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Supporters react during an election campaign rally for Sajith Premadasa, leader of the Samagi Jana Balawegaya (SJB) party, ahead of the presidential election, in Colombo, Sri Lanka September 18, 2024.
Sri Lankans go to polls at pivotal moment for economy
On Sept. 21, Sri Lanka will hold its first presidential vote since the spectacular economic meltdown of 2022, when the pandemic-scarred country defaulted on its massive debts, imports dried up, and widespread shortages of basic goods developed. Images of angry protesters invading the luxurious estates of the president and prime minister appeared on television screens around the world.
Following a government shakeup, new President Ranil Wickremesinghe negotiated a bailout with the IMF that helped to stabilize the situation. He is asking voters this weekend for another five years in office to continue the work of rebuilding the economy, but the tough terms of the IMF program have undermined his support.
We asked Eurasia Group expert Rahul Bhatia what to expect from the upcoming election.
What are the main issues for voters? Is the IMF program a campaign issue?
Economic issues have naturally taken center stage in the election as Sri Lanka continues its fragile recovery. While shortages of everyday essentials such as food, fuel, and medicines have subsided, there is still widespread discontent over the increased cost of living and reduced welfare programs. The IMF bail-out mandated austerity measures such as tax hikes and subsidy cuts, which have increased hardships for many Sri Lankans.
As a result, most candidates are campaigning on promises such as cutting taxes, raising the salaries of government employees, providing subsidies for low-income groups and farmers, and lowering fuel and electricity prices. None of the frontrunners have opposed the IMF program in principle, but most have promised to renegotiate it.
How far has the economy come since the crisis of 2022?
The economy returned to modest growth in the second half of 2023, and inflation, too, has eased to normal levels from its peak of nearly 70% at the height of the crisis. Nevertheless, economic output declined by 9.5% over 2022 and 2023, and it will take time for it to return to pre-crisis levels. About one-quarter of the population still lives below the poverty line, as the economic crisis and subsequent austerity measures have disproportionately affected low and middle-income families. Overall, Sri Lanka’s economic situation remains precarious, and it will need a stable government to complete its recovery.
Who are the frontrunners in this election?
Amid a field of 38 contestants, there are four clear frontrunners: the incumbent Wickremesinghe, opposition leader Sajith Premadasa, the leftist Anura Kumara Dissanayake, and Namal Rajapaksa, scion of the Rajapaksa family that once dominated the island's politics but has been largely discredited by the economic crisis. (Then-president President Gotabaya Rajapaksa fled the country after angry protesters invaded his residence in July 2022.) This means the presidential election will effectively be a three-way contest between Wickremesinghe, Premadasa, and Dissanayake.
What are they offering?
Veteran politician Wickremesinghe is campaigning on steering the country out of its worst economic crisis in modern times. Meanwhile, Premadasa and Dissanayake have sought to exploit the unpopularity of his austerity measures and have promised to ease the burden for Sri Lankans. They have also leveled charges of corruption against Wickremesinghe.
Premadasa comes from a well-known political family, but Dissanayake was a marginal player in Sri Lankan politics until recently. His popularity has risen rapidly over the last three years on the back of the protest movement that ousted Gotabaya Rajapaksa and an effective grassroots campaign. While Premadasa enjoys the support of the country’s Tamil minority, Dissanayake has captured the imagination of the youth.
What are the challenges the next president will face keeping the recovery on track?
To retain the IMF’s support, the government will have to reach a budget surplus, which could prove challenging given the welfare measures the candidates have proposed. The next president will have to balance improving the everyday lives of Sri Lankans and reducing the country’s debt burden.
The next president will also face a parliament dominated by the Rajapaksa-led Sri Lanka People’s Front, which was elected in 2020. Premadasa and Dissanayake, in particular, would find it difficult to pass legislation without a parliamentary majority. Both would thus likely call for parliamentary elections before the end of the year as one of their first actions.
Will these elections reverberate beyond Sri Lanka’s borders?
Given Sri Lanka’s towering debt obligations with foreign creditors and strategic location in the Indian Ocean, many countries have a vested interest in the island nation’s political and economic stability. India would prefer a Premadasa or Wickremesinghe presidency, though it has indicated it would work with any of the four frontrunners. Apart from political stability, New Delhi will prioritize limiting China’s influence on the island—a concern the US and Japan share. It will also seek to bolster connectivity between India and Sri Lanka and push the next president to grant the Tamil provinces a degree of autonomy.
