Impeachment proceedings begin against Peruvian President Kuczynski. UK sanctions against Russia likely to escalate. US tariffs expected to take effect. All in the Week Ahead.
PERU: Impeachment proceedings begin against president
- Following an overwhelming vote in the legislature on Thursday, the Peruvian Congress will begin impeachment proceedings against President Pedro Pablo Kuczynski (PPK). Unlike the previous impeachment rumblings in December, it appears likely that the current impeachment proceedings will be successful.
- The December impeachment moves by the Fujimoristas in Congress eventually ended when PPK agreed to commute the prison sentence of former President Alberto Fujimori and release him for medical reasons. However, PPK does not have any major leverage over the Fujimoristas, and the Fujimoristas do not appear to be in the mood for negotiating this time around. Underpinning the impeachment effort are the ties between PPK and Brazilian construction firm Odebrecht, which provided approximately $782,000 in funds to PPK’s private consulting firm more than 10 years ago.
GRI Take: Notwithstanding the ties between the Fujimoristas and Odebrecht (as well as other major Peruvian political parties), President PPK has become very unpopular among voters, a majority of which now support impeachment and removal. Should PPK be removed—a high probability given the sufficiently high level of support to do so in Congress—Vice President Martin Vizcarra Mercedes Araoz would accede to the presidency. He is expected to complete PPK’s term to 2021.
UK/RUSSIA: Relations remain on edge
- Amid tit-for-tat expulsions of 23 diplomats on each side, and Russian presidential elections, London Metropolitan police are investigating the death of Russian businessman Nikolai Glushkov, who a pathologist concluded last week died of a neck compression consistent with strangulation.
- The case of Glushkov is not particularly similar to that of Sergei Skripal, the former British spy poisoned by a Russia-linked nerve agent, as Skripal was a double agent and Glushkov was an airline industrialist accused of stealing $123 million from the Russian airline Aeroflot.
- While both the Metropolitan Police and the Russian government are treating the two cases as unrelated, the possible murder of Glushkov has already raised eyebrows in both the UK and the United States. One of Glushkov’s former colleagues, Boris Berezovsky, died in Berkshire under similarly mysterious circumstances in 2013, and Russian opposition leader Garry Kasparov is convinced the Glushkov death was a “message addressed to Russians with significant interests abroad who are thinking of cooperating with Robert Mueller‘s investigation of collusion in the 2016 presidential campaign.”
GRI Take: Thus far, the fallout from the Skripal poisoning has been contained in the diplomatic sphere, but Theresa May has stated she is considering “next steps” in conjunction with allies. In this context, any implication of foul play in the Glushkov case will elevate tensions and provide further support to the case for additional sanctions.
UNITED STATES: Steel and aluminum tariffs expected to take effect
- This Friday, the Trump administration’s 10% tariff on aluminum and 25% tariff on steel are expected to take effect. Without any pending legislation to block the move, the decision has already sent ripples through the stocks of both primary producers of aluminum and steel as well as downstream producers.
- With Canada and Mexico already exempted, dozens of countries are looking for similar exemptions to prevent their markets from being affected. Several of these nations are either major trading partners or U.S. allies, creating geopolitical and economic complications across Europe, the Gulf, Southeast Asia, and Latin America. Based on Trump’s tweets and comments, the tariffs are meant to focus on China. However, it China may end up one of the countries least affected. The top 5 exporters of steel to the U.S. are Canada and Mexico (both exempted), Brazil, South Korea, and Russia (none exempted so far).
- As for aluminum, the top four exporters are Canada, Russia, the UAE, and China. Hoping to preempt the imposition of tariffs, the European Union introduced a ten-page list of tariffs that range from textiles, to natural energy products, electronics, and food and drink products.
GRI Take: Should the United States opt not to exempt major trading partners like the European Union, the ramifications beyond the steel and aluminum industry are potentially significant, particularly if the tariffs enacted in retaliation are acted against by the United States.
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