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By Ken Stibler, Noah Berman and Nojan Rostami. Executive editor: Dan Keeler

Africa

Tanzania arrests, then releases, hundreds of opposition figures 

Authorities in Tanzania arrested more than 500 people this week before releasing many on Tuesday, marking a short-lived but sweeping crackdown on political freedom. 

The countrywide arrests included top leaders affiliated with the opposition Chadema party, as well as hundreds of prospective attendees of a youth rally. Police said the arrests were necessary because the rally threatened to “breach the peace.”

The demonstrations and pre-emptive arrests followed mass youth-led protests in Kenya that led President William Ruto to dismiss his cabinet, as well as smaller-scale demonstrations in Nigeria and Uganda. 

Rights groups said the arrests raised concerns about the country’s direction. Amnesty International said in a statement that the tensions are a “deeply worrying sign” about upcoming local and general elections.

Ethiopian businesses struggle with inflation

Ethiopia’s currency, the birr, has lost around half its value since the country dropped its managed exchange rate last month, leading to soaring inflation.

At businesses across the country, this means that prices are changing far more often. A hotel in the suburbs of Addis Ababa, the capital, is now updating its menu prices daily, AP reports. Supermarkets are selling less product to disincentivize hoarding, and a black market has erupted around staple goods.

Ethiopia had a fixed exchange rate for decades. Its decision to embrace a flexible rate unlocked billions of dollars in loans and grants from the IMF and World Bank. The institutions contend that the new rate will lead to more economic stability in the long term.

Kenya considers reintroducing tax measures that sparked mass protests

Kenya is looking to resurrect some of the measures in the tax bill that prompted mass demonstrations last month, Bloomberg reports.

The youth-led protests turned deadly after police met them with a brutal response, and after more than 60 people were killed President William Ruto axed the bill and fired most of his cabinet.

But Kenya still faces a major budget gap. On Monday, new treasury secretary John Mbadi said the finance ministry would look to bring back some of the measures in the tax legislation “as other proposals,” but not a revised bill. These include reducing the number of refunds offered on the country’s value-added tax.

Previous measures that have sought to increase government revenue by raising taxes have failed. The law that Ruto abandoned last month included higher taxes on staple products including bread and diapers. An earlier failed bill included higher fuel and housing taxes.  

Asia 

Bangladesh on edge after interim leader is installed

Around two weeks after youth-led protests toppled Prime Minister Sheikh Hasina’s autocratic regime, Bangladesh is now dealing with the far more difficult task of governance.

Atop the country’s political system, a precarious balance has taken hold. Nobel laureate Muhammad Yunus returned from exile last week to lead the country on an interim basis. He is sharing power with the country’s military, and his caretaker government includes two 26-year-olds who led the protest movement, Dhaka Tribune reports. 

Experts say holding elections too soon could entrench the two existing major parties, neither of which is popular with young people. But waiting too long could strain Yunus’ ability to keep the peace in a divided nation and heighten the risk of military intervention. The country now “teeters on the edge of reconciliation and chaos,” writes Josh Kurlantzick, senior fellow for South and Southeast Asia at the Council on Foreign Relations. 

• Uncertainty remains heightened amid political transition (Fitch)

• Power use grows as searing heat eclipses economic disruption (Reuters)

For now, though, there is relative peace. Students who led the demonstrations are acting as civil servants, NPR reports. Many are directing traffic in the place of police, who killed hundreds during the protests and have since become absent.

Pakistan PM secures military support in push to implement IMF reforms

Pakistani Prime Minister Shehbaz Sharif secured the support of the country’s powerful military before signing on to a recent $7 billion loan from the IMF, the FT reports.

The military has not always approved of Pakistan’s loans with the IMF. Former Prime Minister Imran Khan, who rose to power with military backing, campaigned on a platform highly critical of the lender. Several previous administrations have abandoned IMF programs; Pakistan has gone to the fund more than 20 times since 1958.

But as Pakistan’s economic crisis drags on, the army has come to view the IMF deal—and its required austerity measures—as better than risking instability and default without such an arrangement, according to FT. 

Vietnam plans subsidies for EV charging stations

Vietnam’s government will subsidize the cost of electricity that powers charging infrastructure for electric vehicles, Reuters reports. 

The country currently has around 150,000 EV charging ports, most of which are owned by national champion VinFast, which delivered a record 35,000 electric vehicles last year, mostly to the domestic market. But that represented just a fraction of the more than 300,000 car sales in Vietnam in 2023. The details of the charging port subsidy plan are expected next month. 

In 2022, Vietnam committed to go carbon neutral by 2050 as part of a “Just Energy Transition Partnership” it signed with the US and other G7 countries. The wealthy countries pledged some $15 billion toward Vietnam’s green energy transition as part of the agreement, though its implementation has been marked by delays. 

Middle East

US ends bans on offensive weapons sales to Saudi Arabia

The US has reversed its ban on the sale of offensive weapons to Saudi Arabia, opening the door for the sale of air-to-ground munitions such as guided bombs and missiles for the first time since 2021, Reuters reports. The ban had originally been put in place by the Biden administration to signal disapproval of Saudi Arabia’s national security policy in Yemen, among other issues that had damaged the bilateral relationship.

The reversal highlights the growing importance of Saudi Arabia to US Middle East policy, particularly regarding the security dilemma posed by an increasingly bellicose and bold Iran. Earlier in April, when Iran launched its first-ever direct attack on Israel, Saudi Arabia is reported to have played a key role in supporting the US-led defensive effort.

