WSJ Emerging & Growth Markets Weekly, August 6th 2021

Welcome to the latest edition of WSJ Pro Emerging & Growth Markets, our weekly review of key news affecting frontier and small emerging markets. This newsletter is a companion to Strategic Intelligence, an information resource focused on emerging markets that brings together the global news coverage of The Wall Street Journal with the analysis of market intelligence firm FrontierView.?

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Africa

USAID head condemns Ethiopian campaign against Tigray.?The head of the U.S. Agency for International Development condemned the Ethiopian government’s continued battle with Tigray forces, accusing leaders of prioritizing self-interest over national interest. During a trip to Sudan and Ethiopia this week, Samantha Power, administrator of USAID, said: “The government’s brutal campaign against the people of Tigray has put the country’s people at risk of a prolonged civil war and the people of Tigray at grave risk of imminent famine.”

Ms. Power’s remarks echo earlier criticism by the U.S. administration of a country that she described as having been “home to some of the most impressive development gains and economic growth anywhere on the continent, and a regional anchor of stability and security.” But she also urged Tigrayan forces to join a ceasefire, noting that the U.S. was “watching with great alarm as a conflict that began in Tigray is now beginning to spread.”?

Ethiopia’s government, meanwhile, has continued to?restrict?the movement and operations of aid organizations attempting to provide food and supplies to people in Tigray who are facing imminent famine.

Covid-19 case exposes Zimbabwean vice president’s visit to China. Last September, Zimbabwe’s vice president, Constantino Chiwenga, who also serves as health minister, announced that Zimbabwe’s government would no longer pay for state officials to travel abroad for medical treatment. This week, it emerged that Mr. Chiwenga?was in China to receive medical treatment?for a throat problem, a trip that was exposed after a member of his entourage tested positive for Covid-19, Keith Zhai, Joe Parkinson and Jonathan Cheng report.

Zimbabwean Vice President Constantino Chiwenga getting his second shot of China’s Sinopharm vaccine in Harare, Zimbabwe, on March 18.

PHOTO: XINHUA/ZUMA PRESS

It couldn’t be determined whether Mr. Chiwenga was subjected to the same stringent protocols that China has imposed on other foreign visitors. Diplomats coming to China are required to get tested before their departure and upon arrival, and remain isolated from the public in China until they receive their results.

China has lined up billions of dollars in investment projects in Zimbabwe’s economy in recent years, spanning energy, mining, telecommunications and infrastructure. China’s state-run Sinohydro, for instance, is upgrading Zimbabwe’s largest power station, while Shanghai Construction Group, also state-owned, is building a Parliament building outside Zimbabwe’s capital, Harare.

Asia

Myanmar rulers extend state of emergency.?Myanmar’s junta leader has?pledged to hold democratic elections within two years, extending a state of emergency?imposed by the military when it?overthrew?the country’s elected government in February, Feliz Solomon reports. Speaking in a televised address, Gen. Min Aung Hlaing said his State Administration Council is “working as quickly as possible” to prepare for fresh elections after voiding the results of a 2020 vote that dealt a landslide victory to the party of civilian leader Aung San Suu Kyi.

Ms. Suu Kyi and other members of her government have been detained since the Feb. 1 coup, which?abruptly ended?the Southeast Asian nation’s decadelong transition to democracy and threw the country into chaos. The military says the 2020 vote was marred by widespread fraud, a claim disputed by independent election observers.

Gen. Min Aung Hlaing, shown in March, said his State Administration Council is ‘working as quickly as possible’ to prepare for fresh elections.

PHOTO: REUTERS

Protests erupted within a week after the putsch and have continued almost daily in the six months since. At least 940 people have been killed and more than 5,400 others have been detained since the coup, according to the Assistance Association for Political Prisoners, a nonprofit that monitors arrests and fatalities.

Delta variant stalls Asia’s economic recovery after early rebound. A sharp rise in infection rates driven by the Delta variant of the coronavirus is?hampering Asia’s economic recovery?and eroding the advantage of many of the region’s economies as manufacturing powerhouses, Stella Yifan Xie and Jon Emont report. Countries in Southeast Asia have been among the hardest hit, prompting new social-distancing restrictions and lockdowns in countries that had largely avoided those measures earlier in the pandemic.

Factory production is contracting across Southeast Asia, with?Indonesia and?Malaysia, which have recently faced surging caseloads and Covid-19 deaths, among the worst affected, according to IHS Markit. Malaysia, for example, has required factories in nonessential sectors such as apparel to close since early June after a series of Covid-19 outbreaks linked to workplaces.

