Moldovan political turmoil will boost pro-Russia camp

Subject The rift between the political elite and the electorate. Significance The crisis of late 2014, in which politicians were accused of complicity in a large bank fraud, continues to create political turbulence in Moldova. The arrest of former Prime Minister Vlad Filat in October led to further crisis in which one ruling coalition was replaced by another as street protests by an alliance of pro-Russian and pro-European forces continued. The approval of Pavel Filip as prime minister in January did nothing to strengthen the government's credibility in the eyes of an angry electorate. Impacts Snap parliamentary elections would significantly strengthen Russia's position, as pro-Moscow parties would gain ground. The EU will become cautious about financial aid for Eastern Partnership members and will demand evidence of transparency. The Romanian political establishment will lose its enthusiasm for unification with a dysfunctional Moldova.

Subject Political and economic outlook for 2016. Significance The political turmoil of 2014 subsided over the course of last year, creating confidence in the ability of Prime Minister Nawaz Sharif's administration to complete its full five-year term to mid-2018. The economy has also regained stability after the slump in 2008-13. This year Sharif's Pakistan Muslim League-Nawaz (PML-N) begins preparations for the 2018 parliamentary elections. Impacts Divestment has proved a blunt tool for public sector reform; future divestments, if they proceed at all, will be no different. Inflation will be under control so long as the oil slump continues, boosting purchasing power. Islamabad will be largely muted on Afghanistan and India ties.


Significance This is expected to be followed by the first parliamentary election since 2014, at some point in early 2022. It now looks increasingly likely that both elections will be delayed. The electoral process lacks the elements it would need to be truly transformative, but it is prompting shifts in the political elite which will dictate developments for at least the next year. Impacts Khalifa Haftar will keep pushing for his armed group to form the core of Libya’s future army Seif al-Islam Qadhafi’s candidacy in the elections is unlikely to result in him becoming president. Aguileh Saleh looks set to stay on as House of Representatives speaker with no clear date for parliamentary elections.


Subject Outlook for the post-transition political system. Significance The August 7 constitutional referendum will be conducted under tightened controls on political organisation, making a 'yes' vote more likely. Although the Democratic Party criticises the draft for its attempt to return Thailand to a semi-authoritarian state, efforts by deposed former Prime Minister Thaksin Shinawatra's 'red-shirt' supporters to organise protests offer the only real opposition to the junta's plan. This struggle foreshadows the political system that is likely to emerge after the next parliamentary elections. Impacts Regulatory risk to investors post-transition would be limited: the military, the Democrats and the PTP are pro-business. China will not alter the status quo in its Thai relations, but will need to invest in building ties with the next monarch. Washington will tolerate most eventualities, except a violent crackdown against the military's opponents.


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.


Subject The political impact of the 'Panamagate' scandal. Significance A five-member Supreme Court bench on April 20 ordered the constitution of a Joint Investigation Team (JIT) to probe the legitimacy of the offshore assets (mostly in the United Kingdom and Qatar) of Prime Minister Nawaz Sharif and his family. In coming months, the Court bench will monitor and oversee the investigation in which both civilian law enforcement and military intelligence will participate. Impacts The government will avoid challenging the military’s foreign policy this year. The scandal will increase pressure on the political elite to ensure public probity. A military coup is highly improbable at present.


Significance Centre-left candidate Zoran Milanovic won the second round with 53% of the vote. Grabar-Kitarovic’s embarrassing campaign performance only partly explains her humiliating second-round defeat; more significant is the growing split in the ruling conservative Croatian Democratic Union (HDZ), which backed her. The political scene may see major changes, but not necessarily a move to the left. Impacts Political turmoil will hamper Croatia’s already limited capacity to handle its rotating presidency of the Council of the EU. A change of president may improve Croatia's poor relations with neighbours Bosnia and Serbia. Milanovic is a known quantity whose personal, political and diplomatic capacity will be an improvement on Grabar-Kitarovic’s. Milanovic has frosty relations with Serbia’s Aleksandar Vucic, and Bosniaks remember him saying privately that Bosnia was not a country. Plenkovic’s weakened position will affect the Bosnian HDZ's leader, Dragan Covic, seen as neglecting Bosnian Croat interests.


Subject Election outlook in Uganda. Significance President Yoweri Museveni is confirmed as the National Resistance Movement's (NRM) official presidential candidate for February 2016 general elections. His most threatening challenger is former Prime Minister Amama Mbabazi, whose defection is the most significant in a decade. However, in the wake of the NRM party primaries and delegates conference, Museveni has shown his ability to consolidate support among the political elite. Impacts Uganda's elections will distract focus from its official mediation role in Burundi's deteriorating security crisis. However, Museveni may also guard Uganda's position as the regional mediator for fear of losing influence. Burundi is at high risk of civil conflict, with repercussions for regional stability ahead of Uganda's elections.


Significance His call comes as Prime Minister Haider al-Abadi is seeking to revive plans for wide-scale reform of government, with a new initiative to replace cabinet ministers with technocrats. Launched last August, the reforms seek to cut Iraq's bloated government and tackle rampant corruption, but are encountering tough opposition from all sectors of the political elite. Impacts Efforts to push through ministerial change will weaken Abadi's support base among Shia parties. Longer term, failure on reform may see Abadi lose the backing of the Shia clergy, his strongest source of political support and legitimacy. This would leave Abadi dependent on US support, increasing the risk of efforts to remove him and replace with a pro-Iran figure. Without reform, Iraq's fiscal crisis will worsen and pressure for decentralised regional government will increase.


Significance In the political battle between Prime Minister Edi Rama and President Ilir Meta, parliament -- which is dominated by Rama’s Socialist Party (PS) -- wants to impeach the president following his attempt to cancel the June 30 local elections. Meta’s move was prompted by the decision of the main opposition parties, including the centre-right Democratic Party (PD), to boycott the poll. Impacts Failure to resolve the political crisis will delay the opening of Albania’s accession talks with the EU. The political uncertainty will dampen economic growth, which slowed markedly in the first quarter of 2019. A deteriorating business environment will weaken foreign direct investment inflows. If economic performance remains subdued, it could result in more Albanian migrants seeking work abroad.


Subject Outlook for Somalia's political transition. Significance Leaders of the federal government and member states will meet on January 10 in Kismayo to finalise the framework for the August-September 2016 political transition. This will involve state-level electoral colleges selecting parliamentarians based on clan and constituency-based representation, rather than direct elections. Impacts Any transition in 2016 would fulfil a key donor requirement and mark a break with the politics of the 2004-12 period. Insecurity will challenge the transition, as the political turmoil in Burundi threatens further strain on AMISOM coherence and troop levels. Donor backing for AMISOM is set to shift, with the EU reducing its support by 20% from January.


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