Coalition stability will eclipse reform in Bulgaria

Subject Coalition stability. Significance One month after October's inconclusive parliamentary elections, the largest party in the new parliament, centre-right Citizens for Bulgaria's European Development (GERB), formed a disparate coalition of four political formations that ranged from centre-left (Alternative for Bulgarian Renaissance -- ABV) to far-right (Patriotic Front -- PF). Four months later, Prime Minister Boyko Borisov's greatest achievement is that his unlikely government is surviving and the country's political stability is not seriously threatened either on the streets or in parliament. The downside is that much of the government's energy is spent on ensuring its survival, with little time or effort left for expected reforms. Impacts The reform process may be sacrificed to the needs of stability and electoral gain. The government faces no visible opposition, with BSP largely impotent, and DPS tacitly working with Borisov. Further instability in Ukraine could have an impact on Bulgaria's security and supplies of gas.

Subject The sale of the Erdenet mine. Significance The day before parliamentary elections in June last year, Prime Minister Saikhanbileg Chimed announced the sale of 49% of shares held by the Russian government in the Erdenet Mining Corporation and the Mongolrostsvetmet mining company to Mongolia Copper Corporation, an unknown private Mongolian company. Subsequent parliamentary inquiry concluded that the sale was unconstitutional and the government ordered the shares transferred to the state on February 16 this year. The government’s actions received wide public support while polls reveal that the electorate views corruption as the main obstacle to Mongolia’s development Impacts Talk of 'nationalisation' in the Western media threatens to derail Mongolia's efforts to fix its image and attract foreign investors. The unusual circumstances of the sale raise suspicions of corruption and collusion between Mongolia's previous government and largest bank. The new government's will to scrutinise sale demonstrates the strength of Mongolia’s democracy.


Subject Borisov’s third administration. Significance The government approved by parliament on May 4 is Prime Minister Boyko Borisov’s third since 2009. It is the first time his Citizens for Bulgaria’s European Development (GERB) party has joined in formal coalition with United Patriots (OB), a bloc comprising three nationalist parties. Two OB leaders, Krasimir Karakachanov and Valery Simeonov, are deputy prime ministers, but only the former combines this position with a portfolio (defence). OB’s third and most controversial leader -- Ataka party leader Volen Siderov, noted previously for rabid anti-NATO and pro-Putin statements -- has no formal government role. Impacts GERB has reaffirmed its domination of Bulgarian politics with minimal concessions to its formal coalition partners. The spectre of increased Russian influence over Bulgarian politics that worried some EU partners has seemingly dissipated. A firmer line against migration is likely as a sop to OB, but meaningful reform of the judiciary will again be strenuously avoided. Sofia’s worries about Turkey and the Western Balkans and its forthcoming EU presidency may make it more amenable to EU influence and advice.


Subject Italian political outlook. Significance On January 26, Italy’s co-ruling Democratic Party (PD) defeated Matteo Salvini’s far-right League party by 51.4% to 43.6% in elections in Emilia Romagna, a prosperous region of northern Italy. In what was a litmus test for the fragile national coalition between PD and the Five Star Movement (M5S), the PD victory has reduced the risk of a government collapse. Impacts Risk-averse investors will remain cautious about Italy over the next year. Prime Minister Giuseppe Conte hopes the result will give the government the stability to cut taxes to boost private sector investment. Salvini’s support could decline if he continues to personalise the League’s election campaigns.


Subject The government’s poor showing in regional elections. Significance Elections in Slovakia’s eight regions on November 4 led to a surprise defeat for Prime Minister Robert Fico’s Direction-Social Democracy (Smer-SD) party, whose candidates lost four of the six governorships they previously held. A coalition of opposition centre-right parties, which normally only win the governorship in the most prosperous region, Bratislava, was victorious in five of the eight regions. This is the strongest indication yet that the current left-nationalist government could be replaced by such a coalition at the next parliamentary elections due in spring 2020. Impacts The current governing coalition will want to avoid early elections and serve a full four-year term until March 2020. Fico is likely to continue promoting generous social policies to increase his political support. With the defeat of the far-right, Slovakia will continue to diverge from the other Central European states. The weakening of Smer-SD and lack of trust shown by voters leaves considerable scope for new parties to succeed in future elections.


