Thai junta risks fracture as royal transition nears

Subject The junta's political priorities. Significance The annual October 1 military reshuffle and promotions strengthened Prime Minister General Prayuth Chan-ocha's power base. The junta is attempting to expand and consolidate its rule in the face of two approaching transitions: fresh parliamentary elections that have been promised in late 2017 and a royal transition. Expectations of the latter are rising as the palace releases increasingly pessimistic reports on the health of King Bhumibol Adulyadej. Impacts A counter-coup against the Prayuth administration is unlikely and would probably fail. A royal transition would unsettle markets, albeit temporarily; the baht would fall, but quickly recover. Beijing will continue to accommodate Bangkok's political tactics, while Washington will maintain its security alliance with Thailand.

Significance As prime minister and later president, Essebsi played an important role in the early stages of Tunisia’s peaceful transition to democracy, but failed to deliver any real programme to transform the country’s ailing economy. He leaves behind a country which has shown resilience in the face of many domestic and regional challenges, but in which political infighting and a lack of economic progress means trust in the political class is low. Essebsi’s death so close to an election he had promised not to contest means the Tunisian state was already prepared for a transition. Impacts Signing the electoral law will open the political class up to criticism that it is self-serving. Not signing the law could see a candidate under investigation for money-laundering win the presidency. Essebsi's Nidaa Tounes party has largely collapsed thanks to infighting, and is unlikely to do well in the parliamentary elections.


Significance The governing Nur Otan party won most seats and two tame allies were awarded a few. The importance of this election is that it offers pointers to how much power President Kassym-Jomart Tokayev wields. None of his promises of political liberalisation has been realised and it is unclear how serious he is about change. Impacts Askar Mamin's reappointment as prime minister points to general continuity -- or stasis. Tokayev will defend Kazakh nationhood in the face of Russian politicians casting doubt on its territorial rights. Trends as regards civil liberties and freedom of expression are retrograde in both the real and virtual spheres. The OPEC+ bloc's special deal allowing Kazakh oil output to rise by 10,000 barrels per day in February-March offers some economic relief.


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.


Subject Political outlook for Malaysia's prime minister. Significance This year's United Malays National Organisation (UMNO) general assembly, which concluded on December 12, emphasised unity in the face of some party fragmentation. Party leader and Malaysian Prime Minister Najib Razak used the meeting again to reject criticisms surrounding his government over the 1Malaysia Development Berhad (1MDB) state investment fund and political contributions. Despite infighting, the party assembly and some recent parliamentary victories imply Najib is consolidating his political position. Impacts Some UMNO critics of Najib may defect, but with a weak opposition coalition, defectors' influence would be limited. New security council legislation will alienate parts of Malaysian civil society. The government will face international pressure not to 'abuse' this legislation.


Significance The cabinet enters office just in time to host a fresh visit from the IMF, expected later this month. Despite another landslide victory in parliamentary elections on April 24, Prime Minister and Serbian Progressive Party (SNS) leader Aleksandar Vucic has been in no rush to form his next government. With parliament dissolved in early March, this has been a wasted year for reforms, economic or other. The next government must start working effectively if it is to make up for this, even partly. Impacts Dusan Vujovic, confirmed as finance minister, will remain the focal point for implementing the SBA. A new law on financing local government is likely to be adopted in late August or early September. This will transfer a portion of revenues from income tax from local authorities to the central government. The new government will need to come up with a less ambitious plan for public sector redundancies in 2016 and 2017.


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.


Significance Medvedev and most of the faces in the new cabinet show a high level of continuity, although technocratic figures have replaced several political heavyweights at deputy prime minister level. The overall selection reflects a desire for political stability and careful economic stewardship in the face of domestic and international challenges. Impacts Demands from high-spending ministries will challenge the government's resolve to exert fiscal control. As Putin's term progresses, cabinet changes will be interpreted for signs of a succession process. Any unrest arising from economic problems or unpopular social reforms is likely to lead to the removal of the relevant ministers.


Significance President Maithripala Sirisena’s Sri Lanka Freedom Party (SLFP) and Prime Minister Ranil Wickremesinghe’s United National Party (UNP), which form the National Unity Government (NUG), performed poorly in last month’s local elections, in which former President Mahinda Rajapaksa’s Sri Lanka Podujana Peramuna (SLPP) -- popular among Sinhalese Buddhist nationalists -- swept to victory. Sri Lanka’s next presidential and parliamentary elections are due in 2020. Impacts Tourism and foreign direct investment are likely to be adversely impacted by frequent communal clashes. Amid concern over social media’s use to orchestrate violence, Sri Lanka could introduce legislation that curbs free speech. Further violence would increase friction between Sirisena and Wickremesinghe, threatening the NUG’s stability.


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.


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