Thursday, February 9

SOUTH AFRICA: STATE OF TURMOIL

South African President Jacob Zuma will deliver his fourth State of the Nation Address on Thursday. While Zuma is expected to outline a plan for much-needed economic reforms, allegations of corruption and a deeply divided parliament could hamstring their implementation.

Last year’s address resulted in chaotic scenes. Scuffles broke out when opposition lawmakers interjected the president’s speech with allegations of corruption, leaving one MP with a broken jaw. This year Mr Zuma has moved to head off any such issues by mobilising 450 soldiers. This too has provoked protests from opposition parties, who say the embattled president is trying to intimidate them.

While Mr Zuma has shown himself to be a true political survivor – weathering multiple no-confidence votes in recent years – investor confidence is not as resilient; the country’s currency depreciates 2.5% each time the president’s position is put to the test.

Corruption allegations aside, South Africa’s economy faces an uphill battle. While stagnant growth is expected to pick up, unemployment has soared to a 13-year high of 27%. Poor economic management and political disunity could see South Africa’s credit rating descend to ‘junk’ status – a fate it narrowly avoided last December.

Although the tone of Thursday’s speech may encourage those craving reform, it’s unlikely the fractured parliament can reconcile with Jacob Zuma as President.

HAPPENING ELSEWHERE…

The presidents of Greek and Turkish Cyprus will meet again in Nicosia to try and iron out a deal to reconcile the divided island. Multiple sticking points remain, most significantly disagreements over territory swaps. The two leaders are expected to hold weekly meetings throughout February.

Workers at BHP Billiton’s Chile’s Escondida copper mine, the world’s largest, will strike over pay demands. The mine produces more than 5% of the world’s copper, which is used in everything from electronics to plumbing.

Tensions continue to rise between former allies Belarus and Russia. Last week, Belarus announced some 80 countries (including the US) would be granted visa-free access for short-term visits, a policy that comes into effect on Thursday. In response, Russia has instituted strict new border controls (previously there were none at all).

Indonesia’s foreign minister will visit Singapore on a trip that marks 50 years of diplomatic ties between the Southeast Asian neighbours. The finalisation of a maritime border treaty will top the agenda, as well as cooperation on regional security issues including terrorism, piracy and tensions in the South China Sea.

Italy’s struggling Monte dei Paschi di Siena, a bank, will announce its earnings – or rather, losses, which are expected to top $2 billion. Recently, the Italian government promised to inject some $7 billion to help stabilise the over-leveraged institution, Italy’s third oldest.

European Central Bank President Mario Draghi will hold talks with Angela Merkel in Berlin.

French oil giant Total will report earnings.