By Dan Keeler, Ken Stibler, Noah Berman and Nojan Rostami
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Sudan’s crisis deepens
Since fighting broke out in Sudan’s capital of Khartoum last weekend, the death toll from its worsening crisis has stretched into the hundreds. Despite a cease-fire agreement, conflict is still raging between Sudan’s army and the rebel paramilitary group known as the Rapid Support Forces.
• World powers take sides in Sudan war. (NYTimes)
Violence broke out between the two groups as they tried to decide which would become subordinate to the other ahead of a planned transition to civilian rule, CBS News reports. The two forces were allies in the interim government that followed the 2019 coup that deposed longtime Sudanese dictator Omar al-Bashir. Their relationship soured after the head of the Sudanese Army, Abdel Fattah al-Burhan, dissolved the transitional government in 2021.
Smoke rises during clashes in Khartoum, Sudan. Photo: Ahmed Satti/Anadolu Agency/Getty
There is serious concern that the clashes could escalate into a civil war. Around one-third of those killed so far have been civilians, NBC News reports, and over 20,000 people have fled the country for neighboring Chad, France24 reports.
Crackdown on Tunisia’s opposition intensifies
Security forces in Tunisia’s capital, Tunis, shuttered the headquarters of the main opposition party on Monday and arrested its leader. The moves are the latest escalation in an ongoing crackdown by President Kais Saied, who dissolved parliament as part of a “soft coup” in July 2021, Foreign Policy reports.
The actions against the Islamist Ennahda party and its prominent leader, Rachid Ghannouchi, could threaten Tunisia’s economy. The IMF and Western lenders, including Italy, which last week vowed to help Tunisia negotiate with the fund, could be reluctant to provide loans to an increasingly autocratic leader.
A file photo of opposition leader Rached Ghannouchi before his arrest this week. Photo: Jihed Abidellaoui/Reuters, via Al Jazeera
Last month, Tunisia rejected a $1.9 billion bailout from the IMF, saying that its conditions were too onerous. As those negotiations continue, Tunisia’s economy has tumbled. This week, the country’s sovereign dollar bond yields rose to nearly 50%, well into distressed territory.
“Unless President Saied steps back and the government shows greater willingness to enact IMF reforms, a messy sovereign default lies in store,” analysts at economics consultancy Capital Economics wrote.
African airlines set to benefit from rebound in demand
Air travel in Africa is approaching pre-pandemic levels, offering a much-needed boost for the continent’s airlines. Domestic flights made up 37% of African flights in March, compared to 31% for intra-African travel and 32% for intercontinental travel, Africanews reports.
African airlines suffered a $3.5 billion loss last year and an $8.6 billion loss in 2021. National airlines in Namibia and Mauritius were casualties of the Covid-generated economic downturn. Others, such as South African Airways and Kenyan carrier KQ, received state bailouts to stay operational.
Podcast: Matthias Pitkowitz, EQX Biome
Making money from oil drilling takes a long time. Matthias Pitkowitz, founder of EQX Biome is on a mission to show that making money from saving forests doesn’t.
In our latest podcast, Pitkowitz explains how he is putting together a $400 million fund to persuade the government of the Democratic Republic of the Congo that protecting the massive rainforest in the Congo Basin can be more lucrative than sucking out the oil underneath them.
Available on Spotify or wherever you get your podcasts.
Bangladesh to pay Russia in Chinese yuanBangladesh will pay in yuan for a nuclear power plant Russia is building in the South Asian country. The $12.65 billion project is primarily financed by Russian loans.
The first payment in the Chinese currency, equivalent to about $300 million, was finalized at a meeting between Bangladeshi and Russian officials last week. Russia had initially insisted on payment in its own currency, the ruble, saying that payment in yuan could result in currency conversion losses, Bloomberg reports.
In late 2020, Azerbaijan and Armenia fought a bloody war over Nagorno-Karabakh. Photo: Karen Minasyan/AFP
In 2020, Armenia and Azerbaijan fought a limited war over the region until a peace deal brokered by Russia put an end to the fighting. Since then, Russia’s preoccupation with its war in Ukraine and Israel’s strengthening of its diplomatic and military alliance with Azerbaijan have enabled tensions to escalate between the two neighbors.
Leaked documents reveal Iran’s secret crackdown on celebrities
Dozens of Iranian film stars, professional athletes and celebrities have been secretly punished for voicing support for anti-government protests, the Telegraph reports. Leaked documents show the government has been banning high-profile Iranians from leaving the country, freezing their bank accounts and “disconnecting their communications” since a wave of anti-regime protests began in September 2022.