China continues to have a sizeable economic footprint in Sri Lanka, but its influence has waned with that of the Rajapaksas. Former president and prime minister Mahinda Rajapaksa and his brother Gotabaya were close to Beijing and oversaw a range of Chinese infrastructure projects on the island, partially contributing to its debt problems (China still accounts for about half of Sri Lanka's bilateral debt). Nevertheless, Dissanayake is thought to have close ties to China, and if he becomes president, it could allow China to regain some of its influence.
Edited by Jonathan House, Senior Editor at Eurasia Group.
South Korean President Yoon Suk-yeol speaking at the presidential office on TV at Seoul Railroad Station in Seoul. April 1, 2024
Viewpoint: South Korea’s president looks to legislative elections to kickstart his agenda
All 300 seats in South Korea's unicameral legislature will be up for grabs in the April 10 election, offering President Yoon Suk-yeol the opportunity to kickstart his agenda if his conservative People Power Party, or PPP, can gain control of the National Assembly. The center-left Democratic Party of Korea, aka DP, currently holds a majority of the seats in the chamber and has frustrated Yoon’s efforts to advance business-friendly policies since he took office in 2022.
Nonetheless, the PPP faces long odds in flipping the chamber, according to Eurasia Group expert Jeremy Chan. We asked him to explain.
Why the poor prospects for the PPP?
The conservative party would need to gain roughly three dozen seats to recapture the National Assembly, a tall order that will be made even more challenging by Yoon’s low approval rating, which hovers below 40%. While his name will not appear on the ballot, the election is widely seen as a referendum on Yoon’s administration.
For Yoon, failing to recapture the National Assembly would effectively render him a lame duck with more than half of his term in office remaining. It would put his agenda of cuts to taxes and government spending on life support and make him the first Korean president in decades to serve an entire five-year term without ever exerting control over the legislature. Attention would promptly shift to the race to succeed Yoon in the 2027 presidential election.
What are the main issues for voters?
The state of the economy is at the top of the list, particularly sluggish growth and worrying debt levels for households and corporations. A recent rebound in Korea’s export sector — largely driven by an uptick in global demand for Korean semiconductors — has provided a bit of a tailwind to the economy, but overall sentiment remains negative. Voters are likely to hold the ruling conservative party responsible for this situation, even as the opposition in the National Assembly has watered down many of Yoon’s business-friendly reforms, which are meant to stimulate growth.
Scandals and other allegations of impropriety are another top voter concern. Many left-leaning voters find Yoon’s leadership style imperious, particularly his attacks against critical media outlets. His wife, Kim Keon-hee, is also a lightning rod for public criticism, with Yoon postponing a trip to Germany and Denmark in February to keep her out of the spotlight; if left-leaning opposition parties hold onto the National Assembly, they are likely to open an investigation into allegations that Yoon’s wife received unreported gifts and committed other misdeeds. Meanwhile, the leader of the DP, Lee Jae-myung, continues to face his own corruption investigations, which has decreased support for the main center-left opposition party.
What can this election tell us about the state of Korean politics?
Polls suggest that the election will likely be decided by a narrower margin than the last legislative election in 2020; the top two candidates in roughly 60 single-member districts are polling within the margin of error. Tempers are also running high in Korea, where political polarization has worsened in recent years. Both Yoon and Lee — the runner-up in the 2022 contest — are divisive figures, which has increased support for splinter parties, most notably the newly formed Cho Kuk Innovation Party. Korean politics have traditionally been dominated by two major political parties, but this election may be a harbinger of a more pluralistic system to come. With 30 of the 300 seats in the National Assembly to be allocated to non-major parties, chances are high that neither the PPP nor the DP will secure an outright majority.
Will the election outcome change Korea’s relations with the US, Japan, China, or North Korea?
This election will not have a significant effect on Korea’s foreign policy. Regardless of the outcome, Yoon will retain wide latitude over Korea’s external relations, including in diplomacy, security, and trade. Yoon will continue to deepen Seoul’s ties with Washington and Tokyo — he will participate in a trilateral summit with US President Joe Biden and Japanese Prime Minister Fumio Kishida on the sidelines of the NATO summit in Washington in July — while relations with Beijing and Pyongyang will remain strained. The US is on the verge of overtaking China as Korea’s top export market, and Korean firms are increasingly directing their investments away from China. By the time Yoon steps down in 2027, his successor will face a remarkably different external environment than the one Yoon inherited in 2022.
If the conservative party manages to pull off an upset, how will that change the political landscape in Korea?
