Prospects for Israel in 2020

Subject Prospects for Israel in 2020. Significance The political scene is currently in deadlock after a second inconclusive election in September; Benny Gantz, leader of the opposition Blue and White alliance, currently has the mandate to form the next coalition after incumbent Prime Minister Binyamin Netanyahu failed. Talks are ongoing around how to form a national unity government.

Subject Composition and agenda of a likely unity government. Significance De facto opposition leader Benny Gantz on March 26 agreed to enter a coalition with incumbent Prime Minister Binyamin Netanyahu. The government, terms for which have yet to be finalised, would end the political deadlock that three back-to-back elections failed to break. Although the prospective coalition will enjoy a Knesset majority of at least 75 seats, it will also cover a wide and awkward ideological spectrum. Impacts Netanyahu will remain the dominant figure on the political scene for another 18 months, if not beyond. Equal division of portfolios between Blue and White and religious-right parties will mean a more moderate government than the previous one. Gantz’s decision has split his party and leaves the centre-left weaker and more divided than ever. The new coalition will address issues that have been put on hold during the extended interregnum and restore normal government functioning.


Subject Outlook for the PJD. Significance The new year has already seen several legal, political, and personal controversies involving the moderate Islamist Justice and Development Party (PJD), currently heading the government. Prime Minister Saadedine El-Othmani is struggling to unite the party and maintain popular support. Impacts There may be a low turnout during the upcoming 2020 elections as Moroccans grow disillusioned by the lack of genuine reform. The Palace’s continued domination of politics and the economy may lead to informal mobilisation, likely in the form of consumer boycotts. Benkirane is unlikely to oppose the party openly to avoid weakening it, though he may become more vocal on the political scene. Morocco’s other Islamist movement, Justice and Spirituality, is unlikely to opt for direct political participation to avoid the PJD’s fate. Given the government’s passive role in policy decisions, international actors will prefer to negotiate directly with the Palace.


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 Sirisena's victory is a potential game-changer: instead of entrenching the autocratic tendencies of his predecessor Mahinda Rajapaksa's administration, the election results hold out the promise of democratic consolidation under a new government with a robust mandate for constitutional and policy reform. However, the diversity of the coalition backing Sirisena and the sharing of power with newly appointed Prime Minister Ranil Wickremasinghe augur a period of volatility. Impacts If Tamil parties emerge as 'kingmakers' in April, governance of war-torn Northern and Western provinces is likely to be overhauled. Delhi, Washington and Brussels will welcome the political transition. Long-term growth prospects will turn on the precise rebalancing of budgetary allocations.


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 Moldova's armed forces. Significance Russia's military build-up in Crimea and other parts of the continent, combined with its intervention in Syria, continue to alarm nations in Eastern Europe. With Moscow maintaining a military contingent in Transnistria and its growing military presence regionally, Moldova's armed forces and their relations with NATO will come under greater focus. However, Moldova's financial plight will make military reform and boosting defence spending difficult. Impacts The banking scandal that has rocked the political scene will push defence reform lower down the political agenda. A more militarily capable Moldova would be a useful partner for Ukraine in the future. Moldova may be invited to participate in more NATO exercises to enhance capacity-building measures.


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 Prospects for India to end-2016. Significance Policymakers are counting on improved agrarian performance, cheaper credit and economic diplomacy to drive growth in coming months. On the political front, after a modest triumph in the last round of regional elections, Prime Minister Narendra Modi and his Bharatiya Janata Party (BJP) are emboldened but still politically encumbered.


Subject Outlook for the Crown Property Bureau. Significance The Crown Property Bureau (CPB), which manages the financial portfolio of the monarchy as well as the king's personal wealth, holds estimated assets equivalent to 10-15% of Thai GDP. As the health of King Bhumipol Adulyadej continues to deteriorate and the nation prepares for a royal transition, the CPB could become a central point of controversy, particularly in the political camp of former Prime Minister Thaksin Shinawatra and his populist 'red shirt' followers. Impacts The land market will remain particularly skewed as long as the CPB exists. The CPB will attract greater scrutiny as debates about inequality gain more political traction. Moreover, further economic liberalisation will gradually reduce the economic influence of royal patronage.


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