and Iraq exacerbated the Gulf states’ mistrust of the Biden administration, worsened still by his suspension of several defence contracts initially proposed by former president Donald Trump. This includes the temporary suspension of US-manufactured F-35 fighter jets sales to the UAE in December 2021 due in part to concerns surrounding Abu Dhabi’s warming relations with Beijing. US-Gulf relations have returned to the fore of regional geopolitics as part of the fallout from the Russia-Ukraine conflict, with oil-producing states such as Saudi Arabia and the UAE seeking to utilise insecure oil markets as leverage for greater military and security guarantees as the US tries to steer them away from closer ties with Russia and China. The West’s focus on oil flows from outside Russia could therefore lead to further security guarantees from the US in particular, in the form of bilateral defence pacts to bolster aerial defensive capabilities and mitigate the threat of further cross-border attacks from the Houthis. The GCC’s position of relative neutrality towards Moscow risks complicating multilateral relations with the US and Western allies. This is compounded by the reluctance of the Organisation of the Petroleum Exporting Countries (OPEC+), of which Saudi Arabia is at the centre, to succumb to President Biden’s repeated demands to increase oil output. Nevertheless, the UAE and Saudi Arabia continue to balance pressure from Washington without shunning Russia, prioritising their own regional security and longer-term economic interests. Such reluctance to fully align with the US and Western allies indicates that major Gulf states will continue to engage on a transactional basis, with a key focus on energy revenues and defence infrastructure.
Protracted disruptions to nuclear talks sustain threats of proxy warfare and tit-for-tat hostilities
After weeks of tentative progress, efforts by Western allies to renew the nuclear deal have stalled. This has reignited concern over the probability of an agreement not being reached, with collapsed talks elevating the risk of Iranian proxy groups and state-backed militia engaging in hostile activities to pressure the US and other signatories to return to the negotiating table and meet Iranian demands, including easing sanctions.
Whilst Israel and Saudi Arabia have criticised the prospect of a new nuclear agreement with Iran, the absence of a deal also poses security concerns for both states. For instance, hostile rhetoric has been high in recent weeks between Israel, Iran and Saudi Arabia amid collapsed talks, espionage operations and Riyadh’s execution of several Shia Muslims. Moreover, Iran’s Revolutionary Guards Corps Commander, Hossein Salami, warned against Persian Gulf states forming ties with Israel in the aftermath of the Negev Summit on 28 March, attended by UAE and Bahrain foreign ministers. Such inflammatory language indicates that regional states aligned with Israel risk retaliation from Iran, elevating concerns for smaller Gulf states such as Bahrain and potentially signalling further aerial attacks towards the UAE.
Forecast
In the short term, the two-month truce will likely facilitate critical humanitarian relief to locations in Yemen that have been at the centre of recent clashes. Nevertheless, fundamental disagreements between the Saudi-led coalition, Yemeni government and other Yemeni parties, and Iran-backed Houthi leadership will jeopardise prospects of an end to the conflict. Ceasefire violations by either party would also threaten to trigger a premature end to the temporary peace, allowing re-grouped Houthi elements to conduct assaults on disputed territory and conduct further cross-border attacks in the UAE and Saudi Arabia.
After long-standing US disengagement from the region, the Russian invasion of Ukraine will likely prompt a return to more transactional relationships between the US and Gulf states, especially in energy and defence sectors. Saudi Arabia and the UAE will seek to utilise oil production as leverage to bolster greater US defensive support for the Yemeni conflict, whilst the US will continue to demand greater oil production to address global energy insecurity. However, weaker relations following criticism of Saudi Arabia from the Biden administration sustain the likelihood of Gulf actors seeking greater assistance from powers such as Russia and China.
Finally, deterioration in nuclear negotiations will also jeopardise the longevity of the truce between warring parties in the Yemen conflict. Companies operating in the region will remain vulnerable to cyber attacks linked to state entities and infrastructure, whilst personnel working in commercial shipping lanes, namely the Gulf of Oman and Strait of Hormuz, and in critical infrastructure in the oil and gas sector will remain most vulnerable to hostilities. Moreover, if warring parties renege on the two-month truce in Yemen, Saudi Arabia and the UAE will likely experience an uptick in targeted cross-border attacks. (Source: Sibylline)
05 Apr 22. Potential for Great Power Conflict ‘Increasing,’ Milley Says. America’s top military officer told the House Armed Services Committee that the world is getting more unstable, “and the potential for significant international conflict between great powers is increasing, not decreasing.”
Army Gen. Mark A. Milley, the chairman of the Joint Chiefs of Staff, told the committee that the Fiscal 2023 Defense Budget Request of $773bn enables the U.S. military to handle the missions today and also ready the force for the potential battles of 2030 and beyond.
Milley was quick to point out that the U.S. military is only one part of overall U.S. national power. He emphasized the military works in conjunction with — and often in support of — the other centers of American power: diplomatic, economic and informational.