A conservative victory in the legislative elections — not likely but also not unthinkable — would breathe new life into Yoon’s presidency. His administration would move quickly to enact a raft of business-friendly reforms, including lowering taxes on corporations and increasing government support for small- and medium-sized enterprises.
“Strategic” industries such as semiconductors, electric vehicles, batteries, biotech, and AI would likely benefit from greater policy attention. And Lee would come under increasing pressure to step down as head of the DP.
A PPP-controlled National Assembly would also put wind in the sails of the government’s recently announced “Corporate Value Up Program.” The program is designed to reduce the “Korea discount” whereby domestic firms have lower valuations than peer companies in Japan and Taiwan; it promises tax credits and other incentives to firms that “value up” their stock price through increased dividend payments, share buybacks, and improvements to their corporate governance.
An Iranian man walks past campaign posters for the parliamentary election in Tehran, Iran, February 27, 2024.
Iranian election turnout could set new record low
Iranians will go to the polls on March 1 to vote for a new parliament, which will serve for a four-year term. They will also vote for members of the Assembly of Experts, a body of clerics that is tasked with selecting a new Supreme Leader and serves a six-year term. However, given that the Islamic regime now carefully manages election outcomes to protect its grip on power, voter participation is expected to plumb new record lows. We asked Eurasia Group analyst Greg Brew to explain the significance of this week’s polls.
What is the position of parliament in the Iranian system?
Iran’s constitution delineates legislative powers to the parliament, which also oversees the budget and cabinet appointments. However, parliament’s power is constricted by Iran’s powerful executive branch, particularly the Supreme Leader Ali Khamenei, as well as the Guardian Council, a small group of clerics and senior figures who sign off on all legislation and determine who is eligible to run for office. Given these restrictions, parliament is regarded by many Iranians as a rubber-stamp committee with little real control over government policy, a feeling that has only grown more pronounced since 2020, when elections were stage-managed by the Guardian Council to ensure hardliners dominated parliament. Authorities also carefully controlled the 2021 presidential election to ensure Ebrahim Raisi, an arch conservative with close ties to Khamenei and the Islamic Revolutionary Guard Corps (IRGC), was elected. (The next presidential election will be in 2025, when Raisi is expected to run for reelection.)
What steps is the regime taking to control the election outcome?
As with 2020, the Guardian Council has taken a heavy hand in vetting candidates: Out of the thousands of applications, many were disqualified from running for office, including most prominent reformists and moderates. This ensures the new parliament will remain dominated by hardliners with a strong affiliation with Khamenei, the IRGC, and the conservative clerical faction.
Is the sense of public alienation toward the regime growing?
Dissatisfaction with the regime is currently very high, owing to a variety of factors that include a weak economy, high inflation, widespread corruption, and ongoing and intensifying political repression. The fact that elections are now carefully managed by authorities has produced a broad view that they are sham affairs: as a result, participation in elections has dropped from over 70% to roughly 50%. It is expected to be even lower this year, perhaps the lowest on record. While the regime likely retains the support of some of the population, most Iranians view the Islamic Republic as an illegitimate government.
So, is there a chance of unrest around the vote?
Despite this widespread dissatisfaction, the circumstances don’t seem conducive to the kind of public protest that occurred in 2022, when thousands took to the streets following the death of Mahsa Amini at the hands of the morality police. The force of the government crackdown in response to those protests and the ongoing efforts to suppress new displays of discontent, as well as the generally bleak outlook for political reform, means most Iranians are averse to taking to the streets. Instead, citizens will express their dissatisfaction by staying at home and not participating in elections.
How worried is the regime about its legitimacy?
The Islamic Republic has held power for more than forty years. It possesses a large and sophisticated security apparatus and a toolkit of repressive measures that it uses to suppress public dissatisfaction. It is a government has proven, time and again, that it is willing to kill its own people in large numbers in order to remain in power.
That said, the regime has reasons to be worried about its position. Its credibility on a number of important issues, from the economy to terrorism, water scarcity and inflation, is in serious question. It is defined by self-dealing, with more and more of the nation’s wealth flowing to a small elite, particularly senior officers in the IRGC. Millions of Iranians are trying to leave the country, particularly educated members of the middle class.
What are the prospects for political change in the mid-to-long term?
The regime is confident it can hold on to power. It’s fixated on a potential succession crisis, given that Khamenei is eighty-four and in poor health, and the reason for stage-managed elections has been to ensure there’s a smooth transition from the current leader to a Khamenei 2.0. That’s why reformists and moderates have been squeezed out, with even former president Hasan Rouhani denied the opportunity to run for a seat on the Assembly of Experts. There’s virtually no chance the regime permits any reforms or positive political changes, at least not until after succession.
