Middle East/North Africa

• Over the past month, Syrian rebels led by Hayat Tahrir al-Sham (HTS) advanced rapidly from Idlib to Damascus, toppling President Bashar al-Assad and marking the end of his 13-year rule on December 8th. HTS now controls most major cities along Syria’s western corridor, while Kurdish-led forces hold much of the northeast, and Turkish-backed rebels dominate areas along the Turkish border, though internal clashes between factions remain a challenge. Israel has conducted over 350 airstrikes since Assad’s fall, targeting military facilities to prevent weapons proliferation, and temporarily seized parts of the Golan Heights. Meanwhile, Russia, having secured 49-year leases on key military bases in Latakia and Tartous during the Assad regime, is negotiating their future with Syria’s new leadership.
• The 14-month Israel-Hamas war, beginning on October 7, 2023, has resulted in over 45,000 deaths in the Gaza Strip, including a reported 52 fatalities within the last 24 hours as of December 16th, with mediation efforts from Qatar, Egypt, and the US ongoing. While Israel claims 17,000 militant casualties, Palestinians report heavy civilian tolls amid relentless bombings in densely populated areas like Gaza City, Khan Younis, and Nuseirat. Meanwhile, a fragile ceasefire brokered by the US and France took effect in Lebanon on November 27th, ending a thirteen-month conflict between Hezbollah and Israel sparked by the October 7 Hamas attack. Despite the agreement, which requires Israel Defense Forces (IDF) to withdraw from Lebanon within 60 days, Israeli forces have continued to advance and conduct airstrikes, with France reporting 52 Israeli ceasefire breaches by December 1st. Hezbollah, struggling with leadership losses and Israeli intelligence penetration, fired mortars and rockets in retaliation, but Israel has responded with intensified airstrikes.
• On November 21^st, the International Atomic Energy Agency (IAEA) censured Iran for obstructing nuclear inspections and secretly enriching uranium to 60%, close to weapons-grade levels, potentially triggering renewed sanctions. The resolution, proposed by the US, UK, France, and Germany, passed with a 19-3 vote (12 abstentions), opposed by Russia, China, and Burkina Faso, despite Iran’s lobbying efforts to avoid condemnation. Iran retaliated by announcing the operation of advanced centrifuges while signaling a willingness to negotiate, emphasizing its desire for economic benefits and reduced tensions. The resolution followed IAEA reports detailing Iran’s expanding uranium stockpile, its September 2023 ban on inspectors, and its undermining of the Nuclear Nonproliferation Treaty.
• Last month, Turkey and Qatar signed multiple agreements during the Turkey-Qatar High Strategic Committee meeting in Ankara, co-chaired by Turkish President Tayyip Erdogan and Qatar’s Emir Sheikh Tamim bin Hamad al Thani. These agreements covered trade facilitation, military cooperation, and technical collaboration, reinforcing the bilateral partnership. The visit followed Qatar’s announcement of pausing mediation efforts between Hamas and Israel over a Gaza ceasefire and hostage release, citing a lack of commitment from both sides. Turkey, a critic of Israel’s actions in Gaza and Lebanon, maintains relations with Hamas, which it does not designate as a terrorist group.
• Market Implications: The recent events in the Middle East and North Africa (MENA) region are likely to have profound financial and geopolitical implications for regional markets. In Syria, the fall of the Assad regime disrupts a major axis of influence for Iran and Russia. This shift could destabilize the broader Levant, with potential impacts on neighboring markets like Lebanon and Jordan. Syria’s reconstruction could spur investment opportunities, but instability driven by competing factions and ongoing violence poses risks to investor confidence and trade flows. Moreover, Turkey’s growing influence, particularly through its backing of rebel groups, may boost Ankara’s economic and geopolitical leverage in the region while heightening tensions with other players such as Iran and Israel. Iran’s censure by the UN nuclear agency adds to its international isolation, likely exacerbating economic sanctions and further straining its economy. This development could lead to higher oil market volatility, as Iran’s role in global energy supply remains significant. A prolonged standoff may also redirect trade and energy routes, impacting oil-importing nations in the region. Turkey and Qatar’s bilateral agreements, spanning energy, trade, and defense, signal stronger economic collaboration. This could elevate Doha and Ankara as regional hubs for foreign investment, particularly in LNG exports and infrastructure projects. These agreements also solidify a counterbalance to Gulf rivals, reshaping trade dynamics in MENA.

