#BlueStarBrief January 2022

2021 saw a new American presidency, dozens of elections around the world, and vital meetings of the international community, including the 76th meeting of the UN General Assembly in New York and the COP26 conference on climate in Glasgow. Tensions continued to rise between China, Russia, and the West, and our understanding of "everyday" life was regularly changed as the world navigated the COVID-19 pandemic.

We thank you for sticking with us through 2021’s ups and downs, and look forward to continuing to provide you with insight and analysis on business, governance, and policy throughout 2022. Here’s what we have for you in this month’s #BlueStarBrief:

Karen Tramontano Speaks With the ILO’s Director of Research, Richard Samans

Political and Business Outlooks 2022 for Latin America, the US, and Europe

A Look Ahead at Important Events and Dates in 2022

By Gabriel Sánchez Zinny

2021 saw polarizing elections and stumbles in economic recovery throughout Latin America and the Caribbean as the region continued to struggle with COVID-19's rapid spread and the connected damage to economic and social realities. 2022 will show new challenges as local governments direct economic recovery, as well as complications with Chinese and Russian influence and reevaluation of global value chains. With multiple elections due in the region, there is a lot to look out for throughout 2022.

Click here to read.

By Kesarev, Guest Firm Contributor

Kesarev is a public affairs advisory firm with focus on Central and Eastern Europe.

For Central & Eastern Europe, 2021 was a year of political instability and this year is expected to bring similarly pressing challenges. The majority of the region is now governed by experimental and/or ideologically diverse coalitions, with many facing major question marks over their potential to remain in power throughout 2022 as the region hopes to continue its recovery from the COVID-19 crisis.

After a tumultuous election season last year, the region is also braced for much-anticipated electoral contests in Serbia, Slovenia, Hungary and Latvia, as well as troubled Bosnia and Herzegovina, with Hungary set to hold its most open general election in more than a decade. At the same time, the region's political stability depends not only on domestic political factors but also international affairs, most crucially the impasse between Russia and the West over Ukraine.

In their piece, Kesarev highlights four key political developments for international investors to watch in 2022 which we consider to have the potential to shape the political and economic life of the region for this year and beyond.

Click here to read.

By Will Kinsman

2021 was a turbulent year for governments throughout Central and Eastern Europe. The past year has seen a high degree of political instability in the region with at least three countries, Bulgaria, Romania, and Slovakia, having faced a major political crisis in the past year. The largest contributing factor to political instability during 2021 was the global COVID-19 pandemic. The pandemic has highlighted pre-existing weaknesses in terms of political corruption, distrust of government, weak healthcare systems, susceptibility to disinformation, and supply chain vulnerability.

While governments in the region will have to address these issues in 2022, the single largest issue in the coming year will be moving beyond the pandemic. In doing so, the biggest challenges policymakers face are increasing vaccination rates, addressing rising energy prices caused by the ongoing energy crisis, and inflation. Over the next two years, these issues will be on the ballot in upcoming elections throughout the region. For countries not scheduled to hold elections in the next two years, such as Romania and Bulgaria which have recently emerged from extended political crises, these issues will also play a key role in deciding political stability in the region in the near future.

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By Étienne Bodard

Will 2022 be "crucial" for France and the EU? In France, all of Emmanuel Macron's challengers for the presidential election in April claim so. Not to be outdone, President Macron described 2022 as a crucial year for Europe as France took over the presidency of the Council of the European Union for six months on January 1.

With less than 100 days to go before the French presidential election, the political situation remains blurry and uncertain:

- Who will be the candidates on the starting line?

To date, about 20 candidates are in the race to unseat President Macron. However, to run, each candidate must collect the support of 500 local/national elected representatives before March 4th. This criterion should drastically limit the number of effective candidates. In early March, we will know the final list of candidates running for the 1st round. By then we will know if the left will have managed to unite, which seems unlikely, and if Emmanuel Macron is a candidate for re-election. An open secret. He has publicly expressed his desire; the question is not if he will be a candidate but when. Where the pandemic situation could delay his entry into the campaign, his challengers are calling on him to declare his candidacy shortly.

- What will the impact of the health situation be on the organization and the course of the campaign?

It is a fact that the pandemic is pushing the staff to reinvent themselves to campaign. Several candidates have already had to cancel, postpone, or rethink some of the major grassroots meetings they have organized, considering the virulent circulation of Omicron. Others have maintained their scheduled dates but have imposed the wearing of masks in the meetings. All have agreed to keep the election dates, April 10 and 24.

- What will the campaign themes be?

Because of the pandemic situation, the health issue is at the forefront of media interest. Other themes have emerged but none have imposed themselves unquestionably for the moment. Extreme right candidates Eric Zemmour, Marine Le Pen, and conservative Valérie Pécresse are pushing the themes of immigration and insecurity, while the candidates on the left are mainly campaigning about the fight against global warming, the protection of purchasing power, and the fight against inequalities.