“In coordination with the other elements of power, we constantly develop a wide range of military options for the president as commander in chief and for this Congress to consider,” he said. “As the U.S. military, we are prepared to deter and — if necessary — fight and win anyone who seeks to attack the United States or our allies or our vital national security interests.”
The president’s budget request will enable the appropriate decisions for modernization and transformation of the joint force in order to set and meet the conditions of the operating environment that the United States will face in 2030 and beyond, Milley said. The character of war is changing, and the U.S. military must be ready to face the challenges that emanate from that.
“In alignment with the forthcoming national defense strategy and the national military strategy, this budget delivers a ready, agile and capable joint force that will defend the nation while taking care of our people, and working with our partners and allies,” he said.
The general called Russia’s invasion of Ukraine “the greatest threat to peace and security of Europe and perhaps the world in my 42 years of service in uniform.”
President Vladimir Putin’s unnecessary war threatens not only European peace and stability, but global peace and stability, he said. “The islands of the Pacific and the beaches of Normandy bore witness to the incredible tragedy that befalls humanity when nations seek power through military aggression across sovereign borders,” Milley said. “Despite the horrific assault on the institutions of freedom, it is heartening to see the world rally and say never again to the specter of war in Europe.”
He told the representatives that the military stands ready to do whatever is directed.
Milley said that China, as the pacing challenge to America, requires the U.S. military to maintain competitive overmatch in all the domains of war, cyber space, land, sea and air.
“The United States is at a very critical and historic geostrategic inflection point,” he said. “We need to pursue a clear-eyed strategy of maintaining the peace to the unambiguous capability of strength relative to China or Russia.”
This requires the U.S. military to simultaneously maintain readiness today and modernize the force for the future. “If we do not do that, then we will be risking the security of future generations, and I believe this budget is a major step in the right direction,” he said. (Source: US DoD)
05 Apr 22. DOD Continues Mission to Stabilize the Middle East. Iran is the leading source of instability in the Middle East, and ISIS also remains a threat to the region, even though the organization does not hold territory anymore in Iraq and Syria, the deputy assistant secretary for defense for the Middle East said today at the Wilson Center. Dana Stroul said Iran’s continued sponsorship and cultivation of violent proxies and terrorists, its proliferation of increasingly advanced and lethal unmanned aerial vehicles, or drones, its ballistic missile program, maritime aggression and smuggling activities at sea all comprise reasons why Iran is a threat.
“U.S. forces specifically, who remain present in northeast Syria to assist in the fight against ISIS through local partners, experience on a very regular basis threats from Iran and Iran-backed proxies,” she said.
ISIS remains intent on reconstituting and continues to direct and inspire attacks in the region and beyond it, Stroul added, she said Secretary of Defense Lloyd J. Austin III has reaffirmed U.S. commitment to maintaining U.S. forces in Iraq and Syria in an advise-and-assist capacity to support partner forces in their fight against ISIS.
The Middle East is a key theater for competing with China. It’s not a pivot, but rather, it’s how DOD “thinks through competing with China in the Middle East,” she explained. “Second, we as a department are leaning into multilateral security cooperation to effectively deter against Iran and Iran-backed threats, violent extremist organizations like ISIS and al-Qaeda, and other transboundary threats; and third, we support the State Department in implementing proactive diplomacy to reduce tensions and de-escalate ongoing conflicts.”
DOD’s Global Posture Review particularly emphasized the United States will maintain its presence in Iraq and Syria to support its partners’ efforts to ensure the enduring defeat of ISIS, Stroul said.
“The regime’s continued pursuit of a military solution to the conflict enabled by Russia and Iran has left the Syrian people more vulnerable today than ever before,” she said. “Syrians today are more hungry, more impoverished and further away from achieving any measure of political reform than they have been at any point in conflict,” she said.
“Assad remains intransigent, untouched and unmoved by the misery around him. In recognition of this reality, the administration’s approach to Syria is grounded in several essential priorities: expanding humanitarian access throughout Syria, preserving and maintaining our military presence in partnership with local partners, including the Syrian Democratic Forces to maintain pressure on ISIS,” Stroul said.
Stroul said the United States will not lift or waive sanctions on Syria. “We do not support the reconstruction of Syria until there is irreversible progress toward a political solution.”
On the DOD mission, she said, the specific authorization for DOD to be in northeast Syria is to defeat ISIS, and the goal for U.S. partners is for them to independently maintain pressure to prevent ISIS from reconstituting in Iraq and Syria. “But the reality is this is not going to be achievable in the short term, which is why we continue to emphasize in every policy and strategy document our commitment to maintaining U.S. force presence in Iraq and in Syria,” she added.
DOD continues to operate as part of the global coalition to defeat ISIS, which brings together 79 nations and five international organizations to provide an array of military capabilities, funding and political support to the campaign against ISIS, Stroul said.
