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Weekly Political Compass 5.13.24

May 13, 2024
By Bob Herrera-Lim & Wolfango Piccoli

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 Thailand’s next Senate. Meanwhile, Chinese credit growth turned negative, Georgia’s parliament is expected to adopt the controversial “foreign agents“ bill, and discussions over the Argentine government’s refloated reform package will continue. Our graph of the week zooms in on voters’ dissatisfaction with governments in Europe.

 

Global Snapshot

Thailand’s Senate ended its five-year term on 11 May. Our Southeast Asia expert Bob Herrera-Lim analyzes the situation.

How will the powers of the next Senate differ?

The next upper chamber will lose the power to vote for the prime minister – a power the previous senate had used to protect the interests of the monarchy and the military when it refused to vote for Pita Limjaroenrat, whose Move Forward Party had won the most seats in the 2023 general election. On paper, the Thai senate is supposed to be a non-partisan institution, thus the convoluted process for the selection of its next members.

How will members be selected?

Anyone wanting to be “elected” must apply between 20-24 May and belong to 20 identified civil and professional categories. The applicants will then vote from among themselves to select the 200 members of the chamber. There is no public participation in the vote, public campaigning is disallowed, and a THB 2,500 baht (USD 68) fee is required – conditions that generally disfavor lower-income aspirants. The vote will be held from 9 to 26 June and results are expected on 2 July.

 

WHAT TO WATCH

ASIA PACIFIC

China

Credit growth turned negative in April for the first time since 2005, according to central bank data published on Saturday. The rare on month-on-month contraction in total credit outstanding reflects weak credit demand among corporate borrowers and a slowdown in government bond sales, as China's leadership continues to prioritize austerity over stimulus.

 

EUROPE

Georgia

Despite continuing mass protests, the parliament is expected on 14 May to adopt the controversial “foreign agents“ bill in the final reading. Although President Salome Zourabichvili has pledged to veto the bill, the governing Georgian Dream (GD) party, along with its coalition partner, can use its absolute majority in parliament to overturn the veto. The law would help GD solidify its grip on power by exerting pressure on various civic organizations ahead of the October parliamentary election. The adoption of the controversial bill would likely lead to even larger public protests and, potentially, strikes. Some form of interference by Russia cannot be ruled out if public protests start posing a threat to a Moscow-friendly government.

Lithuania

As anticipated, incumbent Gitanas Nauseda (independent) convincingly won the first round of the presidential elections held on 12 May and is a clear favorite to win the runoff on 26 May. According to preliminary results, Nauseda got 44.1% of the total vote, followed by Prime Minister Ingrida Simonyte, nominated by the governing center-right Homeland Union – Lithuanian Christian Democrats, with 19.9%. Nauseda’s re-election would bring continuity to Lithuania’s Western-oriented foreign policy and extensive support for Ukraine.

Russia

This week, both chambers of parliament are set to approve a reshuffled cabinet led by Prime Minister Mikhail Mishustin. The proposed replacement of Sergei Shoigu, who has been serving as minister of defense since 2012, with economist and former deputy prime minister Andrey Belousov indicates attempts to improve the management, expansion and innovation within the so-called military-industrial complex. Meanwhile, President Vladimir Putin is expected head to China on 15-16 May for his first foreign visit following the inauguration last week.

Spain

The Socialist Party of Catalonia (PSC) won the 12 May Catalan regional election, but it will not be able to govern alone. There are two issues to monitor going forward. The first one is whether the Republican Left of Catalonia (ERC) will allow the formation of a PSC-led regional government – possibly a minority cabinet – or whether a repeat election will have to be held after summer. The second item to watch is whether the Together party of Carles Puigdemont will start voting against the national government of Pedro Sanchez in the Congress of Deputies (Spain’s lower chamber), which might lead to legislative gridlock and a potential snap poll. As previously explained, the vote on the 2025 draft budget in the fall will likely provide a clear signpost of whether the Sanchez government is able to stay in place.

Turkey

The authorities announced on 13 May an underwhelming and hard-to-implement public sector saving and efficiency package that is reportedly worth TL 100bn. As the government deficit is expected to be TL 2.4tn in 2024, it is hard to see how targeted saving for TL 100bn can help the disinflation effort. The savings plan is expected to entail a slowdown in certain early-phase infrastructure projects and a halt on new ones unless deemed essential for the next three years. Other measures include a freezing on buying and renting new vehicles by state bodies, reducing foreign travel for civil servants, and limiting the hiring of new civil servants.

 

LATIN AMERICA

Argentina

Discussions over the government’s refloated package of reforms will continue in the upper chamber after senate committees failed to produce a consensus draft last week. The government has been struggling to build a majority, and with no date set for a plenary vote, it is increasingly unlikely that the reform package can be passed before 25 May, the date that President Javier Milei has set for the signing of a national unity pact with provincial governors. In parallel, the senate will also hold a Q&A session with cabinet chief Nicolas Posse on 15 May. Posse will likely face a grilling from opposition Peronists, who hold 33 out of 72 senate seats. Although Posse is an important interlocutor for the government, the reality is that Milei’s sister, Karina Milei, whose official position is secretary-general of the presidency, is rapidly emerging as the most powerful figure in the administration under her brother.

 

Graph of the Week

Electorates in key European countries express dissatisfaction with the performance of their governments. This is particularly pronounced in France, the UK, and Germany, where fewer than one-quarter of respondents support the government's actions so far. The trend is also observed in polls, where incumbent parties are expected to be electorally punished in the upcoming European election and in the UK general election. On the other hand, Spain and Denmark’s social democratic-led governments are comparatively less unpopular, despite at times heightened levels of polarization. The European Parliament elections will once again reflect emerging trends in the political landscape of the next decade, with important debates looming around how to approach the rise of Eurosceptic far-right parties.

The views and opinions in these articles are solely of the authors and do not necessarily reflect those of Teneo. They are offered to stimulate thought and discussion and not as legal, financial, accounting, tax or other professional advice or counsel.

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