Welcome to Factal Forecast

For the week of Dec. 27-Jan. 3

Welcome to Factal Forecast, a look at the week’s biggest stories and what they mean from the editors at Factal. We publish our forward-looking note each Thursday to help you get a jump-start on the week ahead. If this email was forwarded to you, and you like what you see, you can subscribe for free.

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A look ahead:

Dec. 27/ Russia, Iran and China host naval war games: Iran is expected to flex its muscle during war games with Russia and China on Friday. 

• What's happened so far: According to Iran's semi-official news agency, the commander of the Iranian Navy said the games will show that the countries have “reached a meaningful strategic point” in their relations. The event comes after the Trump administration enacted strict sanctions on the Iranian regime and spent the summer dealing with a diplomatic row over an Iranian tanker.
• The impact: With the Iranian Navy commander calling the games a “message to the world” about strengthening ties, it appears Iran is setting up an alliance to resist pressure from the United States. China and Russia, meanwhile, likely see this as a way to increase security in the Persian Gulf.

Dec. 29/ Guinea-Bissau presidential run-off: Voters in Guinea-Bissau will head to the polls Sunday for the second round of voting in the president election, as the first democratically-elected president in the country’s history, Jose Mario Vaz, finishes his term.

• What's happened so far: After the current president failed to advance to the second round, the run-off is now being disputed between two former prime ministers — Domingos Simões Pereira, candidate of the PAIGC, and Umaro Sissoco Embaló, of the Maden-G15. During the first round in November, Simões Pereira got 40.13 percent of the votes, while Embaló got 27.65 percent.
• The impact: Prime Minister Aristides Gomes has warned he will immediately resign if Simões Pereira is not elected, after accusing Embaló of taking part in an attempted coup earlier this year. As the two candidates race to get the final votes, Simões Pereira has pledged to invest in the education sector, while Embaló said that, if elected, he will focus on the country’s stability and peace. A clean election that produces a clear winner could mark an important step toward greater political stability in the country, after years of political and social unrest.

Dec. 30/ Liberia protests: Authorities in the Liberian capital of Monrovia are preparing for anti-government demonstrations Monday with protesters demanding the resignation of President George Weah, a former soccer-star elected to the office in 2017. 

• What's happened so far: Tension has been building up over Weah’s handling of the nation’s struggling economy and a scandal involving the disappearance of millions of dollars from the central bank. Thousands of people expressed their frustration at Weah’s administration in protests in June, an event that wasn’t met by government offers for dialogue. Liberia’s economy also likely shrank this year by 1.4 percent, and is only expected to post anemic growth next year. 
• The impact: It’s unclear how officials plan to handle the year-end protests, or if they’re prepared to offer concessions. Weah has voiced his support for the protesters’ right to assemble and is attempting to boost the economy with millions of dollars in freshly-printed money, a move that has brought him under further criticism on grounds that he may have overstepped his authority.

Dec. 31/ Russia-Ukraine new gas transit deal: The current agreement between Moscow and Kyiv, which allows natural gas to be transported from Russia through Ukraine and into Europe, expires Tuesday. Last Friday, the two nations struck a provisional deal that is set to begin on Jan. 1, bringing an end to a stalemate which had worried energy markets. 

• What's happened so far: Russian state-owned energy firm Gazprom announced Dec. 20 that it had signed a protocol with its Ukrainian counterpart, Naftogaz, that allowed for the continued transit of gas to Europe until 2024. Part of the agreement includes the settlement of a $3 billion arbitration award that Naftogaz is owed, which Russia has said it will pay by Dec. 29.
• The impact: The two countries had little choice but to strike a new deal, given how mutually lucrative the current agreement is. Ukraine earns around $3 billion annually for transporting gas, which equates to around 2.5 percent of its GDP. Russia, meanwhile, remains reliant on the Ukraine pipeline until its controversial NordStream II project is complete. The European Union hopes this new gas transit agreement could act as a catalyst for improving political relations between Ukraine and Russia, which broke down in 2014 following Russia’s annexation of Crimea.