Asia (Ex-China/India)

• Last week, South Korean President Yoon Suk Yeol was impeached by the National Assembly after his brief declaration of martial law on December 3rd sparked national outrage and protests, drawing comparisons to the country’s past military dictatorships. The impeachment passed with 204 votes in favor and 85 against, including support from 12 members of his party. Prime Minister Han Duck-soo assumed interim leadership as the Constitutional Court, within six months, will determine whether to permanently remove Yoon, who faces charges of insurrection punishable by death or life imprisonment under South Korean law. Yoon’s presidency, which began in 2022, saw significant efforts to mend ties with Japan, including resolving historical disputes and improving public perceptions. Concerns are rising in Japan about how the situation will affect diplomatic and security relations, which Yoon had been improving. Japanese Prime Minister Shigeru Ishiba expressed worries about the potential negative impact on Northeast Asia’s security, especially with North Korea’s recent activities.
• Nepal and China signed a framework agreement under the Belt and Road Initiative (BRI), breaking a seven-year deadlock since the initial pact in 2017, to move forward with infrastructure projects like road upgrades and transportation corridors. During a four-day visit to Beijing, Nepal’s Prime Minister K.P. Sharma Oli prioritized this partnership with China over traditional ties with India, signaling a shift in Nepal’s foreign policy approach. Concerns over debt have caused internal debates within Nepal, with the Nepali Congress party opposing projects funded by loans, as seen with the $216 million Chinese-funded Pokhara airport, which has faced operational challenges due to India’s refusal to grant airspace access. The agreement marks a significant step toward bilateral cooperation, though details on project specifics and financing have yet to be clarified.
• Japan and Italy signed the Acquisition and Cross-Service Agreement (ACSA) in Rome, aiming to enhance bilateral defense cooperation by facilitating acquisitions, supplies, and military exchanges and ensuring rapid mobilization for emergencies. Italian Defense Minister Guido Crosetto and Japanese Foreign Minister Takeshi Iwaya officiated the agreement, which underscores their partnership with Britain on the Global Combat Air Program (GCAP), a project to develop a next-generation fighter jet by the mid-2030s. Iwaya’s visit also included participation in a G7 Foreign Ministers meeting in Italy later that day.
• Last month, Malaysian Prime Minister Anwar Ibrahim and South Korean President Yoon Suk-yeol announced the establishment of a Strategic Partnership in Seoul, aimed at deepening cooperation in defense, trade, green energy, and critical minerals. The partnership builds on Malaysia’s $920 million purchase of 18 FA-50M fighter jets from South Korea in 2023 and includes plans for increased defense exchanges, joint R&D, and military technology collaboration. Both nations aim to finalize a free trade agreement by 2025, marking the 65th anniversary of their diplomatic relations, and expand bilateral trade, which reached $25 billion in 2023. During Anwar’s visit, Malaysian officials signed agreements on critical mineral supply chains and carbon capture, while Anwar pitched Malaysia as a hub for South Korean investment in semiconductors, EVs, and AI to representatives from 147 South Korean companies.
• Market Implications: The declaration and swift revocation of martial law in South Korea created substantial market volatility, with the KOSPI index dropping over 2% initially and the Korean won weakening against the US dollar. While emergency measures, such as a $7 billion stabilization fund, were announced, the political uncertainty could dent investor confidence, potentially lowering South Korea’s sovereign credit rating. This instability may slow foreign investment and consumer spending, impacting the broader Asia-Pacific market. The deepening defense ties between Japan and Italy highlight strategic shifts in response to global security challenges. While this agreement might strengthen Japan’s defense sector, it could also lead to increased military spending. Such expenditure might spur demand in defense-related industries but could weigh on fiscal stability, influencing bond yields and investor sentiment in Japan’s equity markets. The upgraded ties between Malaysia and South Korea, alongside the push to finalize a free trade agreement, signal economic opportunities. This could enhance trade flows and investments in both nations, particularly in the technology and manufacturing sectors. However, political instability in South Korea might slow progress on the deal, dampening potential market gains.

