Russian cabinet reflects safe choices for hard times

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 The military-led National Council for Peace and Order (NCPO) has already postponed elections three times, from 2015 to early 2016 and, most recently, to late 2016, with a new administration to be inaugurated in early 2017. A potential further delay would signal the junta's weakness in the face of mounting policy challenges. Impacts Suthep's reappearance could jeopardise the political stability the junta has maintained since May 2014. The NCPO will continue to suppress the political machine of deposed former Prime Minister Thaksin Shinawatra. Government forecast of 3% growth this year may prove optimistic. Post-elections, China and the West are likely to be given at least equal diplomatic attention.


Significance The reshuffle involves some significant changes, including the promotion of Economy Minister Nadia Calvino as first deputy prime minister. Other notable changes include new ministers at the head of foreign policy and territorial policy, which deals with relations with Catalonia. Impacts Sanchez has increased the number of women and young people in the new cabinet; this could broaden his appeal among centrist voters. While Madrid will continue to respect EU policy parameters, Sanchez’s continued reliance on UP and ERC support will worry investors. Sanchez’s leadership of the PSOE could come under threat if he is seen as ‘giving too much’ to Catalan nationalists.


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 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.


Subject Political changes in Kazakhstan. Significance President Nursultan Nazarbayev has carried out the largest government reshuffle in two years, promoting Deputy Prime Minister Bakytzhan Sagintayev to head the cabinet and placing the outgoing prime minister, Karim Massimov, in charge of the security ministry. Nazarbayev's aims are twofold: to bring in fresh faces to tackle grave economic challenges, and to ensure his security services are able to clamp down on a rising terrorism problem. Impacts The government's top priorities will be to avert protests driven by economic conditions and deal with militant threats. Massimov's security measures will be complemented by the religious affairs ministry's scrutiny of radical Islam. Nazarbayev will seek to manage the succession to preserve his political legacy and his family's interests.


Significance This follows unprecedented arrests of senior princes, ministers and businesspeople in an anti-corruption purge beginning on November 4. The move has alarmed many in the ruling family and business elite, who had enjoyed relative impunity. However, it is so far broadly popular among a youthful Saudi population, who blame high-level corruption for economic problems and unemployment. Impacts A slowdown in investment will make it even harder to meet the economic targets of Vision 2030 and launch the ambitious NEOM project. The combined strengthening and politicisation of anti-corruption mechanisms will complicate performing due diligence about Saudi partners. Opposition within the royal family is likely to be strong but muted in the short term, with an atmosphere of febrile rumour.


Significance Bringing the poll forward could be risky for Prime Minister Lee Hsien Loong's People's Action Party (PAP), as it faces a new opposition party and worsening economic conditions. Impacts Tan Cheng Bock will at the next election attempt to unite the opposition behind his Progress Singapore Party. Deputy Prime Minister Heng Swee Keat will likely succeed as prime minister when Lee eventually leaves the post. Singapore's economy is unlikely to benefit from any large-scale redirecting of investment from Hong Kong, despite the protests there.


Subject Local and municipal election results. Significance The largely united opposition made a major breakthrough in local elections on October 13, taking Budapest and other cities and towns and eroding Prime Minister Viktor Orban's Fidesz party’s predominant position since 2006. A sex scandal plus changes within the opposition have apparently lost Fidesz the middle class, further emphasising the already stark divide between cities and the countryside. Impacts Orban’s weaker position will dent the confidence of the global right-wing populist movement, of which he is a figurehead. Domestic capital associated with the Orban government is at risk as investors price in a potential loss of government support. The decline in political stability may at least momentarily moderate investor confidence in Hungary.


Subject The Russian president's options for winning September elections. Significance The September 2016 elections to Russia's parliament, the State Duma, are the first to coincide with a severe economic crisis since President Vladimir Putin came to power. The authorities are determined to prevent social discontent escalating into the kind of protests seen after the last polls in December 2011, which unsettled Putin's plans for re-election in March 2012. Popular support for Putin remains high, and 'loyal opposition' parties such as the Communists are blaming economic problems on Prime Minister Dmitry Medvedev instead. Impacts Signs that the recession is slowing will reduce the scope for a protest vote. Putin is keen to get EU sanctions lifted by July, not least for the electoral benefits. Buoyed by growing popular support, the Communist Party may evolve into a more active political force.


Subject Prospects for a Canada-China trade agreement. Significance Prime Minister Justin Trudeau has expressed interest in negotiating a trade agreement with China, and will lead a high-level delegation to China this March to secure opportunities for Canadian business. Increased trade with China could prove a significant boost to sectors of Canada's flagging commodities-driven economy, such as agri-business, finance and aerospace, but the domestic politics of trade in Canada remain controversial. Impacts Canada's oil, lumber and agricultural industries will lobby hard for any potential agreement. Political fallout surrounding the Energy East pipeline may hinder the Trudeau government's ability to meet Chinese preconditions elsewhere. Canadian criticism of China's human rights record and espionage activities may present complications if trade negotiations are undertaken.


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