Welcome to this edition of the Weekly Political Compass from Teneo’s political risk advisory team!
This week, we are taking a closer look at cabinet formation in Greece. Meanwhile, four more state assemblies are expected to be dissolved in Malaysia, last weekend’s series of events in Russia left more questions than answers, the proposal for a fiscal framework is back to the House in Brazil, and the decision to free float Nigeria’s currency is likely to face another public test. Our graph of the week zooms in on diversity, equity and inclusion (DEI) policies.
Global Snapshot
New Democracy leader Kyriakos Mitsotakis will be sworn-in as Greece’s prime minister on 26 June. Our Director of Research Wolf Piccoli answers three key questions.
What is the political context?
Mitsotakis convincingly won the general elections gaining 40.5% of the vote and securing a comfortable majority of seven seats in the 300-member parliament. He will unveil his new cabinet soon after the ceremony.
What will the new line-up look like?
A wide reshuffle of his previous executive is expected. Former Labour Minister Kostis Hatzidakis is likely to become Greece’s next finance minister while Giorgos Gerapetritis, who is one of Mitsotakis’ closest aides, is widely expected to get the foreign minister job.
Which other key appointments should be watched?
Stavros Papastavrou, a longtime ND cadre, is widely reported to be returning to government, possibly as a state minister, to serve as a key cog in the PM’s office, alongside current chief of staff Akis Skertsos.
What to Watch
ASIA PACIFIC
China/Russia
China supports Russia in maintaining national stability, and political turmoil is Russia's "internal affair," according to a Chinese foreign ministry readout from talks in Beijing on 25 June between Chinese Foreign Minister Qin Gang and Russian Deputy Foreign Minister Andrei Rudenko. It was unclear if Rudenko's trip was scheduled before the insurrection in Russia, but a separate Chinese readout reaffirmed that bilateral relations were "in the best period in history."
Malaysia
Four more state assemblies – Kedah, Terengganu, Negeri Sembilan and Penang – are expected to be dissolved this week, following Selangor and Kelantan last week, completing the roster of local elections for this year. The vote must be held within 60 days after dissolution, and there is speculation that the states could synchronize their dates within a narrow timeframe, if not on the same day. State legislative elections are normally very local in orientation, but these are being cast as an early marker of public sentiments regarding national politics and the Alliance of Hope (PH) government of Prime Minister Anwar Ibrahim – given that they will involve 40% of the country’s population. The most critical state is Selangor, which is currently held by PH.
EUROPE
Romania
This week, parliament is expected to adopt a contentious special pensions reform, which is a key prerequisite for accessing funds from the EU’s Recovery and Resilience Facility (RRF). However, the reform will likely be referred to the Constitutional Court, which could significantly delay its promulgation and assessment by the European Commission. Reform proposals have already triggered protests by judges, prosecutors, and other public sector employees, but they are unlikely to escalate due to limited public backing.
Russia
Last weekend’s series of events that entailed an incursion into Russia led by private military company Wagner and its swift “march of justice” toward the capital Moscow, which abruptly ended less than 24 hours after its start, left more questions than answers. However, President Vladimir Putin’s failure to foresee and prevent Wagner’s humiliating march toward Moscow might point to an erosion of his authority. The dissolution of Wagner in Russia and the growing threat of internal instability could have negative implications for Putin’s war effort in the longer run. Looking ahead, a fierce rivalry among influential interest groups, leading to a protracted period of political and social instability, is a realistic scenario after Putin’s eventual departure from power.
LATIN AMERICA
Brazil
The proposal for a fiscal framework is back to the House after amendments made at the Senate but should not be voted until the first week of July. The same applies to the tax reform, which is expected to move in the House before the beginning of the July parliamentary recess on 17 July. This week should be slow at the House due to the absence of Speaker Arthur Lira who will be overseas. In the Senate, the parliamentary inquiry on the 8 January ransacking of public buildings in Brasilia will continue this week. Also, the second day of the trial of former president Jair Bolsonaro for holding a meeting with Ambassadors to cast doubt on the electoral system (voting machines) on July 2022 will take place on 27 June at the electoral court (TSE).
Venezuela
The body that is organizing a presidential primary for the opposition Democratic Unitary Platform should confirm the final line-up of candidates today. A total of 14 candidates have registered to compete for the primary, which is scheduled for 22 October, ahead of a presidential election that should take place at some point in 2024. While some candidacies may not last the distance, 14 is still a high number that highlights how divided the opposition remains. Maria Corina Machado, an ex-deputy from the hawkish end of the opposition spectrum, has been leading the early polls. The opposition not only faces an entrenched incumbent who controls the electoral levers and security forces, but it must also contend with internal divisions; an outsider opposition candidate who has emerged relatively recently, the comedian Benjamin Rausseo, did not register for the primary but says that he will still run in 2024 outside the framework of the Unitary Platform.
MIDDLE EAST AND AFRICA
Nigeria
The Central Bank of Nigeria (CBN)’s recent move to free float the local currency is likely to face another public test this week. Since the central bank announced that it would allow the naira to trade freely, there have been many ripple effects across the economy, with upward price adjustments on several goods and services. The latest of such likely adjustments is electricity tariffs, which suppliers have announced plans to adjust by 1 July, amid much public outcry.
Graph of the Week
In recent years, workplace diversity, equity and inclusion (DEI) policies have expanded in many countries. Survey data from the US shows that workers tend to be widely supportive of these policies. Differences emerge, however, when comparing this support across different partisan and sociodemographic groups. Men, white, and older individuals are overrepresented among those who view these policies negatively; the same is true for Republican and Republican-leaning voters. Conversely, women, ethnic minorities and younger individuals strongly support recent DEI efforts. Therefore, when designing these internal policies, or when publicly engaging with political and societal debates, companies should consider the preferences and potential divisions within and across their stakeholder base. Partisan debates and structural demographic patterns will be crucial to watch.