Iranian actor Hamed Behdad, pictured with actress Baran Kosari, is one of those affected by the ban on leaving the country. Photo: Atta Kenare/AFP
Documents state that the punishments are for “instigating riots” and are part of a broader secret campaign by the government to prevent “consolidation and solidarity” of so-far disconnected anti-regime protests. Seen in light of Supreme Leader Ayatollah Ali Khamenei’s comments ruling out reforms or a referendum and a fresh push to force women to wear Hijab, the campaign adds to evidence that the regime is doubling down rather than compromising with the protestors.
Ukrainian grain imports face a wave of bans across Eastern Europe
Friction over alleged dumping of Ukrainian agricultural products on Eastern European markets came to a head this week as Hungary, Slovakia, Bulgaria, Poland and Romania pursued unilateral bans—over EU objections. Tensions had been building for months as cheap Ukrainian grain exports have depressed prices in local markets, frustrating politically important farmers across the region.
Grain prices in Poland and Hungary have crashed as cheap Ukrainian imports undercut local grain producers. Photo: Efrem Lukatsky/AP
The commercial dispute marks the first serious disagreement between Kyiv and its partners in the region and threatens Ukraine’s attempts to boost exports, as FMN reported last week. The wheat, sunflower seeds and maize is even more politically inconvenient as most of the grain was meant to be re-exported to the Middle East and Africa.
The EU initially condemned the bans but bowed to growing pressure, proposing emergency curbs on grain while putting forward a support package to protect farmers and bring additional scrutiny to Ukrainian re-exports.
The conflict could provide Russia, which leveled an accusation of Ukrainian corruption in the UN-backed grain exporting scheme, an opportunity to sow dissent among Ukraine’s allies. While Poland’s side deal with Ukraine and recent warm bilateral visits suggest the region will be difficult to split, mounting corruption concerns and recent agricultural woes highlight potential vulnerability in Ukraine’s international position.
Wagner chief says continued war on Ukraine could cause Russia to collapse
Yevgeny Prigozhin, head of the powerful Wagner mercenary group, has urged Russian President Vladimir Putin to end the conflict in Ukraine, Radio Free Europe reports. In a statement on Telegram, the close Putin ally whose troops have played a key role in the war on Ukraine, urged Russia’s government to declare its goals in Ukraine as “achieved” and bring an end to fighting, or risk the collapse of Russia.
Yevgeny Prigozhin at a cemetery for Wagner mercenaries in southern Russia in early April. Photo via VoA
In a curt statement bordering on criticism, Prigozhin wrote that many Russian elites “either have doubts or are categorically opposed to what is happening.” He also warned that the expected Ukrainian spring offensive has the potential to break through Russian lines and lead to a “social explosion” against the existing order.
Prigozhin has become increasingly critical of Russia’s handling of the war amid a conflict between Wagner and the defense ministry that led to delays in the supply of weapons and ammunition. A recent US intelligence leak included documents showing Putin has apparently tried to reconcile Prigozhin and Defense Minister Sergei Shoig. However, analysts have speculated that Putin was using ‘human wave’ tactics with Wagner forces to weaken the increasingly outspoken Prigozhin.
Argentina’s government admits to losing war against inflation
Argentina’s cabinet chief Agustin Rossi this week admitted his government was losing the battle against rising prices as official figures put March’s annualized inflation rate at 104%, the highest level in two decades. The higher-than-expected figure prompted a spike in the ‘blue’ or unofficial exchange rate to its highest level yet. In response, the central bank was forced to sell scarce dollar reserves to prevent the peso falling further.
With October elections approaching, the inflation overshoot shook the ruling Peronist party. Rumors surged about economy minister Sergio Massa potentially resigning, and President Alberto Fernandez announced that he would not seek reelection.
Argentina’s cabinet chief Agustín Rossi. Photo via Mercopress
The central bank also hiked its benchmark interest rate a surprise 300 basis points to 81%, a reactive move that analysts expect will have little effect.
Chile plans to nationalize lithium industry
Chile’s President Gabriel Boric announced a plan to nationalize Chile’s lithium industry in a long-term bet on electric vehicle demand and investors’ continued comfort with the traditionally business-friendly country. The plan, which still needs to be approved by a fractious legislature that has proven troublesome for Boric’s agenda, will require any future contracts to be issued by public-private partnerships where the state has majority control.
Separately Boric announced his desire to create a National Lithium Company to partner with private companies, but conceded that rapid change is unlikely as the administration lacks the required votes in Congress.
Brine pools at a lithium mine in Chile’s Atacama Desert. Photo: Lucas Aguayo Araos/Anadolu Agency Via Fortune
The move is likely to be popular with Boric’s left-wing base but is also a gamble that large commodity producers can get away with greater state influence. Lithium miners’ shares plunged on the news, which raised concerns that investors would shun Chile in favor of more business-friendly sources such as Australia.
Ecuador’s Lasso threatens to dissolve Congress
Ecuador’s president Guillermo Lasso exacerbated the country’s political instability this week, announcing in an interview with the FT that he would dissolve Congress and call early elections rather than allow himself to be impeached on what he claims are false corruption allegations.
