Japan prepares for snap election amid heightened tensions with North Korea. Catalan parliament declares independence. Major exporters balk at Brexit WTO arrangements. International Contact Group discusses Afghan peace process in Russia. All in The Week Ahead.
As Japan prepares for snap election, North Korea may issue further provocations
This week, Japan’s political parties begin to engage fully with the electorate as it heads to the October 22 snap elections. Tokyo governor Yuriko Koike’s new coalition, the Party of Hope, is looking to contest Abe’s government and party. The governing coalition has become critical of Abenomics’ fiscal and monetary policies, and has called for a sales hike increase, scheduled for 2019. The Party of Hope has also adopted a stance of eliminating all nuclear power in Japan by the 2030s. However, on the key issue that Prime Minister Abe stated was the purpose for the snap election, the emerging North Korea crisis, the two are relatively united. Both Abe and Koike support a more aggressive approach to North Korea and a look at potentially revising defense portions of the constitution. Given the relative harmony between Koike and Abe’s coalitions, the election has increasingly become a referendum on Abe’s administration. His approval rating has been dragged down by criticism of his handling of the nation’s economy, and personnel scandals. The election campaign may be disrupted on Tuesday when North Korea celebrates Party Foundation Day, which in the past has been used as an opportunity for the North Korean government to show displays of military prowess.
Catalan parliament plans to meet next week against Spanish court orders
This Monday, the Catalan parliament is expected to convene in Barcelona despite orders by the Spanish Constitutional Court that it disband. After an intervention from the king criticizing the vote last week and announcements by a major bank that it was moving its headquarters out of Catalonia, several businesses and labor groups have raised alarms about further escalation. Opposition parties in the Catalan parliament, including Prime Minister Rajoy’s PP, are planning on boycotting the proceedings. Catalan center-right pro-independence President Carles Puigdemont has indicated that the parliament is likely to declare Catalonia’s independence from Spain. In response to concerns that such a declaration would trigger a constitutional crisis, Catalonia’s foreign affairs minister Raul Romeva dismissed the notion by saying the crisis was “already here.” Although the declaration appears to be a foregone conclusion, the biggest question will be what happens next: upon a declaration of independence, will the Catalan opposition parties resume their seats in parliament on future legislation? Will the Constitutional Court formally dissolve the parliament? How will the national government respond and will negotiations be opened between the Catalan and Spanish governments, to avoid dire economic consequences for Spain? The Spanish government previously indicated it would do so, but only after the Catalan government withdrew its call for independence, which suggests an impasse is likely.
Brexit negotiations become more difficult as major exporters balk at WTO arrangements
This week, the UK and EU are planning to send a joint letter to the World Trade Organization and its 164 members providing an outline on its future in the WTO. Among the many thorny Brexit negotiation issues that have yet to be addressed, the final arrangement on agricultural support mechanisms, like import duties, tariff-rate quotas, and non-tariff measures (NTMs) is likely to draw substantial ire from the international community that exports to the EU27 or UK. Upon hearing reports that the UK and EU planned on dividing up the current tariff-rate quotas that cover the whole of the EU relative to UK consumption patterns over the last three years, major exporting nations balked, indicating that such an arrangement would likely make them all worse off. The critics included several major exporting nations and major allies of the UK, including the United States, Canada, Australia, Brazil, and Argentina. The sudden shift of major agricultural exporters to strongly oppose the UK/EU arrangement, which undoubtedly will be subject to WTO litigation among the member states, throws a wrench in Brexit negotiations as it becomes increasingly clear that other countries will likely have to be at least consulted on any Brexit component with major international implications.
International Contact Group discusses Afghan peace process in Russia
This Wednesday, the representatives of over 50 countries will be meeting in Moscow to discuss the Afghan peace process and peace talks with the Taliban. A previous meeting in April included representatives from Europe, Russia, China, India, Pakistan, and Afghanistan, though the meeting was notable for the absence of the United States. Ongoing concerns that the Taliban would never be brought to peace talks were tempered slightly with the announcement that the U.S. had changed its Afghanistan strategy and was ramping up its involvement in a country it has been in for 16 years. Some diplomats are increasingly optimistic that an Afghanistan-led international effort could be successful in bringing the Taliban into the peace process, though the United States will remain a wild card. The foreign minister of Pakistan, Khawaja Asif, has indicated that the ebbing influence of Pakistan on the Taliban could open the door to other international actors like Russia to weigh in to try to mediate the conflict. These talks will be followed next Monday with negotiations between members of the Quadrilateral Coordination Group, which consists of China, Pakistan, Afghanistan, and the United States. Afghanistan is expected to also host peace talks of its own within the next few months.
The Week Ahead provides analytical foresight on the economic consequences of upcoming political developments. Covering a number of future occurrences across the globe, The Week Ahead presents a series of potential upside/downside risks, shedding light on how political decisions affect economic outcomes.
This edition of The Week Ahead was produced by GRI Senior Analyst Brian Daigle and Senior Editor Luke Iott.
