Hernandez faces multiple pressures in Honduras

Subject The government of President Juan Orlando Hernandez faces major challenges. Significance Pressure has been growing on President Juan Orlando Hernandez as a result of a corruption scandal and potential constitutional reform. Even if he is not forced to accede to calls for his resignation, political weakness may force him to make deals with his opponents. Impacts Continuing protests over corruption will erode the legitimacy of the government. The government will appear increasingly open to the possibility of an international anti-corruption body. Constitutional reforms offer potential for deals to be struck across the political spectrum.

Significance The region’s current tax and spending policies redistribute very little. The COVID-19 pandemic brought a deep and persistent recession, despite new spending, tax cuts and monetary easing aimed at limiting the damage. In December, the government of Argentina, which was particularly hard hit, passed a temporary (and additional) net wealth tax on the very richest households. Impacts OECD-led transparency efforts offer the long-sought possibility of taxing the foreign assets of wealthy Latin Americans. The pandemic will increase both existing inequalities and the need for tax revenues to finance social welfare and stimulus spending. Efforts to strengthen tax collection more broadly will likely be undertaken by governments across the political spectrum.


Significance The new government will have only 34 of the 179 seats, because policy differences among the right-wing parties, and the political strategy of the electorally strengthened anti-immigration, Euro-sceptic Danish People's Party (DF), mean DF will remain outside. Policy-making will be difficult. The government will be more economically liberal and pro-EU than it would have been with DF, but to make policy it will rely on partners across the political spectrum, especially the ousted Social Democrats -- who remain the largest party -- and DF. Impacts If DF is seen as a welfarist protector of ordinary citizens, it is more likely to repeat, at least, its 22% vote in the next election. The much-tighter immigration regime which is in prospect could taint Denmark's image and make it less attractive to foreign investment. The new government is likely to be an ally for much of UK Prime Minister David Cameron's EU reform agenda.


Significance However, despite their public unity and insistence that they are ready for elections, the opposition leaders only repeated their vow to appoint a single opposition candidate, without delivering a name, suggesting that factional differences have not yet been overcome. Meanwhile, insecurities across the political spectrum are beginning to coalesce into what could be a recipe for a deeply turbulent election period -- or even no election at all. Impacts The government will try to endow the elections with a veneer of legitimacy, as long as this does not threaten its own survival. Whoever wins the elections will struggle to assert control of a deeply factionalised political system with entrenched loyalties. Should the ruling coalition emerge from elections, it will likely intensify its calls for the withdrawal of UN peacekeepers.


Significance The debate over constitutional reform will be enlivened by the upcoming election of a constituent convention in Chile on the same day as the Peruvian elections. Impacts Constitutional change may become a banner for the left elsewhere in Latin America. Future constitutional reforms may reconsider the status of indigenous communities in the Amazon. Workers’ rights, include labour stability, may be strengthened.


Significance If the referendum passes, it will lead to significant changes to the political system, including new executive posts, the devolution of more national revenues to county governments and measures to ensure more women are elected to parliament. Impacts Fully implementing the BBI’s wide-ranging reforms may take years, and if mishandled could delay the 2022 elections. The proposals will significantly increase the cost of government, which in turn will exacerbate the shrinking fiscal space. An enlarged executive encompassing a broader range of leaders may boost political stability, but it will likely also aggravate graft.


Subject The outlook for constitutional reform and presidential re-election. Significance Since the government announced its intention to revise the constitution to allow President Rafael Correa to seek re-election in 2017, the opposition has resisted the move. Various parties and coalitions have attempted to call a referendum on the issue using mechanisms in the 2008 constitution to enable greater public participation in political decision-making. The government has used its influence over public institutions to block a referendum, fearing defeat at the polls. The outcome of the conflict remains unclear six months on from when the proposal was first announced. Impacts The fragmentation of the opposition will bolster government attempts to rebuff demands for a referendum. Denying the public the opportunity to vote on constitutional reform will undermine the legitimacy of the president and government. The economic fallout from low oil prices will complicate the government's political situation and allow for opposition gains.


Subject The impact of the failed July coup on civilian-military relations. Significance The psychological impacts of the attempted coup across political life cannot be understated; it has far-reaching implications for the political, bureaucratic and even ideological structures of the Turkish Armed Forces (TSK). In the aftermath of the attempted putsch, President Recep Tayyip Erdogan is more determined than ever to alter the civilian-military machinery of government in Turkey radically. Impacts The purge and radical reforms will bring into question the TSK's operational and strategic reliability for Western partners. A permanently weakened TSK would ease the way for constitutional reforms strengthening Erdogan's grip on the state. It will take years to rebuild the confidence and prestige the military has lost among broad swathes of Turkish society. Any criticism of the TSK reforms, domestically or from abroad, will meet the authorities' fierce condemnation.


Significance Rifts within the political elite are deepening, evidenced by the departure of former Prime Minister Jean Ravelonarivo -- and his cabinet -- last month. However, the installation of a new administration does not portend stability. Impacts The central bank's decision to cut its benchmark interest rate to 8.3% from 8.7% will facilitate borrowing by firms and households. This is unlikely to boost GDP growth given the countervailing effects of political volatility and low commodity prices. The UN secretary general's appeal (on an official trip earlier this month) for the government to tackle graft is unlikely to be heeded. If Madagascar experiences another coup, the Southern African Development Community bloc will likely expel it -- again.


Significance This is a crucial step for the government before year-end, together with long-term banking issues and slowing economic recovery. The European Commission has allowed Italy considerable fiscal flexibility; the government promises to start reducing its debt-to-GDP ratio this year. However, the slowdown could delay achieving this goal. Under this scenario, the government has to campaign for the referendum on its Senate reform. A 'yes' vote is key not only for reforming the political system, but the government's survival. Impacts A 'no' outcome would pull Italy into deep uncertainty concerning its political leadership. It would also end Renzi's premiership; a new majority could follow up to the 2018 general election. However, since Renzi is the PD leader, he is unlikely to support a new government; early elections are likely. In case of a 'yes' outcome, Renzi's premiership will be reinforced, marking a turning point to his declining popularity.


Subject Japan's participation in UN peacekeeping operations. Significance Prime Minister Shinzo Abe’s administration will withdraw Japan's Ground Self Defence Force (GSDF) mission from the UN peacekeeping operation (UNPKO) in South Sudan in May. The decision follows accusations that the government covered up evidence of the dangers the troops were facing, and raises potential questions about Japan’s commitment to its policy of a ‘proactive contribution to peace’. Impacts The announcement of withdrawal will reduce the political impact if there are casualties. Defence Minister Tomomi Inada will probably survive accusations of a cover-up, with ministry officials taking the blame. Japan will contribute personnel to UNPKOs again in future, to gain experience and earn goodwill internationally. There will be minimal implications for Japan's other security cooperation efforts, which focus on deterring China and North Korea.


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