While the constitutional maneuver known as mutual death is legal, the threat to dissolve Congress on the eve of an impeachment vote mirrors former Peruvian President Pedro Castillo’s attempted “self-coup” back in December.
• Prosecutors push for arrest of former President Lenín Moreno (Mercopress)
• Andes turmoil rattles governments and spurs migration to US (WSJ)
Coming from one of the region’s few investor-friendly presidents, the announcement is likely to unnerve financial and corporate investors. The combination of rising violence, a strong indigenous protest movement and a resurgent far-left suggest that Ecuador’s institutional, economic and financial instability will only worsen.
Outlook improves for smaller emerging markets
Frontier and emerging markets appear to be on a stronger footing this year after a difficult 2022. According to ratings firm Fitch a number of factors are helping strengthen growth markets’ economies, including a weakening dollar and less uncertainty from Russia’s war on Ukraine.
Six frontier markets, including Costa Rica, Georgia and Jamaica, received ratings upgrades or positive revisions to their outlooks in the first quarter of this year. “Positive spillovers from the exodus of labor and capital from Russia due to the war in Ukraine” are helping support countries such as Georgia and Armenia, Fitch said in its quarterly FM report.
Sharp improvement in government finances prompted a two-notch upgrade for Costa Rica’s credit rating. Photo: Dan Keeler/FMN
In our podcast last week, Charlie Robertson, chief global economist at investment bank Renaissance Capital, said the positive impact of Russian money flooding into countries such as Georgia and Armenia is already showing up in the GDP numbers. “In Kazakhstan, Georgia and Armenia, GDP just blew forecasts out of the water,” he told FMN. “It’s really made a big difference in some of the countries in the CIS.”
What We’re Reading
Egyptians struggle to afford food this Ramadan as crisis worsens. (WSJ)
Tunisia leader vows ‘relentless war’ after top opponent detained. (Bloomberg)
CAR, Chad and Sudan: How the CIA wants to push Wagner and Prigozhin off the continent. (The Africa Report)
Tanzania signs $667m deals for rare earth and graphite projects. (Reuters)
Togo accelerates tree-planting initiative to tackle deforestation. (Afrik21)
Liberia opposition banks on soaring food prices to unseat Weah. (Bloomberg)
China debts and pension funds cloud prospects for Ghana’s IMF bailout. (The Africa Report)
Sprawling heat wave envelops large swath of Asia. (Axios)
Pakistan places first order for discounted Russian crude. (Reuters)
Radio documentary: Economic crunch prompts exodus from Sri Lanka. (BBC World Service)
Bangladesh ‘holding free-trade talks’ with 11 countries. (Nikkei)
Taliban prove to be formidable tax collectors, putting squeeze on Afghans. (WSJ)
India to have more people than China by mid-2023, UN says. (BBC)
Myanmar tests Indonesia’s resolve as ASEAN fissures deepen. (Nikkei)
Turkey to make inaugural deliveries from big Black Sea gas discovery. (FT)
Azerbaijan detains 20 for allegedly promoting Iranian ‘propaganda.’ (Radio Free Europe)
Israel’s new embassy in Turkmenistan sends message to Iran. (Al Monitor)
China says it’s willing to facilitate Israeli–Palestinian peace talks. (South China Morning Post)
Syria’s FM visits Algeria and Tunisia to revive diplomatic ties. (AP)
US denies Iranian claim it forced American submarine to surface in Gulf. (Reuters)
At least 85 dead after Houthi gunfire sparks panic in Yemeni crowd. (The Guardian)
Russia’s Gazprom sets up Middle East unit. (Reuters)
Russia’s Putin and Saudi crown prince discuss OPEC+ cooperation (Bloomberg)
Russian recruiters target Central Asian migrants at mosques, dorms to join war in Ukraine. (Radio Free Europe)
Power station strike knocks out electricity in Russian border region. (WSJ)
Isolated in Europe, Hungary’s Orban leans on Turkic allies in the east. (Balkaninsight)
Moldova bars Russian delegation for attempted election interference. (Balkaninsight)
US ready to lend Poland $4 billion for nuclear energy plan. (AP)
Seizing crypto-mining equipment has ‘saved Kosovo millions.’ (Balkaninsight)
Díaz-Canel reelected as President of Cuba. (Mercopress)
Bukele blocks release of IMF annual report on El Salvador economy. (El Faro)
‘Criminalizing journalism’: Salvadoran outlet El Faro to relocate. (Al Jazeera)
Venezuela corruption probe snares another former top PDVSA executive. (Reuters)
Russian FM kicks off Latin American tour in Brazil. (Mercopress)
Japan steps up diplomacy to avoid ‘losing’ Global South to China. (Nikkei)