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Weekly Political Compass 3.27.23

March 27, 2023
By Wolfango Piccoli & Mario Marconini

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 Brazil-China relations. Meanwhile, approval ratings have improved for Japan’s prime minister, the opposition’s vote in Turkey may split, electoral reform has been suspended in Mexico, and Kenya’s opposition leader has called for protests. Our graph of the week zooms in on popular perceptions of the economy.


Global Snapshot

Brazil’s President Lula cancelled a trip to China this week after contracting pneumonia. Our Brazil expert Mario Marconini answers three key questions.

Will some encounters still be taking place this week?

Finance Minister Fernando Haddad also cancelled but there will be a significant entrepreneurial presence in China during the week regardless.

What was the purpose of the planned visit?

The trip was intended to restore pre-Bolsonaro levels of bilateral strategic cooperation. Lula intended to focus on world hunger and food – a good way of linking global social awareness with agribusiness, Brazil’s top exporting sector.

What will be on Lula’s domestic agenda this week?

The president should now focus this week on resolving domestic issues, particularly the unlocking of executive orders on matters as varied as the structure of ministries or the introduction of a temporary tax on oil exports.


What to Watch



Fumio Kishida’s gross approval rating rose five percentage points on the month in two new opinion polls following a busy fortnight of diplomacy. One poll showed gross approval at 48% and net approval positive for the first time since last summer. The public has responded positively to South Korean president Yoon Suk-yeol's olive-branch trip to Tokyo and Kishida’s historic visit to war-torn Kyiv. The timing is helpful for the ruling LDP, as parties this week take to the campaign trail ahead of nationwide local elections on 9 and 23 April and five Diet by-elections on the latter date.


US Deputy Assistant Secretary of State for China, Taiwan and Mongolia Rick Waters became the most senior US official to visit China since December when he made a low-profile visit last week. Waters’ visit could be preparation for rescheduling a visit to China by Secretary of State Anthony Blinken, who cancelled a planned trip in February in response to the alleged Chinese spy balloon.




The parties in Chancellor Olaf Scholz’s so-called traffic light coalition were unable to resolve several policy differences despite all-night talks. The meeting of party leaders and senior government figures had begun on Sunday evening but concluded today, Monday afternoon, without having resolved the main issues. While Berlin’s previous veto against an EU combustion engine ban is off the table following a deal with the European Commission, intra-coalition tensions continue to delay the presentation of first draft figures for the 2024 budget. Coalition leaders will meet again on Tuesday.


As Muharrem Ince gathered the required 100,000 signatures to enter the presidential race, the opposition’s vote may split on 14 May, forcing a run-off two weeks later. The Supreme Electoral Board (YSK) will issue the official list of the presidential candidates on 31 March. Given his nationalist and secularist platform, Ince is well-positioned to draw votes away from his former Republican People’s Party (CHP). The 58-year-old combative campaigner is currently polling at 5-7%.




President Andres Manuel Lopez Obrador (AMLO)’s controversial electoral reform has been suspended pending a definitive ruling on its constitutional legality by the Supreme Court (SCJN); the suspension of what is known as AMLO’s “Plan B” took effect on 24 March. AMLO, who has since rejected the SCJN as a “mafia”, was probably expecting this outcome and is already working on a “Plan C.” This involves seizing the opportunity deriving from the scheduled turnover of board members of the National Electoral Institute (INE) to gain control over the body that organizes elections. The terms of four out of the 11 INE counsellors expire on 3 April. The government has already been accused of trying to secure the election of loyalists. A two-thirds congressional majority is necessary to select the new counsellors; if this cannot be reached, the appointments could end up being decided by the drawing of lots. AMLO wants control of the INE to smooth the path to victory for his National Regeneration Movement (Morena) party in 2024.




The government looks unlikely to meet its earlier stated target of securing an International Monetary Fund (IMF) Executive Board Approval of its in-principal USD 3bn bailout loan from the Fund by the end of March. As part of its ongoing external debt negotiation plan under the G20’s Common External Framework, Finance Minister Ken Ofori-Atta reportedly led a delegation last week to China in a bid to secure a commitment from the Asian economic giant to restructure a USD 1.7bn debt which Ghana owes China. Details of the talks have yet to be officially released, but it remains unlikely that sufficient progress has been made to allow Ghana to gain the confidence of the IMF Executive Board to approve its staff-level bailout agreement with the West African country by the end of this week.


Opposition leader Raila Odinga has called for twice weekly protests on Mondays and Thursdays. Alongside political complaints, Odinga is citing public grievances over the cost of living, particularly food, fuel and electricity prices. The protests are unlikely to swell into mass demonstrations as Odinga’s momentum has weakened post-election. Nonetheless, their momentum may also depend on how President William Ruto’s government responds. If its response is restrained, the protests may run out of steam. However, if Ruto’s administration pushes back too harshly, that could generate its own, new resistance.


Two months after the Central Bank of Nigeria (CBN)’s 31 January deadline for the public to swap designated old bank notes for new ones, the resulting cash scarcity from the demonetization plan has persisted. In response to ongoing public anger and a recent labor strike threat from the Nigeria Labour Congress (NLC) over the issue, the CBN has since directed commercial banks to open on Saturdays and Sundays in a bid to increase public access to cash. However, it remains unclear whether the latest directive will do much by way of increasing cash supply in the cash-dependent economy, although the development may just be sufficient to at least delay any disruptions from labor unions.


Graph of the Week

Banking sector turmoil comes at a difficult political and economic time for many countries. Inflationary pressures continue to worry policymakers. Recent banking woes have raised the prospect of a dilemma for central banks: on the one hand, interest rates hikes could spur financial instability; on the other hand, pausing these hikes could increase inflation expectations. In addition, growing social unrest, from France to Israel to the UK, suggests that in the age of highly polarized democratic politics, major policy or institutional reforms cannot be introduced smoothly. France, for instance, is one of the countries where a comparatively low share of the population is optimistic about the economic situation, a figure that has decreased sharply over the past year.

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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