But this policy comes with its own dangers. The Iranian public appears unwilling to resume protests for the moment, but that could change. By refusing to reform, the regime has further undermined its legitimacy, and the transition to a new, similarly conservative Supreme Leader will only harden public dissatisfaction. Iran may be quiet, but it’s a powder keg that could go off at any time.
Edited by Jonathan House, Senior Editor at Eurasia Group
President Joe Biden shakes hands with Chinese President Xi Jinping as they meet on the sidelines of the G20 leaders' summit in Bali, Indonesia, Nov. 14, 2022.
Viewpoint: Don’t expect too much from Xi-Biden meeting
Presidents Joe Biden and Xi Jinping are preparing for talks next week to stabilize relations between their two countries and prevent a dangerous flare-up of hostilities over Taiwan. The meeting represents the culmination of months of preparatory work by lower-level officials and is expected to take place on Nov. 14 or Nov. 15 on the sidelines of the APEC leaders’ summit in San Francisco.
At a time when wars are raging in Europe and the Middle East, any step toward reducing tensions between the world’s two leading military and economic powers will be welcomed. But given the fundamental differences between the US and China, how much can we really expect from next week’s meeting? We asked Anna Ashton, a director for Eurasia Group’s China practice, and Clayton Allen, a director for the United States practice.
Why is this meeting happening now?
Anna Ashton: When the two presidents met on the sidelines of the G20 summit in Bali last November, it was clear they intended to take further steps to stabilize ties. The next one was meant to be a visit to China by Secretary of State Antony Blinken in February to prepare the way for another meeting between the two heads of state. But the discovery of a Chinese surveillance balloon over the US unexpectedly disrupted those plans. For Xi, the APEC summit – a gathering of the heads of state of 21 Asia-Pacific countries – represents a good opportunity to resume the dialog with his US counterpart. It will allow him (and also Biden) to demonstrate to other Asia-Pacific nations that they are managing bilateral relations responsibly. However, if diplomacy had not picked up in recent months, Xi might have opted to send another senior official in his stead.
Clayton Allen: The US push for diplomacy over the summer – which involved the visits of several cabinet officials to China and the creation of working groups to coordinate policies on various issues – was always intended to lead to higher-level engagement. The APEC summit offered a relatively low-stakes option for a meeting to move forward if sufficient diplomatic progress had been made. Put simply, both leaders already wanted to attend the summit, meaning a sideline meeting could be arranged more easily than a meeting in Washington or Beijing. More broadly, this meeting is happening because both sides see benefit in using a high-level meeting to confirm at least some of the progress made this summer in stabilizing the relationship.
What does Xi want from meeting?
Ashton: Xi is hoping to reassure China's neighbors that China is a responsible stakeholder in the region, a responsible power. His willingness to meet face-to-face with Biden in a US venue is an important signal. But the bilateral relationship remains fundamentally one between peer competitors – even adversaries. The room for tangible cooperation remains limited. Xi's expectations are likely modest.
What does Biden want?
Allen: Biden wants some reciprocal diplomatic effort from China, specifically the resumption of military-to-military communication, which China suspended in protest over Nancy Pelosi’s visit to Taiwan last August when she was speaker of the US House of Representatives. (China considers such visits to what it views as a breakaway territory an affront to its sovereignty.) This, alongside the multiple working group and staff-level engagement frameworks announced since early August, would bring US-China relations back to roughly the same level they were at before Pelosi’s visit to Taiwan. It would also create enough goodwill to avert a potential collapse in relations ahead of Taiwan’s January presidential election.
What are the best-case outcomes?
Ashton: Events on the calendar in 2024 could prove enormously disruptive to any progress made this year. Xi will likely use this opportunity to underscore China's top concerns with US policies. He will remind Biden of the importance Beijing attaches to Taiwan's eventual reunification with the mainland, stressing the damage that would be done to bilateral ties if the US moved away from its longstanding One China policy. He will also likely reiterate China's objections to the breadth of US tech restrictions. It is also possible that China will agree to take steps in support of US efforts to end the fentanyl epidemic. The best-case scenario is that the meeting helps to mitigate the potential for volatility in 2024.