Significance In an interview to Alsat, the TV channel that has most influence among North Macedonia's Albanians, Mickoski argued that overcoming the present government was of common interest to both the North Macedonian and Albanian electoral blocs. Mickoski and VMRO are clearly buoyed by the opposition New Democracy (ND) victory in Greek parliamentary elections on July 7. They are trying to emulate ND's winning tactic by capitalising on the weaknesses of Prime Minister Zoran Zaev's government and growing dissatisfaction in North Macedonia. Impacts The government has been unable to stabilise the country, with government and opposition failing to agree on even minimal common ground. This is likely to lead to a new bout of external pressure and initiatives to break the internal political deadlock. Skopje's stalling on reform and the chill in relations with neighbours weaken its chances to get a date for EU membership negotiations.


Significance One of the front-runners to replace Mattarella is Prime Minister Mario Draghi, who recently gave a strong indication that he intends to run. However, if Draghi is elected president, there does not appear to be an alternative government which could guarantee political stability and make progress on Italy’s crucial reform agenda. Impacts A situation where there is no strong alternative to Draghi’s leadership may boost the electoral appeal of the far-right Brothers of Italy. The return of political instability would diminish Italy’s leverage in the EU regarding important issues such as foreign and fiscal policy. Unless the right-wing parties perform poorly, it is unlikely that Draghi would be elected as prime minister after the next election.


Significance As he departed, Bernardi argued that the governing Liberals "bled" votes to the anti-immigration One Nation party owing to neglect of the party's conservative base by centrists leading the government. With the election of four One Nation senators in last year's election and strong polling ahead of key state elections, the precarious centre-right government of Prime Minister Malcolm Turnbull may face a renewed electoral threat from the far right. Impacts Australian prime ministers of all stripes will struggle to implement climate-friendly energy policy in the face of conservative pressure. The growth of non-major parties could empower localist opposition to foreign ownership of Australian assets, such as ports and farmland. US President Donald Trump's back-tracking on Australia's refugee resettlement deal could undercut Turnbull's position domestically.


Subject Political and economic outlook. Significance The national unity government of President Maithripala Sirisena and Prime Minister Ranil Wickremesinghe completed its first year in July. After a phase of poor cohesion and unpopular decisions, the government is regaining public support. Sirisena, leader of the Sri Lanka Freedom Party (SLFP), and Wickremesinghe, leader of the United National Party (UNP), have extended their alliance to 2020, boosting political stability. Yet significant economic and political challenges remain. Impacts Dependence on Chinese investment is unavoidable, but Colombo will seek new partners. Rajapaksa will remain the most important political challenge for the government. Ethnic reconciliation is a distant dream, but overt tensions are subsiding.


Significance Attacks against intellectuals and activists since 2013 have generated widespread international outrage. However, the priorities of Prime Minister Shaikh Hasina's government lie elsewhere. Relative political stability has improved the economy, emboldening the government to aim for 'middle income' country status by 2021. Impacts Growth of garment exports will accelerate, creating opportunities for foreign investment. Deeper economic ties with China will reduce Dhaka's responsiveness to Western criticisms on human rights. Bangladesh-China ties will worry India, but the BJP will not soften its stance on Bangladeshi migrants for political reasons.


Subject Prospects for Pakistan in 2017. Significance Next year Prime Minister Nawaz Sharif's government enters its last year in office before competing for a second term in parliamentary elections in early 2018. The government faces rising political pressure from both the opposition and judiciary, and a mixed diplomatic and economic environment.


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