“As the nation looks at the continued brutal imagery and reports coming out of Ukraine, those in the Middle East and those displaced by the violence in Syria know all too well what prolonged and sustained Russian support for an aggressor looks like in Syria,” she said.
“And we know what it looks like for the international community to not stand together and demand accountability for those actions. It seems to me incredibly important that those in the Middle East committed to a rules-based international order from which we have all benefited; now’s the time to stand up,” the deputy assistant secretary said.
“Know that this is a black-and-white situation when it comes to Russian aggression in Ukraine,” she said. “When it comes to displaced persons, … war crimes and atrocities, we have seen this before since 2015, when Russia decided to back Assad in Syria. And now, of course, is the time to stand together not only in demanding accountability and pushing back across information operations, humanitarian aid punishing sanctions in the Ukraine context, but to reaffirm our commitment to not letting Assad’s atrocities in Syria stand.” (Source: US DoD)
06 Apr 22. Australia says defence buildup about peace and stability. Australia’s involvement in the development of hypersonic missiles with treaty partners the United States and Britain was part of an effort to achieve peace and stability in the Indo-Pacific region, Prime Minister Scott Morrison said on Wednesday. Britain, the United States and Australia on Tuesday agreed to cooperate on hypersonic weapons and electronic warfare capabilities, under the AUKUS alliance the three countries established last September.
Morrison, who is set to call an election for next month, told reporters in Sydney that hypersonic missiles, like cyber capabilities, were a key modern combat technology and Australia wanted to significantly upgrade its capabilities.
Asked if his expectation was China would invade Taiwan in the next decade and if Australia would be involved in any war, Morrison answered that he was building up defence capabilities to avoid those sort of scenarios.
“We do these things to keep Australians safe; we do these things to bring balance and strategic certainty to our region,” he said, adding that included working with the AUKUS alliance and the Quad grouping of the United States, Japan, Australia and India.
“The reason we invest in all of these things is to create a peaceful environment and a stable environment in our region, not one driven by conflict.”
Last year, when the AUKUS pact was announced, Australia cancelled a contract with France for conventional submarines in favour of a nuclear submarine program supported by the United States and Britain, souring diplomatic relations.
As well as the plan to acquire nuclear-powered submarines, Australia has outlined plans to increase the size of its defence forces, bring forward missile purchase orders, and placed orders for new tanks as part of a ramp up in defence spending. (Source: Reuters)
05 Apr 22. Minister for Africa statement: Reported massacre in Mali. Minister for Africa Vicky Ford has made a statement on a reported massacre in Moura, Mali, in which hundreds of people were killed. The UK is horrified by the reports emerging from Mali which indicate that hundreds of people were killed in Moura last week, following a counterterrorism operation carried out by the Malian Armed Forces (FAMa) with the alleged involvement of the Wagner Group. The allegations of civilian deaths require an urgent, transparent and impartial investigation, to bring those responsible for any violations and abuses of human rights to justice. We note the statement from the Malian Ministry of Defence that the FAMa targeted violent extremist groups around Moura. However, multiple reports suggest that civilians were also killed by Malian Armed Forces and Wagner operatives. All counterterrorism activity must be carried out in strict compliance with International Humanitarian Law – civilians are not targets and they must be protected. We call on the transitional authorities in Mali to ensure unfettered access to the United Nations Multidimensional Integrated Stabilization Mission in Mali (MINUSMA) to allow them to carry out their investigation, as they are mandated to do by the United Nations Security Council. The results of this investigation must be made publicly available, and steps taken to ensure civilians in Moura are protected. The latest reports from Moura follow a clear trend in a surge of human rights abuses since the deployment of Wagner Group to Mali. Violations and abuses of human rights are contrary to the values that the UK and Mali share and will lead to worsening instability and violence. We urge the Government of Mali to end all ties with the Wagner Group. On behalf of the people of the UK, I offer my deepest condolences to the families of those who have been killed. (Source: https://www.gov.uk/)
05 Apr 22. Second and third Modern Brigades progressing – CArmy. The establishment of the South African Army’s second and third Modern Brigades is moving forward, according to SA Army Chief Lieutenant General Lawrence Mbatha. Mbatha made this known during a Change of Office Parade between Master Chief Warrant Officer Ncedakele Mtshatsheni and Senior Chief Warrant Officer P T Tladi on 31 March at the Thaba Tshwane Sports Ground. The South African National Defence Force (SANDF) reports Mbatha as saying preparations are at an advanced stage to establish the 2nd Modern Brigade (Motorised) in the Bloemfontein area and the 3rd Modern Brigade, envisaged as the Light Modern Brigade, in Gauteng. The 4th Modern Brigade, an airborne brigade, would be located in Bloemfontein.