Latin America

• Left-wing candidate Yamandu Orsi, from the Frente Amplio (Broad Front) alliance, won Uruguay’s presidential runoff, defeating conservative Alvaro Delgado of the National Party. Orsi secured 1,123,420 votes (52.0%) compared to Delgado’s 1,042,001 votes (48.0%), marking a shift to the left after five years of center-right governance under President Luis Lacalle Pou. The victory was seen as a continuation of Orsi’s ties to former president José Mujica, who supported his campaign, though Orsi promised no radical changes in economic policies. Uruguay’s next government will address ongoing concerns about crime, economic recovery from COVID-19, and the effects of a historic drought, with Orsi set to govern with a Senate majority.
• Leaders of the Mercosur trade bloc and the European Union (EU) announced the conclusion of negotiations on the EU-Mercosur Partnership Agreement after over two decades of discussions. This agreement, which still requires ratification by member states before implementation, will integrate two of the world’s largest economic blocs, encompassing 718 million people and a combined GDP of approximately $22 trillion. The deal will eliminate tariffs on 91% of goods traded between Mercosur and the EU, with varying reduction schedules ranging from 4 to 30 years. This landmark agreement aims to boost economic growth and sustainability by promoting trade, investment, and integration between Mercosur and the EU while addressing key areas like environmental commitments, critical minerals, and the automotive sector.
• China Development Bank signed a deal to loan 5 billion yuan (approximately $690 million) to Brazil’s National Bank for Economic and Social Development (BNDES), marking BNDES’s first foreign currency operation. The agreement was part of a larger package of 37 deals signed during Chinese President Xi Jinping’s visit to Brasilia. The three-year loan will support BNDES credit lines for various projects across different sectors. BNDES President Aloizio Mercadante emphasized that the loan would help diversify funding sources and provide exchange rate protection for Brazilian entrepreneurs, especially exporters.
• Barbados finalized a debt-for-climate swap, a pioneering financial model for climate adaptation, in collaboration with organizations like the Inter-American Development Bank (IDB) and the European Investment Bank (EIB). This deal generated $125 million in fiscal savings, earmarked for bolstering water resource management and fortifying food security through investments in water and sewage projects resilient to climate change. Separately, following tense negotiations at the COP29 climate conference in Baku, Azerbaijan last month, a controversial agreement was struck, setting a goal of $300 billion in annual climate funding from wealthy nations to assist developing countries in mitigating climate pollution and adapting to climate change threats. However, this sum falls significantly short of the $1.3 trillion that developing nations had requested, prompting criticism from representatives of those countries.
• On December 4th, Cuba’s national power grid collapsed after the Antonio Guiteras power plant in Matanzas, the country’s top electricity producer, shut down at 2 AM. This outage left millions without power, including most of Havana, with only a few large hotels and government buildings having electricity. The Cuban Ministry of Energy and Mines worked to restore power, with Minister Vicente de la O Levy assuring that full service would be restored by the following day. This collapse is the latest in a series of Cuban grid failures exacerbated by outdated oil-fired power plants, dwindling fuel imports, and the broader economic crisis, including the impact of Hurricanes Oscar and Raphael in recent months.
• Market Implications: Yamandú Orsi’s election as Uruguay’s president signals a shift toward center-left policies, likely prioritizing social spending and regional integration. With Uruguay’s economy recovering from drought and COVID-19 impacts, Orsi’s government is expected to strengthen ties within Mercosur and focus on inclusive growth. This could attract investment in public infrastructure and renewable energy while potentially boosting regional trade confidence. The pending EU-Mercosur trade deal could open a transatlantic market for over 700 million people, enhancing exports from Latin America, particularly agricultural goods. However, resistance within the EU, especially from agricultural sectors concerned about competition, creates uncertainty. The $690 million yuan-denominated loan agreement between Brazilian and Chinese development banks underscores deepening economic ties with China. This diversification of financial instruments reduces dependency on the US dollar and promotes cross-border trade in local currencies. The debt-swap deals signed by Barbados for climate financing represent a transformative model for sustainable development in the region. Combined with the $300 billion annual funding pledged at UN climate talks, this trend could drive investment into renewable energy, coastal resilience, and other green initiatives. In summary, these developments indicate opportunities for economic growth and regional integration, but risks from political resistance and global market dynamics remain. 

