Global Public Affairs Newswire – 6 September 2024
Welcome to the latest instalment of FTI Consulting’s fortnightly Global Public Affairs Newswire. This week, we bring you an election update from the US, where North Carolina and Delaware are the first states to mail absentee ballots as candidates gear up for a high stakes debate next week.
Beyond this, we bring you our usual comprehensive market update, with analysis of the latest big public affairs developments across the world’s major markets. This week features updates covering developments in the UK, Germany, China, the EU, India, Colombia, France, Spain, and Brazil.
Our global team are closely tracking the key votes and contests in this worldwide ‘Year of the Election’. In each edition of the Newswire, we look to dive into the upcoming implications, considerations, and opportunities for business.
Polling for November race remains close: National polling between former President Donald Trump and Vice President Kamala Harris continues to be extremely close. A new ABC/Ipsos poll indicates Harris is holding a lead among likely voters, at 52% to 46%, while a new USA Today/Suffolk poll puts Harris at a lead of 47.6% to Trump’s 43.3%. However, the Wall Street Journal highlights that while Harris’ support has grown by 13% among Black voters since President Joe Biden dropped out of the race in July, she is still 10% behind Biden’s 2020 mark. Similarly, the Vice President has gained 13% in Latino support, but this is also 6 points behind Biden’s 2020 mark. A new CNN poll also indicates that there is no clear lead in polling between the candidates among the three battleground states of Georgia, Nevada, and Pennsylvania.
Harris releases new economic policy proposal: Harris unveiled a new set of economic policy proposals this week which focus on small businesses and entrepreneurs. This includes an expansion of a tax credit for setting up a new small business, from $5,000 to $50,000. If elected, Harris’ goal is to incentivize 25 million new small business applications in her first term – up from 19 million received under the Biden administration as of mid-August.
Democratic party ramp up campaign spending for down-ballot candidates: Harris’ campaign and the Democratic National Committee announced they are increasing their investment to support critical down-ballot Democratic candidates this election cycle – sending nearly $25 million to these efforts, substantially more than the top of the ticket has sent in past election cycles.
First debate between Trump and Harris to take place next week: Next Tuesday, September 10, Trump and Harris will participate in the first presidential debate between the two candidates. The debate is scheduled to air on ABC under the same conditions as the CNN debate between Trump and President Biden in June. While it is currently unclear whether a future debate will be agreed to for the presidential candidates, their respective running mates, Minnesota Governor Tim Walz and Ohio Senator JD Vance, are set to debate on October 1. This comes as North Carolina and Delaware are the first states in the country to send out absentee by mail ballots this week.
Market updates
On 26 August, Prime Minister Keir Starmer delivered a speech from 10 Downing Street, warning that October’s Budget will be “painful”, and the government will have to make “big asks” of the public.
Starmer did not set out the details of what would be in the Budget but said that people would have to “accept short-term pain for long-term good” and those with the “broadest shoulders should bear the heavier burden”. It is believed that the speech was designed to serve as an exercise in expectation management, a pledge to voters that whilst this government can be trusted to move past “politics of performance”, the benefits that it seeks to deliver will take time to be felt.
The speech comes amidst widely trailed reports that Chancellor Rachel Reeves is set to announce both tax rises and cuts to public spending in October’s budget, opening the Government up to accusations that they have broken their electoral promise not to raise taxes on working people. Conservative leader and ex-PM Rishi Sunak said the speech was “the clearest indication of what Labour has been planning to do all along – raise your taxes”.
The government has already announced some cost-cutting measures including scrapping a planned cap on social care payments and withdrawing the winter fuel allowance from 10 million pensioners. With Parliament returning from recess this week, these come as part of a barrage of measures from a Government intent on making a rapid and impactful start in Parliament.
Keen to place fault for the UK’s recent social unrest and current economic challenges on the previous Conservative government, it has become evident that the next few months will see some unpopular choices from the new Government. In Starmer’s words, Labour is fixed on delivering the “tough action” which would be needed to “fix the foundations of the country”.
On September 1, voters rejected the federal government coalition parties SPD, Greens and FDP for their performance, while strengthening the populists and the far-right. The far-right AfD, which is categorized as right-wing extremist in both states by the Federal Intelligence Agency, has come first in Thuringia and a close second in Saxony right after the CDU. As no party wants to form a coalition government with the AfD, the CDU is expected to lead a government alliance in both states. The populist Alliance Sahra Wagenknecht (BSW), competing in elections for the first time ever, has achieved double-digit results in both states and is likely to assume government responsibility too.
In Saxony, the CDU cannot continue its government coalition with the SPD and the Greens and is expected to enter a coalition with the BSW and SPD. In Thuringia, it is currently not clear how and whether a coalition can be formed at all. There could be a minority government of CDU, BSW and SPD tolerated by the leftist party Die Linke. A coalition together with the latter is currently not possible due to the CDU’s decision against forming a coalition with them due to general incompatibility.
