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US and NATO forces are scheduled to have withdrawn fully from
Afghanistan - including from Kabul international airport - by 1
September. This timeline is unlikely to change despite an attack at
the airport on 26 August. Having defeated the Afghan government
militarily and negotiated the departure of foreign forces from the
country, the Taliban's focus will shift to forming a government,
demonstrating governance capability, and securing international
recognition. These objectives are likely to dictate whether
Afghanistan transitions to an orderly post-conflict scenario. The
Taliban's political leadership has sought to project a pragmatic
outlook, outlining intent to govern the country with consensus,
accord rights to women and minorities and establish positive
relations with it, along with Western governments and multilateral
institutions.
The Taliban's political leadership's intent appears to be
broadly credible, since engagement with domestic non-Taliban
stakeholders and foreign governments and institutions will be
essential for the Taliban to consolidate power in Afghanistan and
to access international financing, with the International Monetary
Fund having frozen the country's new grant of Special Drawing
Rights. The Taliban's rank-and-file, however, are likely to resist
the political leadership's apparent willingness to adapt some of
its stricter tenets in practice, especially considering the
Taliban's comprehensive military success. Lower-ranking commanders
are particularly likely to resist overtures for domestic
reconciliation, dilution of the Taliban's Islamist social agenda,
or attempts to curtail the activities of al-Qaeda-aligned militants
within Afghanistan's borders.
Indicators to watch:
Appointments of Tajik, Uzbek, and Hazara groups in government -
especially at the head of ministries - would indicate the Taliban's
intent to share power with non-Taliban political groups and
therefore mitigate the likelihood of organized resistance emerging
to Taliban rule.
Inability to ensure the provision of basic services - including
water, electricity, telecoms, and banking - because of foreign
institutions being unwilling to provide critical support, and local
employees refusing to work under the Taliban - would exacerbate
public resentment against the Taliban.
Germany's general election
Germany will hold the most
competitive and open general election in decades on 26
September, with considerable uncertainty about who will follow
Angela Merkel as chancellor and the composition of Germany's next
coalition government. Recent shifts in voting intention indicate a
heightened probability that Germany will be governed for the first
time at the national level by a tripartite coalition. Three
candidates have a viable chance of becoming chancellor: Armin
Laschet, the joint candidate of Merkel's center-right CDU and the
Bavarian CSU; Olaf Scholz, running for the center-left SPD; and
Annalena Baerbock, nominated by the Green Party. With multiple
possible coalition options, forming the next administration is
likely to take at least several months. A key priority for all
feasible coalitions will be tighter environmental regulation to
strengthen the fight against climate change and the related
transition to a greener economy. Other focus areas will be
large-scale investments in digital infrastructure and transport,
labor market and social policies, public health, and education
reform. The new government will have to manage economic and social
recovery from COVID-19, with a heightened risk that this - and
policy implementation - will be hampered by further
pandemic-related restraints.
Indicators to watch:
Given the complex nature of Germany's electoral system, results
on election night might be vulnerable to initial misalignments
between the distribution of votes and seats and face subsequent
adjustment.
The closer the election results are for CDU/CSU, SPD, and the
Greens, the more difficult it will be to reach an agreement on
which of their candidates should be mandated as chancellor.
Mexico-US High-Level Economic Dialogue
The High-Level Economic Dialogue (Diálogo Económico de Alto
Nivel: DEAN) between the governments of Mexico and the US will be
hosted in Washington, DC, on 9 September. The Mexican delegation
will comprise Mexico's Foreign Minister Marcelo Ebrard, along with
Economy Minister Tatiana Clouthier and Finance Minister Rogelio
Ramírez de la O; the US will be represented by officials from the
Departments of State and Commerce, and the US Trade Representative.
Four issues will be on the agenda: relocation of supply chains to
strengthen bilateral trade; emergency coordination mechanisms;
co-operation for development in southern Mexico and the Northern
Triangle countries in Central America; and border infrastructure.
The DEAN was established by former presidents Barack Obama and
Enrique Peña Nieto in 2013 to streamline bilateral priorities for
the two countries' trade and development agenda, though it was
deactivated during the administration of former President Donald
Trump. President López Obrador's push to resume the dialogue
indicates that, despite deterioration in bilateral ties for
security cooperation and intelligence-sharing in 2021, as well as
the potentially contentious issue of Mexico's enforcement of the
United States-Mexico-Canada Agreement (USMCA) labor provisions, he
remains sensitive to Mexican economic reliance on the US for
post-pandemic recovery. The US takes more than 80% of Mexico's
exports, and IHS Markit forecasts that Mexico will surpass mainland
China as the US' top trading partner in 2021.
Indicators to watch:
If the two governments agree on a joint plan to nearshore
manufacturing supply chains, primarily from East Asia, this should
boost Mexico's standing with foreign investors significantly,
despite the likelihood of continuing policy instability and ongoing
concerns regarding Mexico's high levels of criminal violence.
