Australia’s Political Landscape Unveiled: Weekly Insights from Teneo

Slovakia’s Political Outlook: Implications of a Fico Government

Welcome to this edition of the Weekly Political Compass from Teneo’s political risk advisory team. This week, we are taking a closer look at the political outlook in Slovakia. Following the victory of Social Democracy’s (SMER-SD) in the parliamentary elections, our Central and Eastern Europe expert, Andrius Tursa, analyzes the situation and explores the potential implications of a Fico-led government.

What Happens Now?

On October 2nd, President Zuzana Caputova will begin the government formation process by appointing SMER-SD leader, Robert Fico, as Prime Minister. Fico will then have 30 days to present the cabinet and its governing program for approval in parliament by an absolute majority of votes. Fico intends to start talks with the center-left Voice-Social Democracy (HLAS-SD), which will be a crucial partner for forming a majority government. Despite potentially difficult coalition talks, SMER-SD holds the best chance of leading the next government.

Implications of a Fico Government

The return of a SMER-SD-led government would likely bring setbacks in tackling corruption, pose a risk of democratic erosion, and increase risks to foreign investors. Domestically, this would be a worrisome development as it could hinder efforts to combat corruption and undermine the democratic institutions that are crucial for a healthy political environment. Furthermore, a SMER-SD-led government is likely to adopt Euroskeptic and pro-Russian policies, which would strain relations with key Western partners and potentially harm Slovakia’s position within the European Union.

Asia Pacific

China

China plans to boost inbound tourism and business travel by reinstating visa-free travel for some countries, adding new countries to the visa-exemption list, and expanding international flights. However, the number of weekly passenger flights to the US is expected to decrease, which could have implications for trade and tourism between the two countries.

Japan

The implementation of the new invoice system in Japan could cause initial disruption for smaller firms. Although the system aims to improve tax reporting and increase overall tax receipts, smaller firms may face administrative burdens and increased compliance costs.

Indonesia

President Joko Widodo inaugurated Southeast Asia’s first high-speed rail, which was funded and built through the Belt and Road Initiative. While the rail line creates positive headlines, there are concerns about the project’s final cost and the government’s potential need to subsidize fares. If the rail line is extended, it is likely to be as a Chinese-backed project, further raising geopolitical considerations.

Europe

Greece

In the upcoming local and regional elections, ruling New Democracy (ND) is expected to maintain its stronghold on Greek politics. However, ND’s dominance could be challenged in flood-affected regions and potentially lead to a more fragmented political landscape.

Latin America

Argentina

Argentina’s presidential race is heating up with the second and final candidates’ debate taking place. A recent scandal involving a government official enjoying a lavish vacation may have an impact on the election, potentially denting support for the ruling party.

Middle East and Africa

Nigeria

Labor unions in Nigeria are threatening strike action to challenge recent policy decisions by President Bola Tinubu’s administration. The negotiations between the government and labor unions have been ongoing, but if an agreement is not reached, it could lead to widespread disruptions.

Graph of the Week: Foreign Investment Screening in the EU

The European Commission has been ramping up efforts to screen foreign investment in the European Union since 2020. The public mood is shifting towards tougher rules on foreign direct investment, particularly in critical sectors. The debate on foreign investment screening is expected to intensify as the EU’s new security strategy takes shape.

Disclaimer: The views and opinions expressed in this article are solely those of the authors and do not necessarily reflect those of Teneo. They are offered to stimulate thought and discussion and should not be taken as legal, financial, accounting, tax, or other professional advice or counsel.