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Prime Minister Scott Morrison's Liberal Party reached an
agreement ahead of the 2021 United Nations' Climate Change
Conference of the Parties (COP26) with its junior coalition
partner, the National Party, on committing to net-zero carbon
emissions target by 2050. The emissions target for 2050 will not be
formalized by legislation, and there were no changes to Australia's
2030 target. COP26 is to be held in Glasgow between 31 October and
12 November. Morrison appears keen to demonstrate more decisive
action on climate change ahead of the federal elections due on or
before 21 May 2022, since voters are showing growing support for
more ambitious climate change policies. The Nationals have
traditionally been opposed to decarbonization measures. Their
acceptance of the new target is based on seeking state concessions
to support regional industries, such as the provision of government
funding packages to assist regional businesses transition to lower
carbon activities and legislative changes protecting the
agricultural and mining industries. Legislative actions to support
Australia's new climate goal are yet to be announced, but we expect
that they will be closely tied to the federal government's existing
low-emissions technology investment drive and the current gas- and
hydrogen-led direction for energy policy. Increased energy costs or
higher taxes on carbon-heavy industries such as agriculture and
mining remain very unlikely.
Venezuela's regional elections
A total of 23 governors, 335 mayors and 2,724 local council
members will be elected in regional elections scheduled for 21
November. The elections involve opposition parties, which are
participating for the first time since starting an electoral
boycott in 2018, but against a background of deepening divisions.
Opposition parties now argue that participation is necessary to
regain political influence and regional and local governmental
control lost because of past boycotts. The elections, however, will
take place without the active endorsement of Juan Guaidó, who is
still recognized by the United States as Venezuela's interim
president, and who claims conditions for free and fair elections
remain absent. The results will be crucial for the future of
Venezuela's political opposition. A government landslide victory
accompanied by electoral irregularities highlighted by the EU
observers' mission would benefit Guaidó, increasing the likelihood
of opposition calls for new US sanctions and his reappointment as
interim president in January 2022. If the government allows
opposition victories in key governorships, in a process validated
by EU observers, Guaidó would struggle to maintain his position as
the opposition's leader, even if symbolically reappointed, as most
opposition parties would lean towards co-existence with President
Nicolas Maduro's administration rather than Guaidó's goal of
immediate government change.
EU-Central Asia Economic Forum
Kyrgyzstan's capital Bishkek will host the first EU-Central Asia
Economic Forum on 5 November, having been where the EU unveiled a
strategic focus on the region in 2019. Given the Taliban's takeover
of power in Afghanistan in August, it is almost certain that
regional efforts to mitigate major humanitarian risks in that
country will dominate the agenda. The five Central Asian states
will expect the forum to raise the EU's regional visibility and
counterbalance China's expanding economic influence. A key
indicator will be whether the forum advances the EU's Global
Gateway initiative, which was unveiled in September to
counterbalance China's Belt and Road Initiative. Central Asian
states will seek more practical measures by the EU to accelerate
the implementation of their respective partnership and cooperation
agreements. The forum also provides an opportunity for the EU to
promote green transition projects, including those eligible for EU
financial support. Kazakhstan will be most affected by the outcome
as the EU is its biggest trade partner, accounting for 30% of its
foreign trade in 2020. For the EU, the share of its foreign trade
with Central Asian region remained a negligible 0.6% of the total
in 2020.
Nicaragua's general election
Nicaragua will hold general elections for the presidency,
Congress, and municipal positions on 7 November. The elections will
take place against the background of the detention of seven
opposition presidential candidates and the arrest of 32 opposition
leaders to date, including the detention of the country's main
business leader on 21 October on political charges including
treason. All detainees deny the charges against them. President
Daniel Ortega of the ruling Sandinista Front for National
Liberation (Frente Sandinista de Liberación Nacional: FSLN) party
will compete against five presidential candidates, but despite
Ortega's loss of popular approval, these are unlikely to present
any real obstacle to his re-election. The European Union and the
Organization of American States (OAS) will not act as international
observers after May 2021 electoral law changes, and it is thus
highly unlikely that the US, Canada, or most EU and Latin American
countries would recognize Ortega's (very probable) re-election. The
flawed electoral process increases the probability that more
international sanctions would be imposed after the election by the
US, EU, and Canada and that the OAS will invoke the Democratic
Charter, suspending Nicaragua's membership.
Israel's budget vote
In August, Prime Minister Naftali Bennett's cabinet approved a
Budget and an accompanying Economic Arrangements Bill to cover the
remainder of FY 2021 and 2022 - the first government budget
approved since March 2018. On 2 September, the budget passed by
59-54 in its first reading in Parliament, clearing the first major
stability hurdle for Israel's 61-member coalition, which holds a
narrow majority. The final reading is scheduled for the first half
of November. Despite its criticism, the opposition, led by Binyamin
Netanyahu, has little prospect of blocking its passage. That
challenge potentially comes, instead, from within the ruling
coalition. The government encompasses eight parties from across the
political spectrum, including - unprecedentedly - an Islamist Arab
party, and has survived by focusing on non-controversial issues.
However, coalition members have occasionally threatened to vote
against the budget over unmet demands, including Ra'am's insistence
on the legalization of several Bedouin townships in the Negev, and
its demands for government development funds for Arab communities.
Conversely, the police have begun a sustained campaign to combat
violent crime and illegal firearms possession within Arab
communities, another key Arab demand.
Posted 04 November 2021 by James Petretta, Country Risk Director, Economics & Country Risk, IHS Markit and
Lindsay Newman, Director, Economics & Country Risk, S&P Global Market Intelligence