The 1st Modern Brigade (Mechanised) has been established at Lohatlha, and flexed its muscles during an exercise there in November 2021. The Modern Brigade is designed to respond to modern threats such as asymmetric warfare and has been established in response to the current security situation. The modern brigade concept is cognisant of asymmetric and terrorism threats to South Africa.
“The process shall mainly be driven by a constant threat analysis based on the fact the SA Army is required, in terms of its mandate, to provide combat-ready landward forces for the pursuance of national defence and prevention of war to jointly achieve national and regional security goals,” Mbatha said.
The SA Army currently has two standing brigades – 43 SA Brigade at Wallmannsthal and 46 in Johannesburg’s Kensington. Neither have standing personnel and equipment with resources assigned according to mission requirements. Among challenges posed by this arrangement is an inability to meet the joint forces employment requirement – the basic tasking from Chief: Joint Operations. This requires the Army to maintain a brigade strength rapid reaction force.
The Modern Brigade will therefore see a combat ready operational capability in place. This is done by centralising prime mission equipment and vehicles at Lohatla in the Northern Cape. Under the command of 43 SA Brigade headquarters, the Modern Brigade has its own headquarters, combat and support units.
During the change of office parade, Mbatha highlighted some recent success of the SA Army, including Engineers building bridges in remote rural areas under Operation Chariot; providing clean water in places like Machabeng; providing combat troops to the United Nations mission in the Democratic Republic of Congo under Operation Mistral; supporting counter-insurgency efforts in northern Mozambique under Operation Vikela; supporting the South African Police Service through Operation Prosper; and safeguarding South Africa’s borders under Operation Corona.
In his parade address, Mbatha said Tladi has a great responsibility of taking the Office of the Warrant Officer of SA Army to greater heights. Mtshatsheni is now the Warrant Officer of the SANDF. Mbatha congratulated both on their new positions and wished them well in fulfilling their duties. (Source: https://www.defenceweb.co.za/)
05 Apr 22. Kuwait: Reform Delay Following Cabinet Resignation. On 5 April, Kuwaiti Prime Minister Sabah Al-Khalid Al-Sabah submitted his and his government’s resignation to Crown Prince Mishal Al-Ahmad Al-Jaber Al-Sabah. The Crown Prince is expected to agree to the resignation.
SIGNIFICANCE
- The latest government resignation comes ahead of a scheduled parliamentary no-confidence vote against the prime minister tomorrow, 6 April. The vote underscores years of government opposition to Prime Minister Al-Sabah, with lawmakers undertaking persistent efforts to question the senior official on issues including corruption allegations.
- This resignation is Kuwait’s fourth since the beginning of 2020, and third government in 2021 alone, illustrating considerable deadlock in the country’s political system due to an active and polarised legislature with veto powers. Since 2006, Kuwait has had eight elections and 17 governments, against a backdrop of long-term opposition between the government and parliament.
- The move marks the second resignation of a government headed by Sabah Al-Khalid Al-Sabah, having submitted his and his first cabinet’s resignation on 8 November 2021. Nevertheless, the Emir re-appointed Prime Minister Al-Sabah to form a new government, which he did on 28 December.
- Government formation temporarily ends the country’s political stalemate, however, intra-parliamentary political infighting continues to prevent the introduction of economic and legislative reforms crucial for supporting Kuwait’s post-pandemic economic recovery. In January 2022, Fitch Ratings downgraded Kuwait from AA to AA- due to the cabinet’s persistent inability to pass a debt law and address structural economic inefficiencies, including its oversized public sector.
FORECAST
Renewed political deadlock following the latest cabinet resignation will prolong delays to the passing of critical reforms. Moreover, despite the likely upcoming formation of a new executive in the coming months, political deadlocks with the opposition, driven in part by tribal and sectarian divisions, will most likely continue to hinder unpopular fiscal reform efforts that risk triggering a public backlash. These include efforts to review subsidies and foster economic diversification beyond oil revenues. Overall, trends of government resignations will entrench obstacles to reform, consequently undermining investor outlook and confidence in Kuwait’s business environment.