In both federal states, the AfD received twice as many votes as the three federal government parties combined. The CDU emerged from the election with rather strong results. This gives Friedrich Merz, the federal CDU party chairman, a chance to run for chancellor in the 2025 federal elections. No concrete effects are expected for the government coalition in Berlin. Until the state election in Brandenburg on September 22, the SPD, Greens, and FDP are likely to refrain from public discussions about the federal coalition and dismiss any talk of new elections. Although the public debate is being postponed, there are likely to be discussions within the federal coalition parties. The FDP will analyze its historically poor result, while the SPD will reflect on the setback as the chancellor’s party. However, a breakup of the federal coalition or new elections is not expected. The governing parties, given their poor election results and polling numbers, have little interest in either. Nonetheless, a shift in political course can be expected at the federal level.
Director of the Office of China’s Foreign Affairs Commission Wang Yi welcomed his counterpart U.S. National Security Advisor Jake Sullivan in Beijing on August 27-28. From Vienne to Malta to Bangkok and now Beijing, Sullivan’s visit marked the fourth strategic discussion held at a level only below that of the state leaders. It took place at the time of just about two months before the U.S. Presidential election, where the two candidates heatedly competed with each other for the White House and whose results would have a material impact on China-U.S. relations and the global economy.
Both sides agreed that the exchange was “candid, substantive, and constructive,” yet significant differences remained in their views and approaches regarding a range of bilateral, regional, and global issues. From a business perspective in particular, China voiced its concerns about the U.S.’s curbs on China’s technology development through abusing the concept of national security and its unilateral sanctions against Chinese companies over the conflict in Ukraine. The U.S., in turn, raised continued concerns about China’s unfair trade policies and non-market economic practices and emphasized its commitment to taking necessary actions to prevent advanced U.S. technologies from being used to undermine its national security.
Consensus was reached on continued engagement in counternarcotics, military-to-military communications, AI safety and risk, immigration and law enforcement, and climate. U.S. Senior Advisor for International Climate Policy, John Podesta, has arrived in Beijing to talk with his Chinese counterparts. Plannings are underway for a Xi-Biden call in the coming weeks, as well as a telephone call between the two militaries at the theater commander level.
The European Commission is currently undergoing the process of forming a new College of Commissioners, with a strong focus on achieving gender balance. President Ursula von der Leyen is actively engaging with EU member states to increase female representation and avoid a male-dominated Commission. As of now, nine women have been nominated, but von der Leyen has encouraged some countries, like Malta, to reconsider their choices and nominate female candidates. Romania responded to this by nominating MEP Roxana Mînzatu, replacing their initial male candidate. Belgium also put forward a female candidate, Hadja Lahbib.
Balancing gender representation presents a challenge, as von der Leyen must ensure gender parity without causing tensions with member states. If necessary, she may extend deadlines for additional or alternative nominations, which could delay the process. The European Parliament, known for advocating gender parity, may reject several nominations if the Commission is perceived as male-dominated.
In addition to gender balance, the allocation of key portfolios is crucial, with several countries vying for influential roles such as Energy, Economy, and Defence. Once portfolios are assigned, nominees will undergo rigorous hearings in the European Parliament, where their qualifications, conflicts of interest, and political ambitions will be scrutinized. The Parliament’s approval is vital, as any rejections could force von der Leyen to reshuffle portfolios or seek new nominations, potentially delaying the new Commission’s formation beyond the scheduled November 1 start date.
India’s federal government has released draft rules to enhance telecom cybersecurity, under its recently-refreshed Telecommunication Act, 2023. The rules, aimed partly at protecting users of OTT services like WhatsApp against fraud, call for over-the-top OTT traffic data to be monitored, and have sparked debate and controversy.
Published by the Department of Telecommunications (DoT), the new rules propose stricter guidelines on data privacy, enhanced security measures, and revised norms for telecom operators. Under them, the government or any authorised agency would be able to ask telecom companies, for ensuring telecom cybersecurity, to submit “any data generated, transmitted, received, or stored in telecommunication networks”. That includes data relating to the type, routing, duration, or time of a communication.
The proposed regulations also call for enhanced monitoring of telecom traffic data related to OTT services. These services, which include popular platforms like streaming services and instant messaging apps, may face increased scrutiny. Critics say this raises privacy concerns. The government’s rationale is that analyzing this traffic data can help protect users from fraud. OTTs are presently regulated under the Information Technology (IT) Act, 2000, and will continue to be regulated by it.
The draft rules place a heightened focus on cybersecurity, requiring telecom operators to implement advanced security measures, conduct regular audits, and establish protocols for data breach notifications. The regulations also propose stricter guidelines for data handling and protection, emphasizing the need for telecom companies to adopt comprehensive data security frameworks to safeguard user information and ensure secure data transmission.
In addition to the cybersecurity rules, the DoT has also released three other draft rules covering interception, internet suspension, and critical telecom infrastructure. All of these rules are up for consultation till September 28, 2024.