Given the region’s tightly integrated supply chains, factory shutdowns in one country can cause problems elsewhere. PT Pan Brothers, an Indonesian garment producer with 31,000 workers, has been allowed to operate with full staff but raw-material deliveries from?Vietnam?and other countries have been delayed because of lockdowns in those places, said Anne Patricia Sutanto, the company’s vice chief executive.

A near-deserted street in Kuala Lumpur, Malaysia, one of the Southeast Asian countries worst hit by the Delta variant of the coronavirus.

PHOTO: WONG FOK LOY/SOPA IMAGES/ZUMA PRESS

Lockdowns have already hampered output in countries such as?Thailand, where some factories for Toyota were closed temporarily. That risks worsening already-strained global supply chains amid surging shipping costs and shortages of some components.

Middle East

Lebanon’s economy, still reeling from Beirut port explosion, falls off a cliff.?A year on from the tragic Beirut?explosion?that killed more than 200 people and ravaged the heart of residential areas and the city’s vibrant commercial district, Lebanon’s economy?is in the midst of a catastrophic collapse, Jared Malsin and Nazih Osseiran report.

Power outages have become so frequent that restaurants time their hours to the schedule of electricity from private generators, brawls have erupted in supermarkets as shoppers rush to buy bread, sugar, and cooking oil before they run out or hyperinflation topping 400% for food puts the prices out of reach, medical professionals have fled just as the pandemic hammers the country with a new wave of infections, thefts are up 62% and murder rates are rising fast.

The World Bank, which says GDP per capita dropped about 40% from 2018 to 2020, reported in May that the country’s economic crisis could rank among the top three in the world in the past 150 years and Lebanon could take between 12 and 19 years to recover.

• A year after Beirut explosion, Lebanese are still pushing for answers

The origin of Lebanon’s crisis can be traced to its banking system, which tipped into insolvency in 2019 when the country’s policy of pegging its currency to the U.S. dollar unraveled, but a yearslong political crisis has exacerbated the problems, which have been compounded by the Beirut explosion and the pandemic.

Iran swears in president Ebrahim Raisi as unease grows in West. For the first time in years, all branches of power in Iran are?under the control of hard-liners?after a protégé of the supreme leader was sworn in as president, Sune Engel Rasmussen writes. The move bolsters the hard-liners’ power and adds to growing unease that the Islamic Republic’s relations with the West could worsen.

Mr. Raisi was sworn in at a ceremony at Iran’s parliament in Tehran on Thursday.

PHOTO: ABEDIN TAHERKENAREH/EPA/SHUTTERSTOCK

President Ebrahim Raisi, 60 years old, studied as a young man at one of Supreme Leader Ali Khamenei’s Islamic seminaries. He also served on a panel that ordered the execution of thousands of political prisoners. Later, he moved up through the ranks to lead Iran’s judiciary.

In his first speech as president, Mr. Raisi struck a conciliatory tone at times, but he also warned foreign countries against getting involved in regional disputes, saying his election win in June represented a demand from voters to push back against “the excessive demands of the arrogant and tyrannical powers of the world.”

Europe

Belarusian activist’s death in Ukraine is investigated as homicide. A Belarusian activist who headed a group in Ukraine that helps Belarusians escape repression in their homeland was?found dead a day after disappearing?near his home in Kyiv, Ann M. Simmons reports. Ukrainian authorities said they were investigating the death of Vitaly Shyshov, who was found hanged in a park not far from his residence, as a homicide.

• Belarusian Olympic athlete who refused to go home says she will never return?

The incident comes as Belarusian President Alexander Lukashenko has stepped up a campaign to suppress any form of?opposition?to his nearly 30-year rule. A year after declaring victory in a presidential election that local activists and Western leaders widely believe was rigged, Mr. Lukashenko has launched raids on opponents’ homes, banned independent media outlets, allowed security personnel to use live ammunition against protesters, and jailed or exiled key opponents.

The site where Mr. Shyshov was found dead in Kyiv.

PHOTO: GLEB GARANICH/REUTERS

Mr. Shyshov, 26 years old, was forced to move to Ukraine in the fall of 2020 after participating in the mass protests that swept Belarus following the presidential vote, representatives of Belarusian House, the group he led, said in a statement on its Telegram messaging channel.