Further failures in the government’s ability to address structural fiscal challenges will lead to a long-term deterioration in Kuwait’s long-term rating. This decline will be further compounded by delays to introducing a public debt law, the absence of which currently prevents Kuwait from raising debt on international markets. At present, the government is able to meet its debt financing obligations with strong financial and external balance sheets. However, the persistent lack of a public debt law will threaten the country’s long-term fiscal health, with Kuwait’s budget deficit expected to reach between 45 and 60bn dinars (USD 147.6 and 196.8bn) over the next five years. (Source: Sibylline)
05 Apr 22. Sri Lanka: Spiking government instability amidst economic crisis to drive nationwide unrest. On 5 April, President Gotabaya Rajapaksa’s government lost its parliamentary majority after 42 MPs that were part of the ruling alliance withdrew their support. Furthermore, opposition MPs refused an invitation from the president to prop up his government, demanding his resignation instead. The government’s weakening position coincides with nationwide protests that continue to grow with thousands taking to the streets demanding Rajapaksa’s resignation. Given the increasing pressure, the government is likely to continue to crackdown on protestors, raising the threat of clashes, and implementing social media blocks raising operational concerns for tech companies. Additionally, Western countries such as the UK, New Zealand, and Canada have recently issued travel advisories warning citizens to “exercise caution” due to a heightened security presence and the arbitrary power of the military. This will undermine Sri Lanka’s vital tourism sector and overall socio-economic health further. (Source: Sibylline)
05 Apr 22. South Sudan: Disputes over terms will undermine recommitment to peace deal, sustaining threat of conflict. On 3 April, President Salva Kiir and vice president Riek Machar agreed to resume talks regarding the unification of their rival forces under a joint command after an escalation in conflict between the sides. Under the agreement, Kiir and Machar will recommit to the 2018 peace deal which ended the five-year civil war, agreeing to abide by the ceasefire. Next week, opposition generals are expected to be appointed to the unified command. In March, Machar’s Sudan People’s Liberation Movement/Army in Opposition (SPLM/A-IO) suspended its participation of oversight mechanisms of the peace deal, claiming that the decision was driven by attacks by Kiir’s forces. However, details of the agreement have yet to be worked out, including the ratio of Kiir to Machar troops within the unified command. Unfavourable terms for either side will further stall progress in the peace agreement, elevating the likelihood of outbreaks of intercommunal violence, particularly as food insecurity mounts. (Source: Sibylline)
05 Apr 22. Kenya: Fuel shortages likely to endure, driving protests in cities. On 4 April, President Uhuru Kenyatta signed an additional budget for the fiscal year, allocating roughly a further USD 300 m to the fuel subsidy program. Last year, the government imposed a subsidy to reduce the impact of fuel price rises on consumers. However, the government has been unable to keep up with prices rises and is now in USD 113m of debt to fuel suppliers, resulting in delays to fuel deliveries. Subsequent fuel shortages, particularly in western Kenya are causing hours long queues at petrol stations and driving price rises for basic goods, particularly in Nairobi. While the government will use its additional budget to clear its arrears, which it intends to do this week, the government chronically struggles with paying suppliers and the subsidy means further shortages are likely. Fuel shortages will likely continue through the coming week, disrupting the movement of goods, while future shortages will elevate the threat of domestic unrest, with potential protests in cities across the country. (Source: Sibylline)
05 Apr 22. Vietnam: Power shortages possible in the short-term due to insufficient coal supply. On 4 April, state news reported that Vietnam Electricity (EVN) believes that power shortages were possible during April due to lower-than-expected domestic coal supply coupled with dwindling reserves. The shortages are believed to be related to Covid outbreaks at local mines disrupting operations in March. Thermal power plants are integral for generating power for domestic energy consumption in Vietnam, with coal estimated to contribute to a third of electricity output. However, the reliance on coal is heightened during the dry season due to reduced output from hydropower, which the EVN expects to run until July. Efforts are being made to increase imports from Australia and South Africa in order to supplement the domestic supply. However, rising coal prices will undermine efforts to secure the necessary supply to avoid shortages in the coming month.(Source: Sibylline)
05 Apr 22. Lebanon: Sectarian tensions threaten to de-rail financial support despite reform framework progress. On 4 April, Central Bank Governor, Riad Salameh, rebutted claims made by Deputy Prime Minister Saade Chami that Lebanon’s Central Bank had entered bankruptcy. Salameh later confirmed that the bank remains fully operational despite the country experiencing one of the worst financial depressions in history according to the World Bank, with the economy having shrunk by 60 percent since 2019. In parallel to Salameh’s public assurance, Prime Minister Najib Miqati held the fourth Consultative Group of the Reform, Recovery and Reconstruction Framework (3RF) session, underpinning ongoing efforts by the government to execute critical reforms to the banking sector. Nevertheless, institutional corruption and sectarian tensions threaten to jeopardise progress and Lebanon’s access to third-party financial support. For instance, Hizballah’s MP Mohammed Raad, reaffirmed the group’s opposition to any US influence, threatening to hamper negotiations with Western allies and the International Monetary Fund (IMF) that may ease economic concerns. (Source: Sibylline)
05 Apr 22. UAE-Israel: Agreement consolidates regional economic cooperation boosting investor confidence in the longer term. After four rounds of negotiations, the UAE and Israel reached a Comprehensive Economic Partnership Agreement (CEPA) on 1 April, 18 months after the two countries signed the Abraham Accords. The agreement will further drive investment growth and technology partnerships. With non-oil trade reaching USD 700 m between the two countries in 2021, Israel is likely to become one of the UAE’s top trading partners in the future. As such, renewable energy and agritech are likely to be among the leading sectors. This milestone will further boost investor confidence and facilitate intra-regional trade of goods and access to market services. More broadly, in securing longer term strategic economic ambitions, the agreement signals the expansion of a partnership-building trend between the two countries. (Source: Sibylline)
05 Apr 22. Peru: Lima Curfew Imposed. On 4 April, President Pedro Castillo published the Supreme Decree N°034-2022-PCM as a response to the national truck drivers’ strike modifying the state of emergency in the Metropolitan Region of Lima and Callao, and proclaiming a curfew from 0200 until 2359 for 5 April 2022. Cargo drivers, health workers and other “essential workers” are excluded from the curfew, but major supply chain disruption is expected to persist. Violent protests will likely continue.
