World in a Week: 15 June 2020

Energy, Climate & Resources

• Top story: The European Commission to leverage Green Deal to support recovery
• Why it matters: The European Commission is aiming to use member state support for the Green Deal—the EU's flagship policy to be carbon neutral by 2050—to push for its recently proposed Recovery Fund. Such a move would substantially strengthen the EU's climate policy, but uncertainties remain and pushbacks are possible. Potential EU-wide taxes with a focus on the environment have been a divisive issue among member states; the Recovery Fund's plan to impose green conditionality on member states seeking funding could stoke tension in upcoming negotiations. Outside of the EU, a proposed carbon border tax could be applied to Asian batteries as early as 2022.

South & Southeast Asia

• Top story: India's Rajya Sabha elections on 19 June
• Why it matters: Prime Minister Narendra Modi's Bharatiya Janata Party (BJP) is the single largest party in both the Lok Sabha (lower house of parliament) and Rajya Sabha (upper house of parliament). However, he does not have a majority in the Rajya Sabha, which has helped to stymie part of his agenda. Fifty-five seats are up for election, but 37 have been elected unopposed. The key elections to watch are from the states of Gujarat, Madhya Pradesh, and Rajasthan; in Gujarat, a number of Members of the Legislative Assembly (MLAs) have resigned and joined the BJP, while in Madhya Pradesh, 22 MLAs resigned and gave support to the BJP (and in the process allowed the BJP to form the government in Madhya Pradesh). The Congress-led government in Rajasthan is accusing the BJP of trying to engineer defections there as well. Whatever happens in these seats, the BJP is likely to increase its total number of members in the Rajya Sabha, helping them inch toward the majority.

Middle East & North Africa

• Top story: Saudi Arabia's official decision on whether to maintain or cancel the yearly Hajj pilgrimage, set to take place during the final week of July
• Why it matters: While certain pilgrim-sending countries such as India and Malaysia have announced that Hajj would probably be canceled this year, Saudi Arabia has held off on making an official announcement. Whether Saudi Arabia chooses to reduce country quotas and enforce a Hajj with “social distancing” or cancels the event altogether, the drop in religious tourism—previously propped up as a major growth sector—will constitute a significant blow to the Saudi economy in 2020.

Brazil

• Top story: Bolsonaro's new coalition in congress
• Why it matters: Last week, President Jair Bolsonaro re-created the communications ministry and appointed a traditional politician from a centrist party as its head, going against one of his core campaign promises. This is the highest profile position doled out so far in his rapprochement with congress to form a coalition. This forming coalition will be put to a test this week with votes on bills and presidential vetoes that could raise fiscal costs to the administration. Another signpost to watch will be on upcoming discussions to extend the emergency stipend for informal workers affected by the pandemic for another couple of months. Contention over cutting the benefit by half can be a major issue for legislators from poorer regions and will be significant to assess the coalition's red lines.

Healthcare

• Top story: Covid-19 numbers in the US
• Why it matters: The US has crossed the threshold of 2 million coronavirus cases, and with more than 115,000 deaths, it continues to lead the world in Covid-19 fatalities. As the country begins reopening, cases are climbing in 22 states, with Arizona, Texas, and Florida seeing their highest case numbers to date.

Europe

• Top story: European Council on 19 June via video conference
• Why it matters: We are watching for progress on the new recovery instrument, although an agreement is unlikely until July or later.

North America

• Top story: Trump rally in Tulsa, Oklahoma
• Why it matters: This will be the President Trump's first in-person rally since the beginning of the coronavirus pandemic. Trump initially planned to hold the event on 19 June, or Juneteenth, the anniversary of the day in 1865 in which Union soldiers read the Emancipation Proclamation to slaves in Texas, the last Confederate state to receive word. In the wake of George Floyd's death and protests against racial inequality and police brutality, this decision was widely criticized, particularly because Tulsa was the site of a 1921 massacre in which some 300 black Americans were killed by white mobs (Trump has since moved the rally back a day). How the rally plays out will be a bellwether of the political mood surrounding both the pandemic and recent protests.

Eurasia

• Top story: Russian central bank eyeing sizable interest rate cut
• Why it matters: The bank's 19 June meeting is being watched even more closely than usual after Governor Elvira Nabiullina hinted the bank may reduce its policy rate by a full percentage point. This would be an unusually large cut for a bank noted for its policy caution. With the rate currently at 5.5%, it could even fall to a historic low, previously set at 5% in 2010.