2019 was another year of friction between authoritarianism and democratic norms in developing economies across several regions.
In Turkey, President Recep Erdogan forced a re-run of mayoral elections in Istanbul following defeat for his Justice and Development Party (which was repeated by a larger margin in the re-run). In Egypt, the government passed constitutional amendments enabling President Abdul Fattah al-Sisi to stay in office until 2030 whilst cracking down heavily on protestors expressing frustration with the lack of political reform. A military-dominated administration has meanwhile stifled the political transition in Algeria since the removal of President Bouteflika in April. The legitimacy of elections due to be held on 12 December is already being heavily challenged.
Authorities in Russia cracked down against an increased tempo of domestic protest and political dissent linked to grievances over public services, corruption and internet freedoms during 2019. There were also uncompromising government responses to protests in Kazakhstan and Azerbaijan, despite the former pursuing an ostensible political transition following President Nazarbayev’s resignation in March.
Efforts by Uzbekistan to court increased foreign investment are yet to manifest in serious progress on political freedoms. The increasing influence of China in Central Asia via its investments under the Belt and Road initiative means that external pressure to pursue democratic reforms (for example from the EU and international financial institutions) is being correspondingly weakened. The same applies in several African countries in which China and Russia stepped up competition for economic and political influence in 2019.
The trend of increasingly overt authoritarianism is particularly marked in Southeast Asia. This includes Indonesia, where President Joko Widodo followed electoral victory in April by introducing socially draconian legislation that prompted major protests in September. In the Philippines, foreign companies have been implicated in NGO accusations of human rights abuses committed by the government against land rights campaigners.
There is a strong correlation between increasing political and security authoritarianism and declining standards of corporate governance, regulatory transparency and corruption. As such, the operating environment for Western companies in most of the countries listed above is likely to become more challenging in 2020, including competitive disadvantages where China and/or Russia are building strategic relationships supported by investments through state-run companies.
There will also be risks of reputational damage by association for Western-based companies supplying goods or services to governments that are on an increasingly authoritarian trajectory. This will be strongest in defence and security-related sectors but could also extend to internet and communications companies given governments’ manipulation of those platforms in their suppression of opposition.
Header picture taken by: www.kremlin.ru
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