Saturday, August 5
SECOND BITE AT THE APPLE
Iran’s president begins a second term to deliver on reform promises
Today, Iranian President Hassan Rouhani will be sworn in for his second term.
Rouhani’s biggest priority is revitalising and liberalising Iran’s moribund economy, which has suffered from 38 years of sanctions and outdated business practices. Rouhani hopes to follow up on his first-term success in lifting sanctions via the Joint Comprehensive Plan of Action by improving business ties with the West to inject foreign investment into the economy.
Growth will be key to sustaining Iranian reformism, as Rouhani has faced criticism for failing to deliver the higher living standards that he promised would result from negotiating with “the Great Satan.” Rouhani’s economic agenda faces domestic resistance, as the powerful Iranian Revolutionary Guard Corps is reluctant to expose its grip on the economy to foreign competition and Supreme Leader Khamenei has called for a “resistance economy.” Further complicating matters, US President Donald Trump has openly discouraged foreign investment in Iran and signed new sanctions on Wednesday.
However, Iran has successfully negotiated notable business deals with Europe, including a $5 billion natural gas development project with French conglomerate Total. With a reformist plurality in the Iranian parliament, Tehran is set to move slowly towards integration with the world economy.
DEMOCRACY DISBANDED?
Mauritania holds referendum on abolishing key institutions
Today, Mauritania will hold a referendum on a series of constitutional amendments, the most consequential of which will abolish the country’s upper parliamentary house and top court, which President Mohamed Ould Abdel Aziz claims are corrupt and inefficient.
Opposition figures in the west African state claim the measures will shred the country’s system of checks and balances. The referendum’s campaign cannot be considered fair; the “no” camp is only granted a fraction of airtime by state television and radio stations.
Anti-referendum protesters have demonstrated daily since July 21, resulting in numerous arrests and injuries and reports of liberal use of beatings and tear gas by security forces. While no official polling has been conducted, the opposition’s declared abstention from voting certainly helps President Aziz’s chances.
Should the referendum pass, and mass protests ensue, spill-over political crises could erupt in any of Mauritania’s vulnerable neighbours—particularly Mali.
To Mauritania’s east, Mali’s government has had trouble regaining control of its northern region after a coup and subsequent insurgency.
Given the instability of Mali’s other neighbours, mainly Niger and Burkina Faso, political tumult in Mauritania could jeopardize the Sahel’s teetering law, order, and democratic institutions.
Delve deeper: Sahel strive: military responses without peacebuilding?
TAX TURBULENCE
Rocky start for India’s GST but outlook positive
India’s GST council meets today to review the nascent sales tax and discuss any issues that accompanied its implementation.
The council will address the initial hit taken by the Indian economy following the tax’s July 1 rollout. The excise’s five tax brackets confused consumers and producers alike, causing supply and demand of goods and services to slow. India’s Purchasing Managers’ Index, which measures economic activity across manufacturing and service industries, sank to its lowest since 2009.
Regardless, once producers adjust to filing tax returns on the GST Network and consumers acclimate to price changes, economic activity is expected to rebound.
Today’s meeting will also likely see some contend that the GST has not gone far enough to unify taxes across products and increase the ease of doing business within the country. In order to attract foreign investment, and encourage domestic economic activity, the Modi government may look to reduce the number of tax brackets from five to one or two. Such a proposal would face staunch opposition from business owners who would like to maintain low taxes on their goods.
HAPPENING ELSEWHERE…
Mercosur, the largest South American trade organisation, is expected to announce the suspension of Venezuela’s membership. The bloc will likely invoke the so-called “democracy clause”, which seeks to punish member-states for subverting democratic institutions and governance. The move is reportedly in response to the creation of a pro-government assembly designed to subvert the opposition-held legislature and, ultimately, rewrite the constitution. Suspending Venezuela from Mercosur will further isolate Maduro but will do little to end the country’s political crisis.
Provisional results are expected in Rwanda’s presidential election.