Despite all these unknowns, polls indicate that Emmanuel Macron will be re-elected next April. The last president to have been re-elected, outside the period of coalition ("cohabitation"), was Charles de Gaulle! However, 100-day polls rarely show the winner of an election. It is difficult to anticipate the behavior of French people exhausted by 2 years of pandemic. Moreover, voters are less and less captive of political parties and more and more undecided. Not to mention abstention, still on the rise...

Since 2002, legislative elections to renew the lower house are systematically organized in the wake of the presidential elections. In addition, since then, the President has always got a clear and honest majority in the House. However, all the uncertainties surrounding the presidential election this year are also valid for the legislative elections...

Emmanuel Macron promised that he would act, in France as in Europe, until the last day of his term. In France, the priorities for the next few months will be determined by the evolution of the sanitary situation … and by the upcoming presidential election! President Macron will certainly try to put the focus on the economy which has been recovering strongly from the pandemic. In a recent opinion, Nobel Prize winner Paul Krugman wrote : "In fact, among major advanced economies, the star performer of the pandemic era, arguably, is … France". During the pandemic, France supported workers income by offering subsidies to employers to keep furloughed workers on the payroll.

According to a study led by Ernst & Young, France is the most attractive European country for foreign investments for the third year in a row. During the 5th edition of the Choose France Summit on Jan. 17th, President Macron announced that foreign companies will invest 4 billion euros in France, creating more than 10,000 jobs. On the same day, President Macron announced that France got its 25th Tech Unicorn (start-up valued at more than 1 billion US dollars), reaching President Macron’s goal 3 years early. Macron set a new goal: creating 10 European tech companies by 2030. 2030 is also the horizon set for the 30 billion euros investment plan unveiled by President Macron in October 2021, to support the transformation of key sectors of the French economy (energy, transport, agriculture/food, health, culture, space, sea).

Emmanuel Macron also intends to be at the forefront at the EU level during the French Presidency of the Council of the European Union (1 January 2022 - 30 June 2022). For more information on the priorities of the French Presidency, read our last analysis.

Beyond the French Presidency, the challenges for the European Union will be numerous. After the successful launch in 2020 of the European recovery plan (Next Generation EU programme, a €750bn plan), the European Union will have to succeed in landing the dossier of its own resources (multinationals taxation following the OECD deal, carbon border adjustment mechanism, etc.) to repay this joint debt and will have to pursue the discussions on the change of budget discipline regulations, to avoid hampering the economic recovery. On this issue, there may be a political momentum not seen for years. Indeed, in a joint opinion dated December 23rd 2021, Italian Prime Minister Draghi and President Macron called for "more suitable rules and better coordination". More reserved about such reform, the new German Social-Democrat Chancellor, Olaf Scholz, still did not close the door on it.

Internally, the European Union will also have to maintain a firm line on respect for the rule of law in the face of attempts by certain member states to limit press freedom, to challenge the independence of their national judiciary system and to reject the primacy of EU law over national legislation.

The European Union will also tackle decreasing purchasing power due to the increase in the price of raw materials and inflation. The consequences will largely depend on measures/budget allocated by Governments to support the population (equivalent of Build Back Better in the USA). Notably, the debate on the minimum wage will expand in 2022 as a priority of the French Presidency of the EU.

Last but not least, the so-called Geopolitical Commission will have to deal with several external issues, among which: escalated tensions at the Ukraine-Russia boarder, China's trade threats towards certain member states, and the expansion of Chinese influence in Africa. It is in this context that the EU/US dialogue on security and defense will be launched in 2022.

We will closely follow all these developments at the national, European and international levels to provide you with an ever-sharper analysis, essential to your strategic and operational choices. Stay tuned!

By Karen Tramontano

While we have provided a calendar of important upcoming dates and events in the U.S. below, there are several issues in Congress and in the Biden Administration that deserve a special mention.

The House January 6th Commission has interviewed over 300 witnesses and reviewed thousands of documents, texts, and communications. The Commission is preparing to "go public" in the summer. The report will come in advance of the upcoming mid-term elections in November and the Commission will have the burden of convincing the American public that its information is based on facts and that the report is bipartisan, all in the face of what will be attacks by others about the Report's veracity.

In the Senate, that chamber has the fate of the Biden Administration's two major agenda items - the Build Back Better legislation and changes that will restore the Voting Rights Act. As readers of the Blue Star Brief you probably know more than you want to know about the Senate Filibuster Rules. While there was hope that a limited change in the Senate Filibuster Rules would happen, Senator Sinema, right before President Biden’s visit to the Senate, crushed all hope that the rules would be changed by declaring she would be a "No" vote. Meanwhile, the Republicans, wisely are joining an effort to codify the way in which the Congress must count the electoral college votes. This would give the Republicans a pro-democracy message and a vote that allows them to say they are working to support U.S. democracy. But it would leave the Democrats without any power to stop the anti-democratic measurers adopted by Republican led state legislatures – measurers that restrict voting in key states and for key constituencies. Several Democrat Senators including Senator Elizabeth Warren have taken to the air waves to speak out against colleagues voting rights reforms.

