The Week Ahead

The Week Ahead

Japan reworks its energy policy. Kenya goes to the polls. US and Russia meet at ASEAN summit. Brazil eyes pension reform. All in The Week Ahead. 

ollowing cabinet reshuffle, Japan begins reworking energy and other policies

This week Prime Minister Abe’s administration is preparing to begin reforming Japan’s basic energy policy. The central thrust of the energy policy shift, which is not expected to change the structure of energy policy but may shift its energy sources, will be on how Japan’s 2030 goals for power will be met, and will be led by Economy, Trade, and Industry Minister Hiroshige Sego. The trickiest issue will be the extent to which Japan will rely on nuclear power, as current plans project nearly one-quarter of energy production will be from nuclear power. These meetings will also run parallel with a committee run by government and business figures on how to effectively reduce emissions by 2050.

The work represents a shift by the Abe government away from combating more controversial issues like revising the pacifist components of the Japanese constitution in favor of a more technocratic approach. His new government has been noted for employing numerous policy wonks and moving away from more controversial ideologues. Notable among the new hires is Taro Kono as foreign minister. Aside from being one of the more liberal members of Abe’s conservative Liberal Democratic Party, he is also strongly opposed to the use of nuclear power in Japan.

Kenya presidential and parliamentary elections

This Tuesday, Kenyan voters will head to the polls and determine whether to provide incumbent Uhuru Kenyatta a second 5-year term of power. Kenyatta and the Jubilee Alliance were long viewed as a shoo-in to secure reelection, and although current projections suggest the two will prevail, the likelihood of winning has fallen significantly over the past few weeks. Longtime opposition leader Raila Odinga contested the last election against Kenyatta and accused Kenyatta of electoral fraud when he prevailed on a slim margin. Should neither candidate secure 50% of the vote, there will be a runoff between the two candidates.

One of the biggest issues to dent Kenyatta’s reelection changes has been a severe rise in food prices that have also contributed to inflation with many workers’ incomes not catching up. Although the 2013 election was largely without violence there are also some concerns that violence may break out like it did in 2007, when Odinga lost against President Mwai Kibaki and claimed the vote had been fraudulent. There are also concerns that if Kenya, a peaceful area in a somewhat turbulent part of Africa, descends into violence, it could spread outside its borders.

ASEAN summit in the Philippines brings US and Russian foreign ministers together

ASEAN nations will continue meetings this week in Manila to discuss regional security issues. Chief among the concerns, particularly for Russia, China, and the United States — all intending to send delegations — will be the ongoing situation in North Korea, in particular its recent second successful ICBM test. North Korea is expected to send a substantial delegation, as is South Korea.

The U.S. Congress last week completed sanctions against several Chinese companies that work illicitly with North Koreans companies or the North Korean government, further ramping up pressure on the Chinese government to exert its influence over North Korea. However, the U.S. government has also sent mixed signals to China, with President Trump and UN ambassador Nikki Haley questioning China’s commitment to stop North Korean nuclear proliferation, while Secretary of State Tillerson indicated China was not being blamed and the U.S. did not seek regime change in North Korea.

The summit will also represent an opportunity for Secretary Tillerson and Russian Foreign Minister Lavrov to meet and discuss bilateral ties and the North Korea situation. The U.S. will be looking to see if Tillerson takes a tough stance against the Putin government, with any sign of conciliation likely to be leapt on, given the President’s ambivalent stance on Russia and the Putin government’s interference with the 2016 presidential election.

Following impeachment vote, Temer is likely to move forward to pension reform in Brazil

Last week, the Brazilian Congress voted in a 263-227 margin to reject an impeachment vote for embattled President Michel Temer for corruption; the criminal investigation, launched under the broad aegis of Rodrigo Janot and the Petrobras Carwash investigation, continues. Without the cloud of a potential impeachment trial, which had paralyzed Congress and the markets, the president is hoping to move forward on pension reform and/or a successful budget this week. However, despite a stated goal by the administration to have a pension reform vote by October, similar optimism in May that a vote would be forthcoming did not pan out with a vote or even an official bill. Understanding the limitations of his existing political capital, Temer has opted to move forward with a more limited package that might be sufficient to build a critical mass to actually move forward.

Despite the cautious optimism offered by the executive, the continuing unwieldy nature of the scandal, as well as persistent and substantial unpopularity for the President, will hinder any major moves towards a significant tinkering of Brazil’s comparatively generous pension policies. However, if the Congress and executive are unable to deliver some progress in its stated goal to introduce reform measures for Brazil’s bureaucratic and sometimes sluggish economy, market confidence could continue to ebb.

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 written by GRI Analyst Brian Daigle.

About Author

Luke Iott

Luke currently works as an international development professional. He has extensive project experience in financial services and enterprise development across Europe, Asia and Africa. Luke holds a BA in international relations, cum laude, from Georgetown University and is particularly interested in the intersection of science, technology and international affairs. He is proficient in French, German, Spanish and Mandarin.