Malaysia's Najib faces further test in August

Subject The Malaysian cabinet reshuffle's implications. Significance Prime Minister Najib Razak is reasserting himself politically amidst the 1Malaysia Development Berhad (1MDB) investment fund controversy. On July 28, he reshuffled his cabinet, removing the deputy prime minister and other officials investigating the affair; and on August 3, he called on the Malaysian Communications and Multimedia Commission to develop tighter controls against slander in online political speech. Impacts Najib will use the reshuffle to reassert his national development goals, but Malaysian economic difficulties may constrain him. Najib will continue moving against critics, potentially attempting to remove state chief ministers perceived as challenging him. A state-level backlash against Najib is possible; policy disruption could follow.

Subject The Mexican government's advances towards greater gender equality. Significance President Enrique Pena Nieto has been active in promoting gender equality at home and abroad, and his government has repeatedly voiced its commitment to the UN's Millennium Development Goals, particularly regarding female empowerment. The Pena Nieto administration included a gender dimension in its National Development Plan for the first time, and has allocated significant resources to supporting women. Efforts have focused not only on the federal level, but also at state level, as illustrated by the signing of a collaboration agreement in December 2015 between the government and the National Conference of Governors. Impacts Bridging the gender gap across all government levels will be an expensive and difficult task, with uneven success across the country. Any reductions in domestic violence rates will require long-term efforts to change attitudes from the bottom up. Quotas that encourage the employment of women, regardless of merit, may perpetuate politics' reputation for being corrupt and nepotistic.


Significance The reshuffle involves some significant changes, including the promotion of Economy Minister Nadia Calvino as first deputy prime minister. Other notable changes include new ministers at the head of foreign policy and territorial policy, which deals with relations with Catalonia. Impacts Sanchez has increased the number of women and young people in the new cabinet; this could broaden his appeal among centrist voters. While Madrid will continue to respect EU policy parameters, Sanchez’s continued reliance on UP and ERC support will worry investors. Sanchez’s leadership of the PSOE could come under threat if he is seen as ‘giving too much’ to Catalan nationalists.


Subject Political outlook for Malaysia's prime minister. Significance This year's United Malays National Organisation (UMNO) general assembly, which concluded on December 12, emphasised unity in the face of some party fragmentation. Party leader and Malaysian Prime Minister Najib Razak used the meeting again to reject criticisms surrounding his government over the 1Malaysia Development Berhad (1MDB) state investment fund and political contributions. Despite infighting, the party assembly and some recent parliamentary victories imply Najib is consolidating his political position. Impacts Some UMNO critics of Najib may defect, but with a weak opposition coalition, defectors' influence would be limited. New security council legislation will alienate parts of Malaysian civil society. The government will face international pressure not to 'abuse' this legislation.


Subject Political changes in Kazakhstan. Significance President Nursultan Nazarbayev has carried out the largest government reshuffle in two years, promoting Deputy Prime Minister Bakytzhan Sagintayev to head the cabinet and placing the outgoing prime minister, Karim Massimov, in charge of the security ministry. Nazarbayev's aims are twofold: to bring in fresh faces to tackle grave economic challenges, and to ensure his security services are able to clamp down on a rising terrorism problem. Impacts The government's top priorities will be to avert protests driven by economic conditions and deal with militant threats. Massimov's security measures will be complemented by the religious affairs ministry's scrutiny of radical Islam. Nazarbayev will seek to manage the succession to preserve his political legacy and his family's interests.


Subject 'Competitive federalism'. Significance Since Prime Minister Narendra Modi took office in May 2014, India's drive for economic development has placed renewed emphasis on 'competitive federalism' in which the states, rather than the federal centre, play the leading roles. Yet not all states have an equal capacity for self-development. There are risks that growth will become more skewed and social inequalities deepen. Impacts Growth driven by non-industrial sectors is essential for some states, but out of favour with the centre. Institutional protections on social spending are being eroded, despite vast demographic needs -- and risks. Regional growth -- and deprivation -- may come to hinge increasingly on state-level political leadership with declining central mediation.


Subject Malaysia's political outlook following the Bersih 4 protests. Significance Former Prime Minister Mahathir Mohamad is to be officially questioned about his presence at the 'Bersih 4' mass protests organised by the Coalition for Clean and Fair Elections (Bersih) on August 29 and 30, local press reports said today. By allowing the rallies to proceed peacefully, Prime Minister Najib Razak had sought to extend the political respite brought by his July 28 cabinet reshuffle. His position nationally and within the governing United Malays National Organisation (UMNO) is under threat amid political difficulties relating to the 1Malaysia Development Berhad (1MDB) national investment fund. Impacts The Malaysian parliamentary opposition's weakness means civil society will provide most opposition to the government for now. The Bersih movement's mostly urban support limits its challenge to the government, which enjoys strong rural support. Public doubts about the effectiveness of Malaysian anti-corruption frameworks will stunt their development.


Significance Bringing the poll forward could be risky for Prime Minister Lee Hsien Loong's People's Action Party (PAP), as it faces a new opposition party and worsening economic conditions. Impacts Tan Cheng Bock will at the next election attempt to unite the opposition behind his Progress Singapore Party. Deputy Prime Minister Heng Swee Keat will likely succeed as prime minister when Lee eventually leaves the post. Singapore's economy is unlikely to benefit from any large-scale redirecting of investment from Hong Kong, despite the protests there.


Significance Without explicitly saying so, the proposals create a menu of options for Putin's future role now that he has made it clear he will not be president after 2024. Putin has been under pressure to make his intentions clear, especially as the established elite must fear the loss of their patron. Impacts Further statements by Putin are likely to be just as ambiguous on his plans for himself and the state. The prospect of a weaker presidency is a setback for elite figures biding their time to make a bid. Once a new cabinet settles in, it will come under close scrutiny for its delivery of Putin's national development goals.


Subject Cambodia's 'culture of dialogue'. Significance Interior minister and deputy prime minister Sar Kheng, of the ruling Cambodian People's Party (CPP), will meet opposition Cambodia National Rescue Party (CNRP) co-leader Sam Rainsy on October 1 after a similar September 23 meeting. Publicly, such meetings, notionally to discuss forthcoming legislation, characterise the 'culture of dialogue' between the CPP and CNRP. However, the July imprisonment of opposition-linked activists, passage of a controversial civil society law and the August arrest of an opposition senator, raise concerns about the robustness of the rapprochement. Impacts The opposition will focus on sensitive popular issues to gain support, including official corruption and judiciary politicisation. The CPP will use the security forces and judicial apparatus to constrain its opponents. Limitations to civil society freedoms could stoke local unrest over land and human rights.


Significance The falling lira coincides with signs of policy disagreements and rumours of Deputy Prime Minister Mehmet Simsek's resignation. President Recep Tayyip Erdogan and his Justice and Development Party (AKP) want to maintain rapid GDP and employment growth ahead of the 2019 electoral cycle. However, given the unfavourable global financial environment, pro-growth policies could exacerbate lira weakness, high inflation, financial risks and the wide current-account deficit, and eventually cause a sharper slowdown in the economy. Impacts Economic performance will continue to depend largely on external factors including Turkey’s relations with the West and its neighbours. GDP will slow from last year’s extraordinary level but the timing, steepness and disruption caused are less certain. Investor wariness and sliding lira may help a soft landing, sending a warning signal, cutting import demand and increasing external debt.


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