The Build Back Better legislation that would lift thousands of children out of poverty, improve the U.S. healthcare system, and require corporations to pay a minimum tax has been stalled because of one vote - that of Senator Joe Manchin. We understand during the holiday break that many of Senator Manchin's constituents in West Virginia have reached out to him to discuss the impact his potential "No" vote would have on their lives. Majority Leader Senator Schumer has said he will take the Build Back Better legislation to the Senate floor under reconciliation for a vote in the next few months, but that legislation will very likely be limited to provisions that would ensure Manchin’s "Yes" vote.

For the Biden Administration it is COVID-19 and its variants 24/7. Biden ran on an agenda to keep America safe, and with misinformation, a large percentage of the U.S. unvaccinated, and variants continuing to wreak havoc, it is becoming very challenging for the Administration to deliver on its promise. That said, the economy is moving in the right direction, with jobs growing even when millions of workers have decided to resign from their current positions for other, in most cases, more entrepreneurial opportunities.

On the international front, the Biden Administration must manage on-going and lethal threats from Russia to Ukraine and other countries and China's economic dominance threat to the world. All this, while keeping U.S. allies on a course to continue security and economic cooperation. 2022 will be a challenging year for the Biden/Harris Administration and we will watch closely to see whether they will meet the challenges ahead and whether the voters will agree in November that the Biden/Harris team is moving in the right direction.

In the United States:

February 18: The December 2021 Continuing Resolution funding the federal government expires.
March 1: President Biden will deliver his 2022 State of the Union address.
March: The Biden Administration's budget for FY 2023 is released - this is a delay from the usual timeline, and we will keep you updated as the budget process develops.
October 1: Start of the federal government's FY 2023.
November 8: US Midterm Elections are held throughout the country, with 469 seats (34 Senate, all 435 House) up for election.

In Europe:

January 19: French President Emmanuel Macron speaks to the European Parliament.
February 6: 70th Anniversary of Queen Elizabeth II's Reign in the UK.
February 17-18: The 6th annual EU-African Union Conference will take place in Brussels, Belgium. The summit aims to "define key priorities for the coming years and could provide strategic and political guidance for relations between the two continents."
March 10-11: A summit of the governments of the EU will assemble in France to set "a new growth and investment model" for the EU.

Key Elections

January 30: Parliamentary Elections in Portugal
April 3: Parliamentary Elections in Hungary
April 3: General Elections in Serbia
April 10&24: Presidential Election in France
April 24: Parliamentary Elections in Slovenia
May 5: Parliamentary Elections in Northern Ireland
June 12&19: Parliamentary Elections in France
September 11: General Elections in Sweden
October 1: Parliamentary Elections in Latvia
October 2: General Elections in Bosnia
October: Presidential Elections in Slovenia

In France:

January 1: France took over the rotating Presidency of the Council of the EU for the 13th time.
February 9-11: The "One Ocean Summit" will take place in Brest, Bretagne. The Summit will aim at elaborating means to preserve oceans and a protection framework for the high seas.
February 27-June 19: Suspension of activities of the French Parliament due to Presidential and Parliamentary Elections.
March 18: 60th Anniversary of the Evian agreement, which ended the French-Algerian war.
September 21: 230th Anniversary of the first French Republican proclamation
Q4 2022: The first budget bill of the new government will be examined and voted on in Parliament.

In Latin America and the Caribbean:

February 10-11: The 5th Ministerial Meeting of the Energy and Climate Partnership of the Americas will take place in Panama City, Panama.

Key Elections
January 19: Legislative elections in Barbados
February 6: Legislative and Presidential elections in Costa Rica
March 13: Legislative elections in Colombia
May 29: Presidential elections in Colombia
June 5: Local elections in Mexico
October 2: Local elections in Peru
October 2: Legislative and Presidential elections in Brazil

Internationally:

January 17-21: The World Economic Forum will host The Davos Agenda virtual event from Geneva, Switzerland.
March: If confirmed, the WTO will hold its 12th Ministerial Conference, delayed from November 2021 due to COVID-19.
April 22-24: The World Bank Group will hold its Spring Meeting in Washington, DC.
June 9-10: The Fifth Annual Copenhagen Democracy Summit will take place in Copenhagen, Denmark.
June 26-28: The 2022 G7 Conference will take place in Germany, at the Elmau Castle in the German Alps.
June 29-30: The 2022 NATO Summit will take place in Madrid, Spain.
September 13-27: The 77th Session of the UN General Assembly will meet at the UN headquarters in New York.
October 14-16: The World Bank Group and International Monetary Fund will hold their Annual Meeting in Marrakech, Morocco, delayed one year by COVID-19.
October 30-31: The 2022 G20 Conference will take place in Bali, Indonesia.
November 7-18: The UN COP27 Conference will take place in Egypt.
Unknown: The US will host the 2022 Summit of the Americas in Washington at some time this year.
Unknown: The US-EU Trade and Technology Council will hold a second meeting in Europe at some time this year.