As head of the humanitarian organization, he helped other Belarusians to relocate abroad, organized actions against Mr. Lukashenko’s regime, and appealed to government agencies to promote bills to assist Belarusians, the group said.

Romania’s current account deficit leaves leu vulnerable.?The sharp deterioration in Romania’s current account deficit to 6.3% of gross domestic product in the year to May is raising concerns about the stability of the country’s currency, the leu, Renae Dyer writes. “Current account deficits this large have often been associated with vulnerability to a decrease in global risk appetite, which can put large downwards pressure on currencies,” Nicholas Farr, an economist at research firm Capital Economics, said.

Romania’s central bank is likely to try to limit the currency’s decline against the euro, but Mr. Farr believes there is a risk of sharper falls in the leu that could prompt a faster-than-expected rise in interest rates.

Latin America

Contractor says fired supreme court justice behind killing of Haitian president.?A Miami-based security contractor who hired Colombian mercenaries accused of?killing?Haitian President Jovenel Mo?se last month?said he was working with a former Haitian Supreme Court judgeto help arrest Mr. Mo?se and not assassinate him, Drew Hinshaw and José de Córdoba report. Antonio Intriago, owner of a South Florida-based firm called CTU Security, said the mercenaries went to the president’s private villa to accompany Haitian police executing an arrest warrant for the president, according to a statement released Wednesday by three lawyers representing Mr. Intriago.

Suspects in the assassination of Haiti's President Jovenel Mo?se beside weapons and equipment police allege were used in the attack.

PHOTO: JOSEPH ODELYN/ASSOCIATED PRESS

They said the president was dead when the Colombians arrived, echoing testimony from some of the soldiers. “It is our belief that the president’s own bodyguards betrayed him,” the lawyers wrote in a statement.

• Who assassinated Haiti’s president? The mystery gets murkier

More than 40 people including members of the slain president’s security detail, Haitian politicians, a convicted drug dealer turned Drug Enforcement Administration informant, a second longtime DEA informant and Miami-area businessmen have been detained or implicated in the case.

Chile miners’ strike could crimp global copper supply.?The union representing workers at Chile’s La Escondida copper mine said?its members voted to strike, potentially risking disruptions to the supply of a key metal, Jeffrey T. Lewis and Rhiannon Hoyle write. BHP-controlled Minera Escondida, located in Chile’s northern Atacama Desert, is the world’s largest copper mine, producing almost 5% of the world’s supply of the metal.

By law, the miners must continue to work during a period of obligatory mediation by the government for a period of up to 10 days, so a strike isn’t a done deal, according to some analysts. Still, when Escondida workers walked off the job in 2017, they didn’t return for 44 days.

Workers voted to strike after rejecting a revised contract offer from Minera Escondida that, according to the miners, “is really based on the extension of working hours, in the increase of operational demands” and other conditions that are worse for workers.

What We’re Reading

Angola’s?Isabel dos Santos ordered to return €422m worth of shares to Sonangol. (Africa Report)?

Rwanda?raises $620m through a 10-year Eurobond. (CNBC Africa)

Morocco?to extend night curfew to limit Covid-19 surge. (Reuters)

Cambodia?aims to wean itself off dollar-dependence with digital currency. (Nikkei)

Pandemic drives sharp growth in?Vietnam?e-commerce. (The Star)?

Vietnam?to extend lockdown throughout southern region as Covid cases soar. (Reuters)?

Vietnam?overtakes?Bangladesh?in garment exports. (Business of Fashion)?

Pakistan?reaches 1m shots a day after warning unvaccinated face penalties. (WHBL)?

Taliban claim attack on?Afghanistan?defense minister’s home. (WSJ)??

North Korea?is willing to talk, but first it wants fuel, suits and liquor. (WSJ)?

Amid rising tensions with?Iran?ship seized in Gulf of Oman, then released. (WSJ)?

U.S. blames?Iran?for drone attack on?Israeli-linked tanker. (WSJ)

Israeli?military strikes targets in?Lebanon?after Hezbollah rocket attack. (WSJ)

Saudi Arabia?‘ramped up executions’ in first half of 2021. (Al Jazeera)?

Argentina?makes $334m interest payment to IMF. (Buenos Aires Times)

ConocoPhillips aims to collect $115m?Jamaica?owes?Venezuela. (Reuters)?

Peru’s?new finance minister says president backs economic agenda. (Buenos Aires Times)?

Mexico’s?president confirms plan to host?Venezuela?talks. (Reuters)?