Albanian crisis will hold off reform needed for EU

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.

Significance The governing Socialist Party (PSSh) under Prime Minister Edi Rama is expected to win again. This implies policy continuity by what has hitherto been a successful reformist government. However, the decision by the opposition Democratic Party (PDSh) to boycott the elections creates significant uncertainty about the process and aftermath. Impacts PDSh’s boycott of parliament is blocking the completion of judicial reforms that require approval by a two-thirds majority of deputies. A PDSh boycott of elections would constitute a failure of political institutions and halt Albania’s progress towards EU integration. Disenfranchising a large constituency would escalate the political crisis and could lead PDSh supporters to resort to violence.


Subject Blockages holding up Bosnia's EU accession process and new IMF arrangement. Significance International officials have been discussing for almost a year with Bosnia-Hercegovina (BiH) politicians their country's EU accession process and an IMF arrangement. However, the process has bogged down amid personal animosities and mistrust. The impasse not only threatens BiH's EU path but also frustrates efforts in the past year by state and entity governments to implement unpopular reforms and meet demanding conditions for an IMF extended fund facility (EFF). Impacts The political crisis has entered a new, more radical phase that could threaten stability and even security before October local elections. Parallel census results in the two entities will deepen divisions and compromise BiH's already-blocked path to the EU. The UK government's absorption with leaving the EU will reduce its mediating role in Bosnia.


Significance Opposition Social Democratic Alliance (SDSM) supporters are angry with the president's unexpected pardon for all those being investigated for involvement in Macedonia's wiretapping scandal, which disproportionately benefits officials of the ruling Internal Macedonian Revolutionary Organisation-Democratic Party for Macedonian National Unity (VMRO-DPMNE). The pardon coincided with the VMRO-DPMNE speaker of parliament fixing early elections for June 5 and the VMRO-DPMNE caretaker prime minister, Emil Dimitriev, annulling key decisions (including personnel appointments) of the SDSM's interior and labour ministers. Parliament had been dissolved in April over SDSM objections, which retaliated by boycotting the elections. Impacts All influential players at home and abroad have a vested interest in a workable compromise despite Macedonian brinkmanship and rhetoric. Deep political divisions within the ethnic majority will increase the role of minority Albanian politicians. This will improve minority bargaining power both domestically and internationally. VMRO-DPMNE and SDSM agree on the migrant issue and have the support of interested EU countries. Macedonia's borders will, therefore, be vigorously protected despite the political crisis.


Significance He did not name a new prime minister. Over July 25-26, Saied dismissed Prime Minister Hicham Mechichi, dissolved his government, suspended parliament for 30 days, lifted parliamentary immunity and declared himself chief prosecutor, triggering Tunisia’s worst political crisis in a decade. Impacts The Ennahda party could be persecuted once again, this time on corruption charges, as the reconciliation offered excludes its members. Tunisia may become a new ideological battleground, pitting Turkey and Qatar against the United Arab Emirates (UAE), Saudi Arabia and Egypt. The EU, the United States and Algeria have some influence on Tunisia and could perhaps play a moderating role.


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.


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 However, the June 14 local elections resulted overall in the pro-European parties winning 56.5%, with the pro-Russians securing 31.5%. The result will be a relief for the pro-European camp, which had feared that the ongoing banking scandal -- which has seen 1 billion dollars go missing and the resignation on June 12 of Prime Minister Chiril Gaburici -- could portend an upsurge in support for pro-Russian groups. However, despite the pro-European win, Moldova's Gagauz region remains one of Russia's strongest supporters and will remain a potential pressure point. Impacts Russia's enduring prominence in Gagauzia's political landscape will give Moscow a foothold in Moldovan politics. Russia's interest in Moldovan politics will prompt Moldovan supporters of European integration to speed up that process. The EU will have to continue to support Moldova's economy, if only to match Russia's economic support for Gagauzia.


Significance Decades of one-party rule by the Democratic Party of Socialists (DPS) ended at the August 30 elections, which delivered a stinging rebuke to veteran strongman Milo Djukanovic. For 30 years he has dominated the political landscape, alternating between the roles of prime minister and president, occasionally exercising power from behind the scenes. Impacts Brussels in particular will seek reassurance that the new government will adhere to Djukanovic’s generally pro-Western line. The election shows that, contrary to external assessments, democracy is alive in Montenegro and even a long-standing autocrat can be ousted. Despite its leaders’ protestations, the coalition’s composition suggests a closer relationship with Serbia and Russia. The change from the familiar Djukanovic regime with its favoured client links can be expected to weaken FDI, already reduced by COVID-19. Attacks on Bosniaks in Montenegro may lead to demonstrations by co-religionists in Bosnia, destabilising an inherently unstable country.


Subject The Italian political scene ahead of the May 31 regional and local elections. Significance Prime Minister Matteo Renzi of the centre-left Democratic Party (PD) has consolidated his political authority in his party and parliament. The balance of political power has shifted in favour of the left. Renzi has made progress on institutional reforms, most notably of the electoral system, that promise to enhance Italy's longer-term governability. Renzi's strengthened political position, the current relative stability of Italian politics and the prospect of more authoritative Italian governments in future would all provide Italy some insulation in the event of renewed financial market turbulence prompted by a Greek default. Impacts Renzi currently stands out as the left's most successful leader of a major EU state. Italian reformers seeking to consolidate party leadership authority and simplify decision-making have generally come from the right. Renzi has made more progress in these areas than former centre-right Prime Minister Silvio Berlusconi achieved. If Renzi secures his planned reform of the Senate, as seems likely, it would further boost both Renzi and Italy's governability.


Subject New coalition government. Significance Three months on from early elections, Kosovo has a new coalition government comprising the incumbent Democratic Party of Kosovo (PDK), the Alliance for the Future of Kosovo (AAK), the Initiative for Kosovo (Nisma), the New Kosovo Alliance (AKR) and Srpska List, headed by Prime Minister and AAK leader Ramush Haradinaj. Its prospects for survival are not good. Impacts Excluding Vetevendosje from government may bring further unrest, motivated by persistent poverty and anger with the political establishment. Serbia has charged Haradinaj with war crimes; his appointment will therefore complicate relations between Prishtina and Belgrade. Kosovo’s dynamics will have read-across in Macedonia, where the second-largest party has also gained power with ethnic minority support.


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