SIGNIFICANCE
The Castillo administration is attempting to mitigate the impact of the nationwide protests on the capital as protesters have severely disrupted supply chains, affecting exports and the price of basic goods. The Defence Minister, José Gavidia, deployed 95 army patrols on 4 April to control protests and re-open roads, triggering violent confrontations with security forces. To date, at least four people have died.
President Castillo ordered a state of emergency on 2 February 2022 to fight growing insecurity and crime in the Metropolitan Region of Lima and in Callao. The decree allows security forces to participate in domestic operations, enforce public safety, prevent crime, and control public order. The administration extended the decree for 45 days from 20 March, expanding the state of emergency until 4 May 2022. The April 4 decree severely tightened the conditions of the state of emergency.
The administration issued a number of measures over the weekend in an effort to halt the protests and avoid a crisis. The measures mostly consist of subsidies for vulnerable populations and other economic measures:
- Minimum salary increase: from 1 May, the minimum wage will increase by 10% (from Peruvian Soles 930 to Peruvian Soles 1,025). The first minimum wage adjustment in four years.
- Tax cuts on food and fuels: the Finance Minister, Oscar Graham, declared a 90% reduction of the Selective Consumption Tax (ISC) and the exemption of a number of basic goods from the sales tax, effectively reducing their prices.
- Fuel Price Stabilitisation Fund (FEPC): the administration added diesel, LPG, and petrol (84 and 90 octane) to the FEPC to mitigate the impact of price fluctuation on consumers.
Congress invited President Castillo and other Ministers to account for themselves in parliament on 5 April, before the government declared the curfew. The President of Congress, Maria del Carmen Alva, declared that the parliament would not comply with the curfew and therefore expected the cabinet to attend.
FORECAST
Violent protests will very likely continue to cause supply chain disruptions across the country, raising the price of basic goods temporarily due to scarcity in Lima. The risk of looting and private property destruction will increase as protests continue. Demonstrations today in Lima will be a significant indicator of potential riots and unrest over the coming week.
The armed forces’ responsibility for control of public safety moderately heightens the risk of human rights violations and disproportionate repression of protesters, singaling growing bystander risks for staff in the capital.
Truck drivers and transport workers in Peru are largely informal workers. This working status is relevant as the salary increase does not affect their living standards and elevated fuel prices directly reduces profitability. In this sense, protesters will seek to reduce operational costs on several fronts, such as fuel costs, fines, toll charges, and operational restrictions to collective transport.
Supply chain disruptions will likely create further upward pressures on prices, fuelling already-high inflation and possibly leading to fuel supply disruption. Measures taken by both protesters and security forces will likely continue to disrupt operations over the next week, particularly as President Castillo has the opportunity to extend the curfew in terms of duration, scope and geographic coverage. (Source: Sibylline)
04 Apr 22. Mali: Mounting violence against civilians will impede international counter jihadist operations. On 3 April, the US State Department called on the Malian authorities to provide impartial investigators access to areas in which the Malian army are operating alongside Russian military contractors the Wagner Group. Over the past week the Malian military claims to have killed over 200 jihadists in operations around Mora in the central Mopti Region. However, international and local NGOs allege that hundreds of unarmed civilians, also present in the area, were killed. Since joint operations began with Wagner in December, reports of civilian deaths have mounted alongside claims that the military is targeting communities believed to be sympathetic to jihadists, primarily semi-nomadic Fulanis and Tuaregs. This is encouraging more widespread attacks on these communities by vigilante groups with the UN warning that attacks on civilians have spiked since the start of March. The military will resist investigations into military activity and therefore control the movement of international forces, threatening UN operations and the availability of French air support, impeding counter-terror efforts. (Source: Sibylline)
04 Apr 22. South Africa: South Africa’s economy rating improving to ‘stable’ will bolster investor confidence. On 1 April, the ratings agency Moody’s upgraded its outlook on South Africa from ‘negative’ to ‘stable’. The agency claimed that the country’s improved fiscal outlook meant that risks to creditors, while still significant, were not worsening, with the government demonstrating its capacity to reprioritise its spending. Russia’s invasion of Ukraine is projected to drive a commodity boom in South Africa, with western companies likely shift sourcing for some mineral goods, such as platinum and palladium, from Russia to South Africa. High commodity prices boosted the profitability of companies in the mining sector during the 2021 fiscal year, with companies contributing 2 percent more in corporate income tax than the government planned for the initial budget. Sustained high commodity prices will therefore support the rand and elevate prospects for the government stabilisation of the country’s debt burden, bolstering confidence amongst creditors and attracting investment into the country. (Source: Sibylline)
