This week, the British government delivers the Article 50 notification with much fanfare (and many bad puns), Russia's presidential race kicks off noisily and South Africa's political infighting becomes acute.
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Here we go!
The Noise This Week
In South Africa, President Jacob Zuma is busy working to justify our call that infighting within the country's leadership is one of the top political risks of the year. After months of rumors, Zuma pulled the trigger yesterday on a cabinet reshuffle that removed Finance Minister Pravin Gordhan and his deputy, despite fears that the decision would appear politically motivated and spook markets. Removing his finance minister helps Zuma consolidate control of the ANC ahead of a party conference that will determine the leadership heading the next national election. It will come at the expense of financial stability, though, and a number of ministers opposed to Zuma may resign in sympathy. Zuma will likely prevail in his intra-party struggle — having replaced a well-liked finance minister once before, he knows what he's in for — but the future of the ANC as South Africa's dominant political force is now more in question than ever.
Meanwhile, Russia reminded the world this week that it has not just politics but a political opposition when Alexei Navalny's media-friendly, anti-corruption movement staged protests. Critically, demonstrations broke out not just in liberal-friendly big cities like Moscow but around the country. Russian President Vladimir Putin is too powerful to be targeted directly by the opposition, so the protests tried a bank shot, focusing on Prime Minister Dmitry Medvedev's alleged corruption. With Putin certain to win next year's presidential election, a more interesting question is whether Medvedev is too big to fail, or if the two will continue their buddy-presidency indefinitely. (Putin made a point of appearing in public with him this week.) Even authoritarians need public support, and easily documented corruption is a threat that even Putin may have to pay attention to.
Elsewhere, China's plans for an extradition treaty with Australia ran aground after Chinese authorities made a politically sensitive arrest during a visit by the Chinese premier to Australia. The optics of the arrest's timing made it difficult for the Australian government to proceed with the treaty, which was signed in 2007 but not yet ratified. The reminder that Chinese rule of law exists only on paper will be unwelcome for Beijing, which is in the midst of an effort to persuade Australia to align with its One Belt, One Road infrastructure strategy. Canberra has hesitated, seeing the Chinese strategy as in part an effort to undermine the U.S. presence in Asia. Not everyone feels the same way: New Zealand, an early backer of the Asian Infrastructure Investment Bank, happily jumped on board the OBOR train on Monday. Australia may eventually join, as it did with the AIIB, but high-profile reminders of Canberra and Beijing's competing worldviews won't help.
How does China's history inform its future? We sat down with Howard French to talk about his new book, “Everything Under the Heavens: How the Past Helps Shape China's Push for Global Power.”
Watch our interview with Howard French and read his book.
Bremmer on Brexit: Ian's views on what's coming now that the U.K. has triggered Article 50.
It's been nine months since the Brexit vote, but the world has moved on to other political stories (Trump, Trump, Trump), and Brexit hasn't (yet) had much impact. After all, Brexit itself hasn't happened yet. Everyone's talking about it, but the hard bargaining has yet to begin. The outcome remains far enough in the future (at least 2+ years) that it feels like something people should be concerned about, but not yet an urgent reality.
But Brexit is coming. And it's going to hit big.
For now, we should look to the future of Europe as much as to the future of the UK. That makes assessing Brexit a hell of a lot more complicated.
The strongest argument for Brexit has always been that if Europe is bound to fall apart, the UK should get out early. During the referendum campaign, that argument was mostly shrugged off as “sky is falling” spin. But as far-right and anti-EU parties gain traction in this year's election polls — the Freedom Party in the Netherlands, the National Front in France, and Alternative fur Deutschland in Germany chief among them — upheaval in EU politics looks increasingly plausible, if still not imminent.
But even if none of those parties will lead a government in 2017, their move from the fringes into the political mainstream fundamentally alters European politics, gives concrete shape to the anti-EU movement, and makes the eventual breakup of the EU ever more likely. If that happens, the Brits will end up looking brilliant.
But if Europe stays together, the Brits must negotiate an unwind, and any agreement on Britain's post-EU future will leave the UK worse off than today. Europeans at the bargaining table know this, and they want to send an unmistakable message to other EU members that exit comes with pain, particularly for those who might want to follow the Brits toward a “hard Brexit” that leaves the UK out of open immigration, the European judicial system, and the common market.
That means that the UK will end up with a European offer that inflicts real damage on its all-important financial sector and gives regional businesses less incentive to base operations in the UK. By the way, the Scots may have plans for another try at exit from the UK — even if it makes little economic sense.
For our part, Brexit has been good for the political risk industry. People turn to Eurasia Group in times of extreme political uncertainty — and this story will be spinning out uncertainty for years. At every stage, in many countries, in multiple industries. No firm is as well-equipped as ours to respond to these complex political stories.
There's one last factor that makes Brexit especially compelling for us. As I've said many times, working in political risk is like driving a cab — you get more business when it's raining outside, but you lose when it's raining so hard that people stay home. For now, Brexit is raining hard. Here's hoping that the geopolitics surrounding Brexit don't make it a torrential downpour.
— Ian Bremmer
Self-Promotion Interlude: EG's Jon Lieber on the tough road ahead for the Trump agenda
Hard Numbers
1,000 drones are included in North Korea's military arsenal, according to a recent report from a South Korean think tank, raising the specter of drone-borne chemical attacks. Not the rush delivery you're hoping for.
85 percent of the “blasphemous” material reported by the Pakistani government has since been removed by Facebook. The worldwide web becoming less open to the wide world.
10 percent of Russians for opposition candidate and anti-corruption crusader Alexei Navalny for president.
40 percent of French voters have yet to decide who they will vote for in the upcoming presidential election. Probably not Navalny, though.
24 countries allow for the visa-free travel of Afghan citizens, putting it last in the world in terms of freedom of travel. That's behind both North Korea and Syria.
“Our souls are not for sale.”
– Former South African Finance Minister Pravin Gordhan, who is going out swinging against allegations of corruption in the country's government.
Signal is written by Matt Peterson (@mattbpete) with editorial support from Gabe Lipton (@gflipton). Don't like what you read? Feel free to yell at us on Twitter or just reply to this email.