Allen: The resumption of military-to-military communication, formalization of the working groups announced since August, and commitments to additional high-level meetings. Additional commitments from China to leverage its influence with the Global South in talks about the Ukraine crisis and efforts to contain the hostilities in the Middle East would be significant positive outcomes.
What are the next watchpoints for the bilateral relationship after this meeting?
Ashton: Taiwan's presidential election on Jan. 13. The candidate most likely to win based on current polling is Lai Ching-te, a member of the Democratic Progressive Party who draws support from Taiwan's most dedicated independence activists. That brings us to a second watchpoint in May, when Taiwan’s next president will be inaugurated. During the interim, between January and May, China will likely seek to dissuade the incoming president from adopting a more assertive independence agenda by conducting military maneuvers in the region. The final major watchpoint is the US presidential election in November. The lead-up to the vote is likely to feature heated rhetoric on China from both Republicans and Democrats.
Allen: Additional staff-level meetings. Leader-level meetings are essential to advancing efforts at stabilizing the relationship, but staff-level meetings are where the detailed work will happen. Historically, the US-China relationship has improved in the lead-up to leader-level meetings but declined soon after they have finished; staff-level engagement may mitigate some of this (potential) decline.
Edited by Jonathan House, senior editor at Eurasia Group.
Supporters of Kentucky Gov. Andy Beshear hold signs and cheer during the annual St. Jerome Fancy Farm Picnic in Fancy Farm, Kentucky, on Aug. 5, 2023.
Viewpoint: Upcoming US state elections will offer signposts for 2024
Amid primary debates, early swing-state polls, and campaign events, it’s safe to say that much of the political focus in the US is already on the 2024 elections, which appear likely to feature a rematch between President Joe Biden and former President Donald Trump. This anticipation will heighten the scrutiny of a slew of state and local elections and ballot measures on Nov. 7 – the last chance to gauge voter sentiment on key issues ahead of the main event next year.
Eurasia Group expert Kylie Milliken will be following the Kentucky gubernatorial race, Virginia’s state legislative elections, and an Ohio ballot referendum closely. We asked her to explain.
What’s at stake in a Democratic governor’s reelection bid in Kentucky?
Although Kentucky is a red state, the party that has won the governor’s mansion there has gone on to win the White House the following year in every political cycle for the last 20 years. The off-year gubernatorial race generally gives a sense of the set of issues that matters most to independent and moderate voters, including issues that drive turnout. This year, popular Democratic incumbent Andy Beshear is expected to beat his challenger, the Trump-endorsed, highly conservative Attorney General Daniel Cameron. Although it will likely be a close race, Beshear is favored to win a second term, given his high approval ratings (even among Republicans) and his position on the issues.
If Beshear does win, what would that signal?
A few things, I think. The first would be that a focus on jobs can help mitigate criticism of Biden on inflation. Voters hold Biden responsible for high prices, and inflation will almost certainly be an issue that hurts Biden politically in 2024. However, running on the strong labor market, as Beshear is doing, could help Biden on the margins. The second is that abortion will turn out Democratic voters and attract independents and moderates to Democratic campaigns. Beshear is campaigning on the issue and criticizing Cameron’s extremely conservative stance, including his support for a proposed anti-abortion amendment, which Kentucky voters rejected by 4.7 percentage points in 2022. Lastly, a Beshear victory would signal that culture war issues won’t necessarily drive turnout or convince independents to back Republicans. Cameron is running on a conservative education and LGBTQ+ platform that many Kentucky voters would likely support, but a Beshear win would indicate that other issues are more important.
What’s the relevance of a new referendum on abortion in Ohio?
Ohio, once considered a key swing state, is now decisively red – the Republican Party controls the state legislature and governor’s mansion, and Trump won the state by 8.1 points in both 2016 and 2020. The Ohio ballot measure is the only abortion referendum taking place this year, and anti-abortion activists have argued that they have a better chance of success both because of the state’s conservative bent and their ability to focus all their resources on Ohio.
However, past referenda on abortion have all gone the pro-choice way, regardless of the political tendencies of the state, and the Ohio referendum is likely to do the same. The first poll shows strong support for abortion access, with 58% in favor of passing the ballot measure. Some think that the salience of abortion will decrease over time, minimizing the extent to which Democrats can win on the issue. However, the longer there are bans in place, the more people are affected and the more unpopular the bans have become. If abortion passes in Ohio by a wide margin and with a high turnout, as is expected, it will demonstrate that the issue is still galvanizing voters, which will likely benefit Democrats.
What are the key issues shaping Virginia’s legislative elections?
