Trump Dominates Super Tuesday

Following former President Trump’s domination on Super Tuesday, candidate Nikki Haley has withdrawn from the U.S. presidential race. In addition, the Supreme Court has unanimously decided that states do not have the authority to remove Trump from the ballot for president (though they did not decide on whether or not insurrection was committed on January 6). Now Haley has dropped out of the election, President Biden will face Trump again in November.

The current polling has Trump slightly ahead of Biden in a head-to-head election, but the general economic indicators for the election remain mixed. Unemployment is at 3.7% and 2024 GDP growth was 2.5%, but inflation is still too high for interest rate cuts that are needed to bring down mortgage rates. Inflation is a critical indicator for voting because of how it negatively impacts the middle and working classes. The Federal Reserve still targets 2% inflation sustainably before committing to cuts. However, cultural issues remain at the forefront for many voters, and both Trump and Biden appeal/repulse voters based on those issues. They also deeply galvanize the base of the parties.

All of this means that the current most likely scenario for the election is 50% for either candidate, and therefore, corporations need to prepare for political risks and opportunities from either candidate winning. There are highly likely to be protests throughout the election, especially over the cultural issues mentioned above. Corporations will face incidental risks from such protests. 

Insight Forward can help clients navigate the difficulties of political and security risks related to the US election based on their particular interests.

Haiti Entered State of Emergency Over Gangs

Haiti declared a state of emergency on March 3 after armed gang members earlier attacked two major prisons, freeing approximately 3,700 inmates, and killing at least 12 people. The armed gangs also attempted to seize the capital’s main airport along with government buildings, and they currently control about 80% of Port-au-Prince. There are two primary gangs that are seeking control of the capital: G9 Family and G-Pep, and even though Kenya has pledged law enforcement support, which is extremely unlikely to be effective if the police officers do make it to the island nation. In response to the gang activity, the Dominican Republic put its military on alert, and the US embassy encouraged the evacuation of its citizens. The US has specifically stated it will not intervene, but Russia’s Wagner Group and China are considering some support (China doing so to turn Haiti away from Taiwan). Gang leader Jimmy “Barbecue” Chérizier has made this explicitly political, stating that “the battle we are waging will not only topple Ariel’s government. It is a battle that will change the whole system.” Haiti’s interim leader Ariel Henry was meant to leave office on February 7, but he has continuously pushed back elections. The situation is extremely likely to further deteriorate, and any organizations operating there will face significant security risks.

Ramadan Increase Likelihood of Terrorism

The Palestinian Islamic Jihad has called for Ramadan to be a “month of terror” as the terrorist group hopes to escalate violence in the West Bank and Gaza. Abu Hamza, the spokesman of the al-Quds Brigade, advocated for Arab countries and pro-Iranian groups to “unify” against Israel and attack from multiple fronts. Israeli security assessments indicate that there will be a general increase in terrorism in the region during Ramadan, and some Western governments are concerned the continued war in Gaza will lead to attacks in their countries as well. Generally, there is usually increased terrorism during Ramadan, but the targets are significantly more likely to be Israeli and Western this year because of the current conflict.

Egypt Secures Funding From IMF

Egypt secured an expanded deal with the IMF for $9.2 billion dollars in development and environmental sustainability loans the same day the Egyptian central bank devalued its currency and raised interest rates 600 basis points in the hope of stabilizing the economy. With the devaluation, the Egyptian pound went from 30.85 to over 50 to the dollar. The IMF had demanded a more flexible exchange rate, which is typically better for currencies and consumers over the long term even though there are short-term problems. Previously, Egypt has moved towards a flexible exchange rate and then quickly moving back to managing the currency. These changes are likely to be positive for Egypt in a few years, but there will be economic instability over the short term as the economy attempts to correct the problems.

Chinese Premier Wants More Economic Growth

Chinese Premier Li Qiang has declared a goal for 5% economic growth in 2024 as the National People’s Congress (NPC) begins its annual meeting. This comes as China confronts considerable economic difficulties, with its real estate market in decline, a manufacturing sector affected by earlier Covid policies, and city governments facing substantial debt. Li also stated that China would spend more on defense, and he took a harder line on Taiwan. Such growth is extremely unlikely because of the major structural problems China faces, such as deflation, debt, and depopulation. Corporations are likely to face investment issues in the country over the medium term as the CCP attempts to manage these problems, though they are unlikely to be successful with the current policy approaches.

Philippine and Chinese Ships Clash

On March 5, the Philippines and China had a diplomatic spat when Chinese vessels blocked and then collided with Philippine coast guard ships near the disputed Second Thomas Shoal in the South China Sea. Four members of the Philippine crew were injured in the event, and the Philippines said China was attempting to “illegally impede or obstruct a routine resupply and rotation mission.” China stated that the Philippines’ ships illegally entered their territory. In 2016, the Permanent Court of Arbitration ruled that China has no legal basis to claim the Second Thomas Shoal, which the CCP rejected and why they continue to send ships there in protest. Although this is not a unique security event, it does demonstrate a risk for corporations focused on friendshoring to places like the Philippines because supply chains can still be disrupted when goods are moved through the South China Sea.

Europe Pursues Improved Defense Industrial Base

On March 5, the European Commission proposed mechanisms for the EU to increase its arms industry so the continent can move towards “war economy mode” over Russia’s continued war on Ukraine. The goal is for EU countries to purchase more weapons from European companies so those companies can increase their production capacity. This is also in response to the possibility of Donald Trump getting reelected in the United States because Trump is hostile towards NATO and supporting European defense. While any improvement to Europe’s military-industrial complex will take several years, the fact the European Commission has set this goal strongly indicates that Europe will pursue different ways to bolster their own defenses separately from the Americans, which will have a long-term negative impact for the US’s foreign policy goals in the region. However, it could mean better industry for Europe as a whole.

Ghana Passes anti-LGBT Bill

Ghana’s legislature passed a bill criminalizing LGBT activities and organizations, but the finance ministry, central bank, and national revenue authority have argued the president should not sign the legislation due to financial issues. If the legislation moves forward, then the World Bank would remove $3.8 billion in funding, and the IMF would stop dispersing the $3 billion bailout. The World Bank suspended the funding of Uganda when it passed a similar bill in May 2023. Suspension of funding would significantly disrupt the Ghanian economy, which would have negative regional impacts. However, this is an important demonstration of the conflict between Western governments and Africa when it comes to religious issues. Many African countries are more religiously conservative than Western countries, and this puts their values at odds with each other. Despite the potential financial problems, African nations may choose their religious values and cultural traditions over Western money, and that will significantly reduce Western influence in the great power competition happening on the continent.

 New Research by Insikt Group on Predator Software

“New research from Recorded Future’s Insikt Group examines newly discovered infrastructure related to the operators of Predator, a mercenary mobile spyware. This infrastructure is believed to be in use in at least eleven countries, including Angola, Armenia, Botswana, Egypt, Indonesia, Kazakhstan, Mongolia, Oman, the Philippines, Saudi Arabia, and Trinidad and Tobago. Notably, this is the first identification of Predator customers in Botswana and the Philippines. Despite being marketed for counterterrorism and law enforcement, Predator is often used against civil society, targeting journalists, politicians, and activists, with no specific victims or targets currently identified in this latest activity.”