On August 28th 2024 the Colombian Constitutional Court gave approval of Law 2273 of 2022, which ratifies Colombia’s adherence to the Escazú Agreement. Driven by Latin America and the Caribbean, it includes key mandates on the disclosure of environmental information and seeks to increase protection of environmental leaders. The approval of the agreement comes at a pivotal moment, as Colombia prepares to host COP16 on Biodiversity. This event will allow the Administration to demonstrate its leadership in sustainability and environmental justice and highlight its progress in implementing the Escazú Agreement.
In Colombia the treaty will become enforceable in three months. However, key regulatory aspects still need to be defined, such as the fiscal and institutional arrangements required to fund and thus enable access to environmental information. This includes new regulations on social and environmental licensing, as well as negotiation and concertation spaces with ethnic communities. In the meantime, Congress members and industry groups, such as the mining sector, warn that this could negatively impact the autonomy of these communities and, consequently, the country’s legal security.
On 5 September, after weeks of political stalemate and numerous speculations about the next prime minister, President Macron appointed 73-year-old Michel Barnier, an experienced right-wing politician and statesman, to the role. Barnier has had a long and distinguished career in French and European politics and has served in government multiple times between 1993 and 2009. More recently, Barnier served as the EU’s chief Brexit negotiator, and unsuccessfully campaigned to obtain the Les Républicains (LR) nomination for the 2022 presidential election.
Barnier’s future government will likely be backed in the National Assembly by both the presidential camp and the centre-right party, La Droite Républicaine (LDR), while the left-wing alliance, the New Popular Front (NFP), is set to vote down his government. The National Rally (RN) has pledged not to censor the government until Barnier’s general policy speech and declared that subsequent backing will require the “respect of RN voters, the backing of a review of the electoral law to institute proportional voting, and fighting against immigration, insecurity, and safeguarding public finance”.
Barnier’s nomination suggests some kind of continuity with Macron’s policies, and possibly the participation of some outgoing ministers in the new government. Nonetheless, it is important to note that the credibility of this government hinges in part on some form of departure from Macronist politics.
On September 4, a day prior to Barnier’s nomination, Macron’s first prime minister, Edouard Philippe, announced his intention to run for president in 2027. While his presidential ambitions were an open secret, the timing of this announcement is surprising as it comes at least two and a half years before the election, set for the spring of 2027. Philippe is widely perceived as the front-runner to be Emmanuel Macron’s successor, and this announcement can be seen as an attempt to claim the mantle before other pretenders (outgoing prime minister Attal, outgoing Interior Minister Darmanin) make their intentions public.
The August vacation period in Spain has ushered in a significant shift in the political landscape, both nationally and regionally, with the establishment of a new non-separatist government in Catalonia. This milestone has occurred after almost 15 consecutive years of pro-independence governments characterized by a progressive loss of business attraction, political instability and regulatory uncertainty.
On August 10th, a new minority government was formed, led by the Socialist Party in Catalonia (PSC) and under the presidency of Salvador Illa, the former Minister of Health for Spain during the COVID-19 crisis. This change has been facilitated by the easing of separatist tensions, compelling left-wing and republican parties (traditionally proponents of Catalan independence) to support the new government.
Illa’s leadership symbolizes the beginning of a new era in Catalonia, aiming to restore the region’s leadership in investment and industrial revitalization. Key initiatives include the development of a Strategic Plan to attract foreign investment, the modernization of the transportation industry, and the introduction of new financing and tax policies. During this term, Catalonia will adopt a more proactive approach to attracting modern industries and offering favorable conditions to companies considering strategic investments in the region.
In the second quarter of 2024, Brazil’s economy expanded by 1.4%, based on data published by IBGE on Tuesday, surpassing the 0.9% growth anticipated by the financial market. Year-over-year, the GDP increased by 3.3%, and for the first half of the year, the growth rate stood at 2.9%. Services and traditional industry contributed to the growth, while the agricultural sector experienced a cutback due to climate-related issues such as heat waves, excessive rainfall or droughts since the end of last year. Particularly, the severe flooding calamity in the state of Rio Grande do Sul had direct impacts on soybean cultivation, which is Brazil´s most relevant tillage.
Overall, the robust economic performance is largely attributed to fiscal stimuli, which include increased government spending, tax cuts, and subsidies. Such measures have revitalized economic activity, reflecting growth patterns, especially in families’ and government consumption and investment, which had not been seen in a decade. As a result, the projections for the 2024 GDP are now closer to 3%, which equalizes with the registered performance from 2023 (2,9%) and 2022 (3%). Finance Minister, Fernando Haddad, has even hinted to higher potential.
Still, domestic market behaviors and climate issues will continue to pose challenges in terms of forming expectations. This surge in consumption, outpacing productive capacity, also raises concerns about potential inflationary pressures. The acceleration in economic activity might prompt the Monetary Policy Committee to consider raising basic interest rates in their upcoming meeting. This decision is particularly contentious given President Lula’s position; he has publicly criticized the high interest rates in Brazil, arguing that they are excessively burdensome for the country and should be reduced. Despite this, the Committee has remained resolute in making decisions based on technical analysis rather than political pressure. The challenge for the Committee will be to balance the need to control inflation without stifling economic growth, especially as Brazil faces a complex economic landscape in the latter half of 2024.
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