Abortion is also shaping up to be a major issue in the Virginia legislative elections – but in a different way. While the Ohio referendum will gauge voters’ support for abortion in general, the Virginia legislative races will test voters’ preferences for a 15-week ban.
Republicans have consistently struggled with their messaging on abortion since the Dobbs decision, as they must attempt to find a balance between being pro-life enough to win primaries and pro-choice enough to appeal to a wider audience in general elections.
Virginia’s Republican governor, Glenn Youngkin, is attempting to walk this fine line by advocating for a 15-week ban if Republicans keep the state House and flip the state Senate in the Nov. 7 elections. State-level Republican legislative candidates have taken up his message, increasing the salience of the issue in the campaign. If the GOP performs well in Virginia, it will give Republicans across the US a new strategy on abortion messaging that may prove to be more electorally successful than advocating for strict bans.
A giant Second World War Polish Home Army flag is seen, as participants attend the "March of a Million Hearts" rally, organised by the Civic Coalition opposition parties, two weeks ahead of the parliamentary election, in Warsaw, Poland October 1, 2023.
Viewpoint: Polarized Poles head to polls
In less than two weeks, Poland’s United Right alliance will face the biggest challenge to its grip on power since gaining control of parliament in 2015. The national-conservative party’s strident rhetoric and generous welfare policies have lost some of their appeal, but voters don’t appear ready to decisively embrace the alternative path offered by the liberal opposition either. Among other uncertainties, it’s unclear how the tricky politics of the war next door in Ukraine will play out when polls open on Oct. 15.
Months of difficult government-formation talks and maybe even new elections could follow. We sat down with Eurasia Group expert Anna-Carina Hamker to talk about what to expect.
Why have voters soured on the United Right?
The alliance has been losing support since a constitutional court packed with its appointees instituted an abortion ban in 2020. An overall sense of fatigue with the government and a lack of new (young) faces is another factor that has contributed to its gradual decline.
Over the past 12 months, a deteriorating economic situation has also contributed. The well-targeted social benefits that the United Right has used to shore up its support in the past – such as the 500 zloty per child payments to families the government has promised to expand – have become less effective in a context of high inflation.
Despite these developments, the United Right maintains a strong base of mainly rural voters (more than 30% of the electorate) and will likely win the largest vote share in the elections.
What are the main issues for voters?
According to recent surveys, the main issues are inflation, access to and the quality of healthcare, security (particularly in light of the war raging in Ukraine), and the independence of the judiciary. Under the guise of fighting the remnants of communism, the government has adopted multiple laws bringing the judiciary under political control, causing a long-running confrontation with the EU.
Security has been a key topic in the United Right’s campaign, but recent surveys suggest that Poles trust the leading opposition party – the Civic Coalition – slightly more to keep them safe. This is likely the result of recent mishaps, such as a series of conflicting communications issued in response to an incursion into Polish airspace by Belarusian helicopters. De-politicizing the judiciary and the media is a key priority for the liberal opposition. On the economy, the far-right Confederation party has gained a lot of support with its proposals for radical tax and benefits cuts.
What role has Ukraine played?
A big one!
The United Right is at risk of losing some (potential) supporters to the far-right Confederation over the generous support offered to Ukraine, both in terms of military and humanitarian aid.
Polish farmers – a key United Right constituency – have suffered from falling grain prices they attribute to the large amounts of Ukrainian grain exported to Poland and other EU countries. The Confederation party has wooed these farmers with its anti-Ukrainian rhetoric. Fearing a loss of support, the United Right enacted a unilateral grain import ban before the summer that provoked tensions with Brussels and Kyiv. The government fired back by announcing a reduction in financial support for Ukrainian refugees from next year.
What is the likelihood of a contested election? Difficult government formation process?
I think the election will likely produce a hung parliament – that is, no parliamentary majority for the United Right or the combined liberal opposition. In that case, Confederation will be the kingmaker. Both the United Right and the liberal opposition will probably try to enlist its support, either for a minority government or by convincing individual lawmakers to switch sides.
Though there is more ideological alignment between Confederation and the United Right, Confederation would be wary of being co-opted by the ruling alliance, which could prompt it to join forces with the liberal opposition instead.
In the event of a hung parliament, we expect a lengthy government formation process that could drag out into the new year. There is also a substantial risk that the parties fail to form a government, forcing snap elections early next year.
What would another United Right government mean?