Iran’s central bank intervenes to support stock and bond markets

Iran’s central bank has rolled out a range of measures to support the country’s stock and bond markets, local media report. The intervention, which includes guaranteeing bonds, purchasing stocks in the open market, and providing short-term credit facilities for local companies facing liquidity issues, risks fueling inflation and further depreciating Iran’s currency.

A local think tank, the Presidential Strategic Studies Center (a rough translation by FMN staff), has published a report with Etemad, the reformist newspaper associated with newly-elected President Masoud Pezeshkian’s party, that highlights concerns about mass emigration and brain drain from Iran due to heightened social tensions and the weak economic situation.

Pezeshkian campaigned on a platform of social reform and economic growth, and this week’s market interventions could be the first of several drastic measures taken to make good on his promises.

Latin America 

Peronist scandal and progress on inflation buy Argentina’s Milei more time

Argentine President Javier Milei’s popularity, which has remained strong despite continuing economic turmoil, was buoyed this week by a scandal engulfing his predecessor and the opposition Peronist movement. Former President Alberto Fernández faces domestic abuse allegations from his ex-wife, alongside corruption charges, tarnishing the left-leaning party’s image and potentially extending public patience for Milei’s austerity measures.

In part by implementing drastic spending, Milei’s administration has made progress in taming inflation, with monthly price increases falling from 25.5% in December to 4% in July. However, this comes at the cost of plummeting consumer spending and rising unemployment, with over 175,000 formal jobs lost since he took office.

• Weary Argentines have mixed feelings as world’s worst inflation eases (Reuters)

• Milei keeps close economic ties with Beijing while cozying up to the US (WSJ)

Analysts suggest the Peronist scandal provides Milei with additional ‘oxygen’ to pursue his economic reforms. The crisis has deepened the power vacuum within the opposition, hampering their ability to present a unified front against Milei’s policies. But while the libertarian president’s popularity remains stable for now, experts warn that his success hinges on economic recovery, stating, “If Milei fails there, he fails.”

Western powers adopt softball approach to Venezuela

Western governments are treading cautiously in their response to Venezuela’s disputed presidential election, in contrast to their swift condemnation and sanctions following the 2018 vote, Reuters reports. The US and EU are calling for the release of voting records and dialogue between President Nicolás Maduro and the opposition, but have refrained from the kind of punitive actions that inadvertently strengthened Maduro’s grip on power.

This softer stance comes as the Biden administration pursues a long-shot bid to persuade Maduro to relinquish power in exchange for amnesty, WSJ reports. US officials have reportedly discussed pardons for Maduro and top lieutenants facing US Justice Department indictments, signaling a willingness to “put everything on the table.”

However, with Maduro maintaining a firm grip on power and showing no inclination to negotiate his departure, the efficacy of this approach remains uncertain. And if Donald Trump wins the US presidency, his administration is likely to abandon it altogether and revert to a harder line against Maduro.

What We’re Reading

Ethiopia-Somalia peace talks continue in Turkey (AP)

Economic reforms are tempting finance back to Ethiopia and Zambia (FT Opinion)

US hosts Sudan peace talks in Switzerland—without the warring parties (BBC)

Sudan at ‘breaking point’ as famine and floods exacerbate displacement crisis (IOM)

DRC and Zambia reopen border after trade dispute (Reuters)

Botswana looks to counter diamond price slump by slashing spending (Bloomberg)

Botswana government to cut spending on cars and travel as diamond slump persists (Bloomberg)

South Africa unemployment hits two-year high (Mail & Guardian)

Development Bank of Southern Africa looks to double renewable energy financing program (Bloomberg)

Opinion: Helping to create a single integrated market across Africa is in the West’s interests (FT)

TotalEnergies’ Pakistan exit stirs company exodus fears (Nikkei)

Vietnam turns chip sector magnet (Nikkei)

Cambodia grants French company Vinci right to operate China-built airport in Phnom Penh (Nikkei)

Myanmar’s release of Aeon exec highlights struggle to retain investment (Nikkei)

Thailand taps billionaire former leader’s daughter as PM after court ejects predecessor (WSJ)

Disbanded Thai opposition party reforms under new name (Bangkok Post)

Indonesia claims growing investor interest in new capital Nusantara (Nikkei)

Indonesia’s new capital city faces construction setbacks (FT)

Kiribati votes in national elections (ABC) 

Pacific island news outlets face government pressure and China influence (Nikkei)

Ringgit and baht gain against dollar on speculation of US rate cut (Nikkei)

Exclusion of Russia raises questions over Kazakh president’s call for Central Asian security cooperation (Radio Free Europe)

Flooding in Yemen leaves dozens dead and thousands displaced (BBC)

Iraq postpones plan for US troop withdrawal amid regional tensions (CNN)

Turkey and Iraq sign accord on security cooperation (Reuters)

Oman revises work permits to ‘regulate labor market’ (Zawya)

China’s CEEC wins 2GW solar energy project in Saudi Arabia (PV Magazine)

Saudi Arabia announces reforms to investment laws to attract foreigners (Bloomberg)

Poland signs deal with US on Patriot missile-defense systems (Bloomberg)

Gas and grain ships shun Panama Canal after drought disruption (FT)

Peru’s drivers offer a data deluge for self-driving cars (The Economist)

Chile’s investment outlook remains subdued (FrontierView)

Argentina permits natural gas exports to Brazil via Bolivian pipelines (Oil and Gas Journal)

Lithium fever overshadows environmental concerns in Argentina (Buenos Aires Times)

Blue bonds gain ground in LatAm as climate finance solution (Latin Finance)

WHO declares mpox a global emergency (WHO)

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