04 Apr 22. Sri Lanka: Nation-wide protests sustain security threats for bystanders amidst immense government turmoil. On 4 April, hundreds of demonstrators continued weekend protests across the country demanding the resignation of President Gotabaya Rajapaksa over deteriorating economic conditions. The Central Bank Governor as well as Rajapaksa’s entire cabinet have resigned in an attempt to quell public anger that spiked again after the government temporarily banned social media yesterday to curb “fake news”. Rajapaksa has invited opposition members to take up ministerial positions but demands for Rajapaksa’s resignation continue. The political turmoil has undermined economic recovery efforts with authorities today even halting trading on Sri Lanka’s stock exchange after the share market plunged 5.9 per cent. Further, the army’s presence has not deterred protesters and violent clashes are likely, raising threat levels for bystanders. Protester use of barricades and security checks on main roads, particularly in Colombo, will create supply chain bottlenecks. (Source: Sibylline)
04 Apr 22. Indonesia: Eased restrictions for Ramadan to boost socio-economic health. On 2 April, the Muslim community of Indonesia marked the star of the holy month of Ramadan, with Covid-restrictions eased in many areas to allow for greater social activities. For the first time in two years, the government will allow people to undergo “mudik” which involves residents travelling to their hometowns for the end of Ramadan, with 79 m Indonesians expected to travel internally this year. The reduced concern regarding Covid-19, with cases and hospitalisations falling, has boosted rates of consumer confidence according to the country’s Finance Minister. As a result, greater spending – particularly for food, drink, clothes, and travel – in the next month will boost socio-economic health. Additionally, the vice-president has indicated that the effect of Ramadan on Covid figures will guide the government’s decision on whether to transition into treating the disease as endemic or not, potentially heralding further relaxations in restrictions. (Source: Sibylline)
04 Apr 22. China: Deployment of military to Shanghai to raise policy risk and frustrate domestic stability over Covid-19. On 4 April, over 2,000 People’s Liberation Army (PLA) medical personnel and over 10,000 healthcare workers were deployed to Shanghai to support the city’s “dynamic clearance” Covid-19 strategy and mass-testing. The troop deployment is also an opportunity for the military to test the strategy’s effectiveness, suggesting that similar measures and deployments may be applied elsewhere. The personnel deployment combined with statements of concern by local officials suggest that the city’s lockdown may be extended. Moreover, Beijing may now consider military personnel as necessary to curb infections and provide economic stability, highlighting the severity of the situation for the country’s top leadership. However, while this approach may help alleviate some of the economic impact, it may nonetheless frustrate local populations and worsen domestic stability. The policy risk of extending such an approach to other cities may consequently worsen public frustrations and undermine domestic stability, but the risk of domestic unrest will remain low. (Source: Sibylline)
04 Apr 22. Chile: Escalation of Mapuche conflict amid military withdrawal increases physical threats to staff in south. On 2 April, Resistencia Mapuche Lackenche (RML), a radical indigenous Mapuche group, claimed responsibility for an arson attack destroying 15 houses in Contulmo, Bio Bío Region, amid an escalation in the conflict between the Mapuche and the Chilean authorities over ancestral lands. RML threatened to stage nationwide protests from 4 April if the new government led by President Gabriel Boric does not comply with several demands. Days before, Coordinadora Arauco Malleco (CAM), another radical group, issued a communiqué refusing an invitation for dialogue with the government and reiterated its willingness to use violence to achieve its objectives. While Mapuche group’s capabilities are fairly limited, the declarations likely signal a further escalation in conflict despite the recent withdrawal of the military from Bio Bío and Araucanía regions. Willingness to attack private property as a method of increasing pressure on government, particularly through arson, will likely elevate physical threats to assets and staff in the next month. (Source: Sibylline)
04 Apr 22. Mexico: Armed confrontation in Acapulco reflects homicide uptick and signals rising extortion risks. On 2 April, Mexican police killed one of two gunmen that carried out a targeted assassination, killing two people in Playa Manzanillo beach in Acapulco, Guerrero. The gunmen reportedly arrived and left the beach on a boat. Violence in Acapulco has been falling since 2016, reaching a historical low homicide rate of 11.45 per 100,000 in 2020. However, organised crime group turf wars are driving a new uptick in homicides in the municipality, which registered a 24 percent annual increase in 2021. While the group the perpetrators belong to and the victim’s identity remain unclear, the rise in deadly violence is likely linked to the profitability of local micro-trafficking networks and associated competition for control. The surge in violence will significantly impact the hospitality sector, as perception of insecurity scares away tourists. Targeting of foreigners remains unlikely, but violence against firms that refuse to pay extortion is likely to increase as competition for control intensifies. (Source: Sibylline)
04 Apr 22. SAMIM deployment extended and mandate altered. The Southern African Development Community (SADC) Mission in Mozambique (SAMIM) is to be downgraded from a full enforcement operation to a peacekeeping mission.