This will depend on whether the United Right commands a parliamentary majority or relies on cooperation with Confederation. In the former case, I’d expect mostly continuity on foreign policy, but the rather aggressive rhetoric directed at Brussels would ebb a bit, as would the assertiveness toward Ukraine. Domestically, the ruling alliance would likely try to tighten its grip on power even more by undermining the powers of democratic institutions.
In the case of cooperation with Confederation, I think relations with the EU could get even worse. Both parties are critical of the European Commission’s powers, and, considering that they are competing for the same national-conservative electorate, there could be a battle between the two parties about who is best at protecting Polish sovereignty from Brussels’s influence. Warsaw’s growing assertiveness toward Kyiv would likely also remain a problem as the parties continue to compete.
What would a liberal opposition-led government mean?
Its immediate priorities would be to de-politicize democratic institutions, reform the judiciary, and improve relations with Brussels. It would likely also take significant steps to accelerate Poland’s green transition. However, considering that the ruling coalition would consist of at least three parties, I think that once immediate priorities have been addressed, there will be a lot of potential for tensions and, thus, slow policy progress and maybe even the government’s collapse. We have seen these problems in other European countries with three-party governments, such as Germany.
Edited by Jonathan House, senior editor at Eurasia Group.
A shopper looks at produce in a market in Buenos Aires, Argentina.
As inflation nears 100% in Argentina, the political class struggles to respond
Though much of the world is suffering from uncomfortably high inflation as economies adjust to the disruptions brought by the pandemic and the war in Ukraine, some countries are grappling with double- or triple-digit price increases. In Argentina, for example, a rapid acceleration of price gains in recent months has economists predicting inflation will reach 100% this year.
We asked Eurasia Group expert Luciano Sigalov to explain the runaway price increases in the South American country and how political leaders are responding to them (or not).
How did we get here?
This is not Argentina’s first bout of very high inflation. The last was in the late 1980s, when inflation topped 4,000%. After a period of price stability in the 1990s, inflation began to accelerate again in 2005 and then skyrocketed over the summer. Prices rose at an annual rate of 83% in September, one of the highest in the world.
Argentina’s longstanding practice of having the central bank print money to finance public spending is the main driver of inflation. More money chasing the same amount of goods bids up prices. Currency depreciation is another driver, because it raises the cost of imported goods, something that is particularly dangerous during a period of high global inflation.
A couple of things happened over the summer to spark a run on the Argentine peso.
What happened?
Earlier this year, Argentina reached a deal with the IMF to refinance a $44 billion loan it received from the multilateral lender in 2018. But in June, concerns started to mount about the country’s ability to comply with the terms of the deal – such as the reduction of the country’s wide budget deficit – prompting investors to sell off the peso. The July resignation of Economy Minister Martin Guzman, the main architect of the IMF agreement, further fueled the sell-off.
How is soaring inflation affecting everyday life?
As prices adjust from one week to the next, a trip to the supermarket has become a surreal experience. People are losing their sense of what things cost and are becoming adept at financial calculations to determine the value of installment plans for purchases. As the pesos in their pockets rapidly lose value, people try to spend them as quickly as possible. This dynamic makes financial planning, and life planning, that much more difficult.
How has President Alberto Fernandez’s administration responded?
To shore up confidence in the local economy and currency, new Economy Minister Sergio Massa has reiterated the country’s commitment to meeting the terms of the deal with the IMF. He is also rolling out a series of measures freezing the prices of key items and offering households targeted relief in the form of subsidized interest rates, tax cuts, and support for inflation-indexed wage deals.
Yet the crisis has created divisions within the administration. Massa wants to prioritize measures to fulfill the terms of the IMF deal, while the powerful Vice President Cristina Fernandez de Kirchner wants more price freezes and government handouts. And no one really has the stomach for the type of broad stabilization program economists say is necessary but that would include politically unpopular measures such as aggressive interest rate hikes and cuts in public spending.
What does this mean for the ruling coalition ahead of next year’s elections?
Soaring inflation and bleak economic prospects spell trouble for the ruling coalition in next October’s elections. Maximo Kirchner, a lawmaker in congress and son of the vice president, reflected the somber mood taking hold among the parties of the coalition when he suggested recently that they lacked a competitive candidate to run for president next year. He said that neither Fernandez de Kirchner nor Massa, thought to be strong potential contenders, would be running, and he played down President Fernandez’s reelection prospects.
So, does the opposition offer some hope of a solution to the current difficulties?
Curiously enough, the troubles of the ruling coalition have led to increased tensions within the opposition alliance. The Together for Change coalition has three potential presidential candidates jockeying for position, and there are growing difference among them over electoral strategies and post-electoral policies.
