Digital taxes will test the political elite globally

Headline INTERNATIONAL: Digital taxes will test political elite

Significance All the signs are that Xi will take a third term, though the secrecy of the political elite means alternatives cannot be ruled out completely.


Significance This is expected to be followed by the first parliamentary election since 2014, at some point in early 2022. It now looks increasingly likely that both elections will be delayed. The electoral process lacks the elements it would need to be truly transformative, but it is prompting shifts in the political elite which will dictate developments for at least the next year. Impacts Khalifa Haftar will keep pushing for his armed group to form the core of Libya’s future army Seif al-Islam Qadhafi’s candidacy in the elections is unlikely to result in him becoming president. Aguileh Saleh looks set to stay on as House of Representatives speaker with no clear date for parliamentary elections.


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 The political impact of the 'Panamagate' scandal. Significance A five-member Supreme Court bench on April 20 ordered the constitution of a Joint Investigation Team (JIT) to probe the legitimacy of the offshore assets (mostly in the United Kingdom and Qatar) of Prime Minister Nawaz Sharif and his family. In coming months, the Court bench will monitor and oversee the investigation in which both civilian law enforcement and military intelligence will participate. Impacts The government will avoid challenging the military’s foreign policy this year. The scandal will increase pressure on the political elite to ensure public probity. A military coup is highly improbable at present.


Significance Kurz has said he wants a coalition agreement by the end of the month -- probably with the far-right populist Freedom Party (FPOe). Impacts Austria is likely to push for EU reforms on migration, border controls and social welfare benefits. The SPOe is struggling to find a niche in the party system and could face a long spell in opposition. The FPOe's rise to a potential government role will attract unwanted international attention. The political elite could be rejuvenated as younger Kurz supporters are promoted to top jobs in ministries and parliament.


Subject Anti-corruption efforts. Significance On September 30, Vice-President Felix Ulloa met a UN mission in San Salvador to discuss possible support for a new anti-corruption mission. Inspired by similar bodies in neighbouring Guatemala and Honduras, the International Commission against Corruption and Impunity in El Salvador (CICIES) is intended to scrutinise political malpractice and address public concerns surrounding the political elite. The announcement of its establishment last month by President Nayib Bukele came within the first 100 days of his term, meeting one of his election campaign pledges. Impacts The CICIES will probably have less autonomy than its Guatemalan and Honduran equivalents. The politicisation of anti-corruption debates threatens to hinder progress on the issue. Reducing corruption could weaken gangs’ influence over public institutions but will do little to ease violent crime.


Subject Election outlook in Uganda. Significance President Yoweri Museveni is confirmed as the National Resistance Movement's (NRM) official presidential candidate for February 2016 general elections. His most threatening challenger is former Prime Minister Amama Mbabazi, whose defection is the most significant in a decade. However, in the wake of the NRM party primaries and delegates conference, Museveni has shown his ability to consolidate support among the political elite. Impacts Uganda's elections will distract focus from its official mediation role in Burundi's deteriorating security crisis. However, Museveni may also guard Uganda's position as the regional mediator for fear of losing influence. Burundi is at high risk of civil conflict, with repercussions for regional stability ahead of Uganda's elections.


Significance His call comes as Prime Minister Haider al-Abadi is seeking to revive plans for wide-scale reform of government, with a new initiative to replace cabinet ministers with technocrats. Launched last August, the reforms seek to cut Iraq's bloated government and tackle rampant corruption, but are encountering tough opposition from all sectors of the political elite. Impacts Efforts to push through ministerial change will weaken Abadi's support base among Shia parties. Longer term, failure on reform may see Abadi lose the backing of the Shia clergy, his strongest source of political support and legitimacy. This would leave Abadi dependent on US support, increasing the risk of efforts to remove him and replace with a pro-Iran figure. Without reform, Iraq's fiscal crisis will worsen and pressure for decentralised regional government will increase.


Subject Policy differences reflected in Russian budget debate Significance Budget management has grown into an acute problem for Russian policymakers. The immediate difficulty is how to finance this year's deficit with as little inflationary impact as possible. The problem over the next three years will be to win elite support for a tough fiscal stance. Officials have proposed tighter budgets in 2017-19 in nominal as well as real terms. Impacts The CBR will continue to complain that uncertainty on fiscal policy restricts its monetary policy effectiveness. Privatisations to plug budget gaps will be controversial among the political elite. Cuts in federal transfers to regional budgets will be contentious.


Significance Opposition victories, especially those that remove long-standing authoritarian regimes, have been associated with democratic strengthening, with transfers of power shown to boost public support for democracy and demonstrate that the political elite is willing to share power, bolstering democratic norms and values. Impacts Evidence of further opposition victories will encourage authoritarian leaders to deploy more intense pre-election repression. Ruling parties at risk of losing polls may try to exploit the pandemic to postpone elections, especially in more authoritarian settings. While transfers of power have often strengthened democracy, they largely disrupt rather than bring an end to political corruption networks.


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