More tests of Malaysian opposition unity are coming

Significance This followed a prominent display of placards at the PKR's conference in favour of the imprisoned Anwar Ibrahim becoming prime minister, a position the party has long held. Impacts The BN-led government will likely support another push by the PAS to pass Islamic criminal punishment reforms in parliament. This would add to pressure on the PH, as Amanah also favours Islamic politics. Ahead of the election, the government will likely prioritise East Malaysian infrastructure projects.

Significance The government vows that freeports will represent “hubs of enterprise which will allow places to carry out business inside a country’s land border but where different customs rules apply”. The creation of freeports are a central component of Prime Minister Boris Johnson’s government to facilitate global trade and promote regional regeneration in the post-Brexit era. Impacts With Brexit, London will have more flexibility regarding the concessions it can offer businesses operating in freeports. The government vows to create freeports in the devolved regions but faces the difficult task of cooperating with the devolved governments. Some poorer regions will miss out on freeports, which could leave them even more deprived and stoke local resentment against London.


Significance The five-party coalition enters office at a time of intense economic and social uncertainty resulting from the COVID-19 pandemic, rising debt and soaring energy prices. Prime Minister Petr Fiala's greatest challenges involve negotiating between the five coalition partners and restoring respectability to Czech politics. Impacts The new government will be less sceptical about closer EU integration, given the upcoming Czech EU presidency from mid-2022. The government will try to reopen EU Green Deal chapters to renegotiate compensation for highly industrialised member states. Former Prime Minister Andrej Babis may run for president in 2023. Babis will strive to avoid losing parliamentary immunity from prosecution relating to the Stork’s Nest affair and alleged EU subsidy fraud.


Significance The government led by the Slovenian Democratic Party (SDS) is under mounting pressure as Slovenia prepares to take over the European Council presidency. This is due mainly to hostility in parliament and society to Prime Minister Janez Jansa, who promotes a popular but divisive form of national conservatism. Impacts A successful no-confidence vote in the government followed by early elections would complicate Slovenia’s handling of its EU presidency. The fall of the current government and its replacement by the centre-left would improve Slovenia’s relations with the EU and United States. Hungarian Prime Minister Viktor Orban would lose an ally at EU level if Jansa lost office.


Significance The hryvnia crisis, which has seen the currency's value plummet, has deepened. However, as reported by Reuters, the NBU decision was suddenly reversed following heavy criticism from Prime Minister Arseniy Yatsenyuk, who said the move was bad for the economy. Overall, Ukraine's economy continues to be weak and vulnerable to shocks. The local economy had already been struggling for most of 2012-13, owing largely to weak external demand and deteriorating trade relations with Russia. However, the political turmoil that the country found itself in soon after the February 2014 change of power exacerbated these troubles significantly. Impacts Continued economic decline will prompt the government to take new unpopular belt-tightening measures in order to get international aid. Rapid economic reforms increase the risk of mass social discontent with far-reaching political implications. Should key merchandise exports fall further, producers could face an effective loss of their main markets.


Subject Prospects for the banking sector. Significance The government is buying a 30% stake in the Austrian lender Erste Bank under a memorandum of understanding (MoU) with the European Bank for Reconstruction and Development (EBRD). The MoU signifies a volte-face by Prime Minister Viktor Orban, whose relationship with foreign-owned banks has been fraught with difficulties since the imposition of a levy on financial institutions in 2010 that drove down earnings and achieved notoriety as one of the highest taxes of its kind in Europe. The government has pledged to reduce the bank tax during 2016-19. Impacts The MoU may not redefine government relations with foreign banks, but could mean more activity on the market by institutional investors. Banks will clean up balance sheets, adopting a 'wait and see' strategy until FX debt relief peters out and the bank tax starts to fall. A return to profitability is unlikely before 2016; much depends on an uptake in corporate and household loans denominated in local currency.


Significance The process looks in danger. Serious local conflicts in south-eastern Turkey are straining tensions between Kurds and the government, even though guerrilla warfare has not resumed. Kurdish self-confidence is rising because of its fighters' success in expelling Islamic State group (ISG) from Kobani. However, dialogue between the government and imprisoned PKK leader Abdullah Ocalan continues, and Prime Minister Ahmet Davutoglu seems more sensitive to Kurdish aspirations than his predecessors. Impacts Ocalan's leadership of the PKK is unshakable, but his ability to persuade his followers to avoid clashes on the streets is weakening. The conflict between the Kurds and Islamists inside Turkey will grow. Public opinion, including conservative religious elements, will block significant concessions to the Kurds, limiting the government's scope. The Kurds are emerging as a key regional opponent of Islamist politics.


Subject The Hungarian government's anti-immigration stance. Significance Prime Minister Viktor Orban and his government have been campaigning against the wave of migrants seeking refuge in Europe, and the EU's handling of the resulting crisis. The government hoped a referendum on October 2 would reject EU settlement of non-Hungarians in Hungary without parliament's consent. With a turnout of less than 50%, the referendum is null and void. Orban's Fidesz party nevertheless claimed victory, as 98.6% of those who cast a valid vote opposed relocation. Impacts The opposition to Fidesz will be able to frame the referendum as its first victory since 2010 and try to build unity on that basis. Fidesz will be unable to extend its popular support on the basis of these results. The EU is unlikely to react forcefully to constitutional amendments in Hungary, given Brexit and elections in France and Germany.


Subject Outlook for the new government. Significance Despite opinion polls before the February 25 election indicating a victory for the incumbent People's National Party (PNP), the opposition Jamaica Labour Party (JLP) won a narrow one-seat victory and JLP leader Andrew Holness was sworn in as prime minister for a second time on March 3. The PNP ran a lacklustre campaign that failed to galvanise its core supporters. In contrast, the JLP offered a positive message of tax cuts and job creation. Impacts Absent rapid economic improvements, public opinion may turn against the new government. Juggling IMF targets and popular demands may prove beyond the JLP's capabilities. The government has only a narrow window of opportunity before the PNP recovers from its surprise defeat.


Subject Pakistan's divestment drive. Significance Prime Minister Nawaz Sharif's government describes divestment of public sector enterprises (PSEs), involving 69 firms, as an essential part of its 2013-18 economic reform agenda. Progress thus far is limited, but the government faces rising pressure from the IMF, which made divestment a core condition of its 6.6-billion-dollar, three-year loan in September 2013. Impacts Another government led by Sharif would continue gradual divestments after 2018. Since PSEs are an important vector for distributing political patronage, structural reforms will face stiff resistance. Divestment of profitable PSEs defeats the purpose of the exercise, but the government will use them for a short-term cash boost.


Subject Pre-election politics in Uganda. Significance The long-expected announcement on June 15 by sacked Prime Minister Amama Mbabazi that he will run for president will bring bitter tensions between him and President Yoweri Museveni out into the open. It is highly unlikely to threaten the latter's 30-year rule but may provoke internal disruption within the ruling party as Museveni makes an example of internal dissent. Impacts Loyalty among the military and police forces will remain central to Museveni's power. Museveni effectively distances himself from graft scandals, while Mbabazi's reputation remains tarnished by several high-profile cases. Oil firms could see some benefits, if Museveni decides to assure them of his solid hold on power. The government was already likely to unleash inflation-inducing spending during the election, but Mbabazi's campaign increases this risk.


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