At this point, the opposition has strong incentives to remain united to ensure as broad as possible appeal in next year’s elections. But the deeper the problems of the ruling coalition grow, the more confident the main opposition presidential hopefuls might become about prevailing on their own, without the support of their alliance partners. That could lead to a weaker opposition-led administration, with less support in congress, making politically costly policy changes more difficult.
A man works at an illegal oil refinery site in Bayelsa, Nigeria.
Nigeria struggles to curb oil theft
Nigeria’s official oil output recently slumped to a two-decade low of less than 1 million barrels per day, spotlighting a longstanding problem with oil theft in Africa’s largest country. Mele Kyari, head of the Nigerian National Petroleum Corp. Ltd, sparked debate locally when he provided an estimate of the magnitude of the problem: Thieves are stealing about 200,000 barrels per day.
These losses are particularly galling at a time when many oil-producing countries around the world are reaping the benefits of high prices. Nigeria, conversely, earlier this year said weak oil income had caused federal revenue to fall below its debt service obligations in the first quarter.
So, what’s going on? We asked Eurasia Group expert Tochi Eni-Kalu to explain.
Is the country really losing this much oil to theft? Who is responsible?
Though it’s getting more attention now, oil theft or illegal bunkering is a problem dating back several decades in Nigeria. Yet the scale and mechanics of the problem are poorly understood. Estimates of theft vary widely: Some studies suggest that as much as 724,000 bpd were stolen in the 2000s. If Kyari is right and current losses are about 200,000 bpd, that would translate into about $7.3 billion in forgone revenue for the state, assuming an average oil price of $100 per barrel. That amount is equal to a little less than 2% of GDP, or about 2.7 times more than total government expenditure on gasoline subsidies in 2021.
However, the government does not systematically track crude losses, so these figures are difficult to substantiate. In fact, the Nigerian navy disputes Kyari's estimates, arguing that illegal bunkering on that scale would struggle to evade detection by security agencies. Then again, security agencies — alongside political figures, local communities, and energy sector employees among others — are alleged to be complicit in oil theft, which is often carried out by criminal gangs of varying levels of sophistication. Once crude is pilfered from pipelines or wells, it can be transferred to vessels bound for other countries or refined at illegal makeshift refineries where deadly accidents are common.
Is theft the main reason for the output decline or are there other factors at work?
There are other contributing factors, most importantly a history of underinvestment in active oil blocks, leading to delayed maintenance and declining productivity. Why? International oil companies have been steadily divesting from the oil-rich Niger Delta over the past decade, with a focus on offloading less cost-efficient onshore and shallow water oil blocks. Regulatory hurdles, an inability to ensure the security of employees and critical infrastructure, and fraught relations with Niger Delta communities have accelerated this trend.
These complaints also explain why Nigeria has struggled to attract investment in developing new oil blocks, further depressing production levels. The country accounted for only 4% of capital expenditure on oil and gas projects in Africa that reached a final investment decision between 2015 and 2019 despite holding about 40% of Africa’s proven reserves.
What are authorities doing to combat oil theft?
They have largely focused their efforts on protecting critical oil infrastructure, particularly pipelines. In late August, the national oil company awarded new pipeline security contracts to five private contractors to complement patrols led by security agencies. One of those contracts was given to Government Ekpemupolo (also known as Tompolo), who led attacks against oil installations prior to a government amnesty in 2009. This is not the first time that Tompolo has been contracted to protect oil infrastructure — he was one of the ex-militant leaders paid to secure pipelines under the terms of the 2009 amnesty.
That may well help rein in acts of vandalization and theft, but it also risks angering other militant groups that are not benefitting from government contracts. Still, dialogue among the government, Niger Delta community leaders, and militant commanders will likely prevent a resurgence in attacks ahead of the Feb. 2023 general elections.
Will it be a campaign issue?
Yes. Leading opposition challengers Atiku Abubakar and Peter Obi have pledged to solve the problem if they’re elected president. However, their proposals are light on specifics. For instance, Atiku promised to declare a deadline to put an end to oil theft, but only after completing consultations with government agencies about the issue once elected.
On the other hand, ruling party candidate Bola Tinubu has yet to comment, but his proposals are unlikely to diverge substantially from current government policy. Still, while it reflects dissatisfaction with the status quo, oil theft won’t be a pivotal issue in this election cycle. Voters are likely to assign more weight to insecurity, unemployment, and the rising cost of living.