South Africa: The wors is yet to come
Also: Hong Kong, China, Yemen, Pakistan, Iran, and Sudan.
In addition to our daily risk monitoring brief, the team behind Geopolitical Dispatch also provides advice, risk audits, scenario planning, executive masterclasses and board briefings among other services. Click here to get in touch.
SOUTH AFRICA. The wors is yet to come
A minority government could complicate desperate reforms.
Long queues Wednesday suggested a strong turnout in excess of South Africa's 2019 general elections. Early counting Thursday showed the African National Congress losing its majority but remaining the largest party in parliament.
INTELLIGENCE. Cyril Ramaphosa will likely stay president but without a majority he will be more beholden to radicals within and beyond his party. A coalition with the second-placed Democratic Alliance would be a boon for governance and the economy but its white complexion and anti-corruption stance make it unpalatable for many in the ANC. Parties like the left-wing MK and Economic Freedom Fighters would be happier to share power without asking probity.
FOR BUSINESS. Ramaphosa is no friend of the MK – led by his disgraced predecessor, Jacob Zuma – or the EFF, whose leader – Julius Malema – was expelled from the ANC at Ramaphosa’s direction. But the coalition arithmetic suggests one or both parties will join his government. This bodes ill for the country’s beleaguered mining sector. Many Anglo-American shareholders may come to rue their rejection of BHP’s buyout offer when they had the chance.
Geopolitical Strategy is the advisory firm behind Geopolitical Dispatch. Our partners are former diplomats with vast experience in international affairs, risk management, and public affairs. We help businesses and investors to understand geopolitical developments and their impacts with clarity and concision.
HONG KONG. CHINA. Subversion control
New national security laws show their teeth.
A court found 14 guilty of subversion Thursday, in a landmark trial of politicians and activists under the Chinese territory's 2020 security law. Six were arrested Tuesday in the first use of a second security law, introduced in March.
INTELLIGENCE. The findings relate to an unsanctioned primary held ahead of Hong Kong’s 2020 legislative council election. The arrests relate to social media posts on a “sensitive date”, most probably the 30 April anniversary of the Tienanmen Square massacre. Both follow the recent arrest of a Hong Kong trade official and two others in London on espionage charges. One of the defendants, a former Royal Marine, was found dead in a Berkshire park on Sunday.
FOR BUSINESS. The death in Berkshire is not being treated as suspicious but the cloud around Hong Kong is. Western interest in the former British colony has declined, matching strained ties with the mainland. Expats have decamped to Singapore and Dubai. Yet Chinese and emerging market interest has more than replaced this, allowing the city to keep its status as a global financial centre. IPOs and capital raisings are expected to increase in the coming months.
YEMEN. CHINA. Red Sea, red lines
Beijing renews efforts to rein in the Houthis.
Foreign Minister Wang Yi called for attacks on ships to end Tuesday when he met his Yemeni counterpart in Beijing. Houthi rebels claimed to have hit six ships across three seas Wednesday, and to have downed a US MQ-9 Reaper drone.
INTELLIGENCE. Despite its warming ties with Iran, China has been a major victim of Houthi attacks, with most of its trade with Europe, its largest market, normally transiting the Red Sea. Beijing has lent on Tehran to rein in the rebels but, so far, the Houthis have not listened. Tehran’s control is deniable and the Houthis’ attacks (ostensibly against Israeli shipping) are popular on the Arab street at a time when few regional powers have any control of the narrative.
FOR BUSINESS. China has so far been reluctant to join the West in sanctioning the Houthis or Iran. Yet an attack on a China-bound tanker last week, likely transporting Russian crude, is one of several factors that may harden its resolve. China will also worry about the crisis’s ongoing impact on Egypt, whose president was in Beijing Wednesday. China has invested billions in Egypt’s Suez Economic Zone. Traffic through the canal has fallen 85% since October.
Emailed each weekday at 5am Eastern (9am GMT), Geopolitical Dispatch goes beyond the news to outline the implications. With the brevity of a media digest, but the depth of an intelligence assessment, Geopolitical Dispatch gives you the strategic framing and situational awareness to stay ahead in a changing world.
PAKISTAN. IRAN. Re-opening the Baloch box
Another border skirmish breaks out.
Four Pakistanis had been killed by Iranian forces in the border province of Balochistan, officials said Wednesday. The region's assembly formed a committee on the China-Pakistan Economic Corridor ahead of the project’s second phase.
INTELLIGENCE. The Balochistan port of Gwadar is the terminus of a $62 billion corridor to Xinjiang in China’s west. It is less than 200km from a rival port in Chabahar, in Iran’s Sistan and Baluchestan province, which India is funding as a route to Russia and Central Asia. Last month, Iran and Pakistan ostensibly buried the hatchet on the competing schemes, and on separatist entities operating on either side of the border. The latest deaths thus come as a surprise.
FOR BUSINESS. Russia and China have sought to foster a repairing of ties. Beijing has proposed trilateral talks on counterterrorism. Moscow has floated a highly ambitious nuclear dialogue, involving Delhi. But India (and the US) are threatened by any détente. They may not be behind the Balochi insurgencies that have plagued the region (as claimed by Tehran and Islamabad) but ethnic unrest suits their broader interests, including to keep Iran internally distracted.
SUDAN. The new Syria
Anti-Western forces play both sides of the civil war.
Fighting continued in Darfur Wednesday as medical supplies in the city of el-Fasher dwindled. Sudan's acting foreign minister visited Iran, a supplier of drones, to discuss reopening embassies. Sudan rejected a US call for peace talks.
INTELLIGENCE. Since diplomatic ties were restored in February, Tehran has helped the Sudanese army turn around the war. In turn, this has led Moscow to pivot its support back to Khartoum from the rebel Rapid Support Forces, which had previously been armed by the erstwhile Wagner Group. Sudan's military authorities had previously lent toward the West (albeit uncomfortably), were allied with Ukraine, and were party to the Abraham Accords with Israel.
FOR BUSINESS. Sensing the status quo may endure, Moscow has revived negotiations with Khartoum on a Red Sea base. A delegation is expected to visit Russia this week to sign the deal. Sudan has also proposed a deal on mining and agriculture (mirroring arrangements Wagner had with the RSF and Russia still has across the Sahel). Iran also hopes to revive ties. Until the ousting of Omar al-Bashir in 2019, Sudan was its third-largest trade partner in Africa.