President López Obrador provides a positive assessment of the
Dialogue after its conclusion, which would signal Mexican
willingness to engage in discussions to renew cooperation
mechanisms in other policy areas, notably security.
Australia-India-Japan-US Quad summit
US President Joe Biden proposed an in-person Quadrilateral
Framework (Quad) meeting be held in Washington in late September.
If confirmed, this would be the first in-person Quad meeting
between the leaders of Australia, India, Japan, and the United
States, although all met virtually in March 2021. All four members
have indicated - individually and jointly - that the Quad will be a
key vehicle for collaboration on regional initiatives given the
increased crossover of each country's strategic objectives,
particularly regarding China. Quad members are likely to issue a
joint statement pledging enhanced security coordination following
the September summit, particularly for maritime and ground
security.
The meeting is also likely to include efforts to establish a
joint Quad position following the US withdrawal from Afghanistan
and the subsequent Taliban takeover. The Quad's ability to assert a
unified strategic influence in response to events in Afghanistan
and other geopolitical developments is currently limited by
differences between their individual approaches and differences in
each country's bilateral relations. In addition, US Secretary of
State Antony Blinken said on 28 July during a visit to India that
''the Quad is not a military alliance", indicating that mutual
defense arrangements between Quad members are currently unlikely.
Tangible commitments are more likely to include enhanced
coordination on COVID-19 vaccine development and distribution in
the region, alongside infrastructure development initiatives.
Indicators to watch:
Early recognition of the Taliban government by China - with
limited conditions attached to the Taliban's domestic political
agenda - would increase Quad incentives to establish a more
coordinated approach towards Afghanistan.
Morocco's legislative elections
On 8 September, Morocco will hold legislative elections to elect
395 members directly for parliament's lower house, the Assembly of
Representatives, for a five-year term. For the first time, regional
and municipal elections will be held concurrently, an arrangement
potentially designed to bolster voter participation given the
historically low turnout in prior legislative polls. These
elections will determine the policy agenda over the next five
years, deciding both the distribution of seats in parliament and
the future composition of a likely coalition government, with the
King appointing the prime minister from the party that secures the
most seats.
In March 2021, Parliament voted for a new electoral law
modifying the quota system, with the new quota based on the number
of registrants and not of voters. The new system appears intended
to increase party participation, particularly to encourage the
involvement of smaller parties. The new quota configuration means
that a parliamentary coalition will be required as no party
individually can win enough seats to form a majority. This will
forcibly reduce the representation for and popular participation in
traditionally larger parties, ultimately weakening any coalition's
strength. Whatever the electoral outcome and the composition of the
subsequent governing coalition - which is very likely to include
the main pro-monarchy parties - the election is unlikely to signal
a significant shift in Morocco's overall policy agenda. This
reflects the significant influence of the King and his unofficial
and unelected political body of advisors, known as the Makhzen, on
the political agenda. Royal influence significantly reduces the
likelihood of policy change that is not aligned with the preferred
policy direction set by the King and the Makhzen. Policy priorities
are likely to include efforts to attract foreign investment for the
aviation, automotive, renewable energy, tourism, and
agriculture-related technology sectors while focusing on economic
recovery from the COVID-19 pandemic and socially orientated
policies designed to reduce the risk of intensifying protests.
Ethiopia's delayed elections and conflict
Ethiopia will hold delayed elections on 6 September in the
country's Somali and Harari regions, where the polls were postponed
beyond the 21 June 2021 election day - which went ahead in all
other regions - due to alleged irregularities relating to ballot
papers. Advances by anti-government insurgents in Tigray, Amhara,
Afar, and Oromia regions will have a thinly stretched security
presence in the Somali and Harari regions, negatively affecting the
security forces' ability to suppress civil unrest and militia
violence. Incumbent Prime Minister Abiy Ahmed won an overwhelming
majority on 21 June and is likely to obtain similar results on 6
September, but insurgent advances towards major cities and key
roads increase the risk of Ahmed's forced removal through a coup.
If the Tigray Defense Forces (TDF) armed group succeeds in
capturing Gondar, Bahir Dar, or Semera (and the A1 highway to
Djibouti), then a coup against Ahmed would be likely in the
subsequent month. Similarly, if the TDF-allied Oromo Liberation
Army (OLA) succeeds in blocking road access to Ethiopia's capital
Addis Ababa via the A1-A5 highways for longer than two weeks, a
coup would also become likely. The most likely replacement for
Ahmed would be a military-backed administration looking to
negotiate with the TDF and OLA.
Posted 09 September 2021 by James Petretta, Country Risk Director, Economics & Country Risk, S&P Global Market Intelligence and
Lindsay Newman, Director, Economics & Country Risk, S&P Global Market Intelligence