This was made public by South African International Relations and Co-operation Minister Naledi Pandor during a SADC troika minister’s meeting in Pretoria at the weekend.
Her statement reads, in part: “The Summit extended the mandate of SAMIM with additional capability requirements and additional integral personnel for a further three months, from 16 January to 15 April and thereafter de-escalation to Scenario Five up to 15 July 2022”.
In terms of African Union (AU) procedures, Scenario Six is a full enforcement mandate and Scenario Five a peacekeeping one.
SAMIM deployed in Mozambique’s Cabo Delgado last July with troops and materiel from Angola, Botswana, Democratic Republic of Congo (DRC), Lesotho, Malawi, South Africa, Tanzania and Zambia. A thousand-strong contingent from Rwanda is also in the southern African country.
SADC member states have, according to Pandor’s opening remarks to the meeting, “pledged” the required combat equipment and personnel to support the mission. “An additional budget in support of the SAMIM operations was also approved.”
“Continued commitment and support of member states is commended. It signals the premium we attach to the fight against terrorism, which continues to threaten gains the region is making toward integration and socio-economic development. Member States’ efforts are not in vain,” the South African Cabinet Minister tasked with foreign relations said.
Other key decisions taken at the Summit were approval of a framework for support to Mozambique in addressing terrorism. This reportedly encompasses the thematic areas of politics and diplomacy; economic and social development; humanitarian assistance; military, information and intelligence; as well as public security, law and order.
“These are key steps that would lead to stabilisation of affected areas in Cabo Delgado province,” she told the meeting.
On the issue of continental and international support for the southern African regional bloc’s efforts to halt and terrorist activity by ASWJ (Al Sunnah wa Jama’ah), Pandor indicated the European Union (EU) approved funding for SAMIM to benefit from the AU early response mechanism under the auspices of the African Peace Facility (APF).
Her remarks to the meeting, carried on the DIRCO (Department of International Relations and Co-operation) website, confirm non-lethal equipment is available at “the continental logistics base”. This is presumably the AU logistics depot in Douala, Cameroon with Pandor urging follow-ups as the equipment is urgently required in Mozambique – “the [SAMIM] theatre of operations”.
“We commend co-operation among the forces on the ground. Despite progress, there continue to be challenges, including the need for the fulfilment of pledged capabilities and additional resources as this mandate will enter Scenario Five phase,” she said.
“There is indeed progress in all thematic areas, albeit witg challenges and capacity gaps. I trust our deliberations will assist in finding solutions and closing the gaps,” she said.
Pandor said they were pleased with the inauguration of the Regional Counter-Terrorism Centre on 28 February in Tanzania, as an important step toward strengthening regional security architecture, working in synergy with the Regional Early Warning Centre. (Source: https://www.defenceweb.co.za/)
04 Apr 22. Jordan: Increased government scrutiny to foster bouts of unrest but royal family rift unlikely to threaten government stability. On 3 April, Prince Hamza bin al-Hussein, renounced to his royal titles in protest to the country’s current government policies via a statement on Twitter, further noting that he would continue to serve Jordan privately. The development comes nearly a year after the former heir to Jordan’s throne was placed under house arrest after being implicated in an alleged coup plot against King Abdullah II. Earlier on 1 April, thousands of protesters also gathered in Amman in support of the Palestinian cause and to reject the normalisation of relations with Israel by Arab countries. With Jordan facing increased public scrutiny over its relationship with Israel, Hamza’s statement is likely to spur additional bouts of unrest in the coming days and weeks. Nonetheless, implications for government stability are likely to be limited due to the overall institutional stability of the Hashemite monarchy. (Source: Sibylline)
————————————————————————-
Founded in 1987, Exensor Technology is a world leading supplier of Networked Unattended Ground Sensor (UGS) Systems providing tailored sensor solutions to customers all over the world. From our Headquarters in Lund Sweden, our centre of expertise in Network Communications at Communications Research Lab in Kalmar Sweden and our Production site outside of Basingstoke UK, we design, develop and produce latest state of the art rugged UGS solutions at the highest quality to meet the most stringent demands of our customers. Our systems are in operation and used in a wide number of Military as well as Homeland Security applications worldwide. The modular nature of the system ensures any external sensor can be integrated, providing the user with a fully meshed “silent” network capable of self-healing. Exensor Technology will continue to lead the field in UGS technology, provide our customers with excellent customer service and a bespoke package able to meet every need. A CNIM Group Company
————————————————————————-