Jan. 1/ Hong Kong protest: A New Year’s Day protest is set to be held in Hong Kong on Wednesday, as one of the city’s largest pro-democracy groups seeks to remind leaders of the movement's demands.

• What's happened so far: After pro-democracy groups secured a landslide victory in local elections, Hong Kong’s leader Carrie Lam vowed to “listen humbly” to the public. A period of relative calm followed the election in late November, but fresh clashes broke out on Christmas Eve as police fired tear gas and charged protesters in shopping malls and on the streets.
• The impact: The Civil Human Rights Front is still waiting for police to approve the Wednesday rally. Previous pro-democracy marches have seen hundreds of thousands of people take to the streets. The marches have mostly been peaceful events but have deteriorated later in the evenings, turning into a flash point for clashes between more radical protesters and police. 

Jan. 1/ New Kenya Airways acting CEO starts: Allan Kilavuka will ascend to the top role at Kenya's flag carrier airline Wednesday, after a year at the helm of its low-cost subsidiary, Jambojet.

• What's happened so far: Current CEO Sebastian Mikosz announced in May he would leave by year's end, citing personal reasons. His departure, however, comes as the airline navigates the "renationalization" process, following a vote by lawmakers in July in hopes of turning around the carrier's financial fortunes. The Kenyan government currently owns nearly half of the airline and plans to buy out minority shareholders, converting the shares held by commercial banks into treasury bonds.
• The impact: Kilavuka's tenure begins at a tenuous time for Kenya Airways, with indications of larger losses this year than last, despite cost-cutting measures. Meanwhile, some experts are skeptical that renationalization will lead to a brighter future.

What else matters:

Thai opposition regroups: Thailand’s minority parties are mounting their biggest challenge to the nation’s military rulers since they took power in a 2014 coup. After successfully rallying thousands of pro-democracy protesters in Bangkok on Dec. 14 (members’ link), the Future Forward party has attracted the support of Pheu Thai, the party with the most seats in parliament.

• Watch for: The two parties plan to hold a “Run Against Dictatorship” in the capital on Jan. 12, a six-kilometer group run that has yet to be approved by police. The early-morning event is set to start at Chulalongkorn University and will be watched closely to gauge the opposition’s ability to rally support and the military leadership’s tolerance for dissent.

Myanmar genocide trial in the Hague: Nobel Peace Prize winner Aung San Suu Kyi appeared before the Hague this month, urging judges to dismiss allegations that Myanmar had committed genocide against its Rohingya Muslim population. The allegations relate to a 2017 military crackdown in the Rakhine state that included the clearing of almost 400 villages, rape and mass murder, and causing almost 750,000 Rohingyas to flee to neighboring Bangladesh.

• Watch for: The International Court of Justice has never found a state guilty of genocide, and this is only the third time that the court has examined a state genocide case. Despite evidence of extrajudicial killings that has led to the United States imposing sanctions on military leaders, the case hinges on the prosecution proving the state’s intent to commit genocide. The court is expected to rule shortly on "provisional measures" that are legally binding, and may include steps Myanmar must take immediately. It is expected, however, to take several years before the outcome of the wider case is decided.

Extended outlook:

What’s on our radar in the coming weeks

Dec. 26: Kwanzaa begins; Likud leadership election in Israel; annular solar eclipse 

Dec. 27: Russia, Iran, China naval war games; UK South Western Railway guards strike

Dec. 29: Presidential election run-off in Guinea-Bissau

Dec. 30: Planned protests in Liberia

Dec. 31: Gas transit contract between Russia and Ukraine ends

Jan. 1: New Year’s Day; Kenya Airways new acting CEO starts; Hong Kong protest; China will lower import tariffs on over 850 products; Swissport Canada workers threaten strike at Montreal airports; legal marijuana sales begin in Chicago

Jan. 2: Bill Taylor, the top US diplomat in Ukraine, departs from temporary post; Greece says gas pipeline deal with Israel, Cyprus to be signed

Jan. 3: U.S. Secretary of State Pompeo plans to visit Ukraine; President Trump to rally evangelical voters in Miami

Jan. 5: Croatia presidential race to go to runoff; Venezuelan National Assembly election

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