Sub-Saharan Africa

• Former President John Mahama won Ghana’s presidential election on December 7 with 56.6% of the vote, defeating Vice-President Mahamudu Bawumia, who secured 41.6%. This marks the largest margin of victory in Ghana in 24 years, with a voter turnout of 60.9%. Mahama’s National Democratic Congress (NDC) also made history by electing Jane Naana Opoku Agyemang as the country’s first female Vice-President. Amid Ghana’s severe economic crisis, Mahama’s victory comes as a response to high unemployment, rising living costs, and environmental concerns, with Mahama promising to create a “new beginning” and transform the country into a “24-hour economy.”
• Netumbo Nandi-Ndaitwah of the South West Africa People’s Organisation (Swapo) was elected Namibia’s first female president in the disputed election held in late November, securing 57% of the vote. Her closest rival, Panduleni Itula of the Independent Patriots for Change (IPC), received 26%, but his party plans to challenge the results in court due to logistical issues and allegations of electoral mismanagement. Despite these disputes, Nandi-Ndaitwah, who has served as vice president since 2015, was congratulated by South African President Cyril Ramaphosa and will become Africa’s second female president. In the same election, Swapo retained its parliamentary majority but saw its lowest performance since Namibia’s independence, with a 51-seat win out of 96.
• Peace talks between Rwanda and the Democratic Republic of the Congo (DRC), mediated by Angola, were called off on December 15th due to disagreements over direct talks between the DRC and the M23 rebel group. The talks were meant to address the ongoing conflict in eastern DRC, where the M23, accused by the DRC and the UN of being backed by Rwanda, has seized large territories, displacing thousands. Rwandan President Paul Kagame was expected to attend but did not, as his delegation refused to engage over the issue of direct negotiations with the rebels. The conflict has led to one of the largest humanitarian crises, with over seven million people displaced, as fighting continues despite previous ceasefire agreements.
• On November 25, Zambia and Zimbabwe experienced nationwide blackouts after power outages struck both countries around 8:15 PM. The power cuts were caused by dwindling water levels in the Kariba Dam, the main source of hydropower for both nations, which had been providing only about seven hours of electricity daily due to the drought. In Zambia, power was restored within 30 minutes at the University Teaching Hospital, with investigations underway to prevent future disruptions. The Zimbabwe Power Company reported a similar issue, and by the next morning, most load centers had resumed operations, with the water level at Kariba Dam recorded at only 2.4% of capacity on November 18.
• Protests have ignited across Mozambique, notably in the capital city of Maputo, following a disputed election in October. Venâncio Mondlane, the independent candidate, challenged the declared victory of Frelimo’s Daniel Chapo, who officially secured 71% of the votes. Mondlane alleged electoral irregularities and mobilized supporters to challenge the longstanding rule of Frelimo, in power since the country’s independence from Portugal in 1975. This social uprising, fueled by anger over unemployment, corruption, and police brutality, has resulted in over 100 casualties, with reports of children being shot dead amidst the chaos. The dire economic situation, marked by an average annual income of just $600 per person, further exacerbates the unrest.
• Market Implications: The Sub-Saharan African markets are on the brink of significant changes due to recent political and economic developments across the region. John Dramani Mahama’s victory in Ghana marks a potential shift toward more populist economic policies, including efforts to address youth unemployment and enhance social programs. This could improve investor sentiment in the medium term, particularly in sectors such as education, healthcare, and technology. However, Ghana’s existing debt challenges may require Mahama to balance fiscal expansion with austerity measures to avoid destabilizing its credit ratings. In Namibia, the election of Nandi-Ndaitwah as the first female president signifies a progressive shift that might attract increased foreign investment, particularly in industries like renewable energy and infrastructure. Namibia’s policies could prioritize inclusivity and sustainability, enhancing its appeal to ESG-focused investors. Angola’s facilitation of peace talks between the Democratic Republic of Congo (DRC) and Rwanda is another positive development. Stability in this region could unlock significant potential in mining and trade. Enhanced regional cooperation could also attract foreign direct investment, particularly in resource-rich industries. Conversely, Zimbabwe and Zambia’s challenges with blackouts and droughts present risks. Prolonged power outages and climate-related issues may deter investment, especially in manufacturing and agriculture. However, these issues could spur increased interest in renewable energy solutions and climate resilience investments.

Recommended Reads

The Saudi Solution?

Maria Fantappie and Bader Al-Saif, Foreign Affairs

The surprising stagnation of Asia’s middle classes 

The Economist

Latin America’s Food Paradox

John Otis, Americas Quarterly

Africa’s Rural Economies Are Being Completely Transformed

Liam Taylor, World Politics Review