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Sao Paulo Gov. Joao Doria addresses demonstrators during a Sept. 12, 2021, protest in Sao Paulo, Brazil.

Americas

The fourth quarter will see countries with low vaccination rates explore options to "live with COVID" rather than continue severe lockdowns in order to enable economic recovery.

Quarterly

The virus that causes COVID-19.

Global Trends

<p><strong>The delta variant will continue to fuel the <a href="https://worldview.stratfor.com/article/what-happens-when-covid-19-becomes-endemic">spread of COVID-19</a>, primarily in unvaccinated populations around the world, and to create supply chain disruption risks.</strong> Vaccination rates, social distancing measures and new mutations of the virus will remain the key factors to watch with regard to the spread of the virus. The likely approval of childhood vaccinations against the virus that causes COVID-19 in the United States and other developed nations in the fourth quarter will accelerate containment efforts, but vaccine hesitancy in the developed world and difficulties in obtaining and distributing vaccines in emerging economies will constrain the global effort to end the pandemic. In the near term, the risk of additional supply chain disruptions will remain high, especially in more risk-averse countries like China that maintain severe lockdown strategies. The risk will decrease somewhat toward the end of the quarter as other nations, especially in hard-hit Southeast Asia, shift their strategy from enacting strict lockdowns to learning to live with COVID-19 in order to protect their economies. But even with a new approach to COVID-19, disruptions related to structural issues and efforts to emphasize resilience over timeliness will persist beyond the end of the year.</p>

Endemic COVID-19 on the Horizon

<p><strong>The delta variant will remain the main source of global economic uncertainty in the fourth quarter amid rising inflation, supply chain bottlenecks and labor shortages.</strong> While the world economy is growing at its fastest aggregate pace since the late 1970s, the pandemic will remain the biggest factor generating uncertainty until well into 2022, if not beyond. Meanwhile, global aggregate demand is recovering faster than supply, which is creating production and distribution bottlenecks and labor shortages putting upward pressure on prices and increasing the risk that inflation will become embedded and further slow real growth. With high levels of public debt, especially in developed economies, major central banks will cut back on their expansionary monetary policies, which will increase exchange rate pressures on emerging markets and developing economies also dealing with higher inflation. While growth in the United States and China will remain relatively high during the quarter, it probably peaked during the first half of the year, and will likely slow as supply chain issues constrain output.&nbsp;</p><p>In the United States, household and business expectations of inflation, inventory rebuilding and continued federal spending should support demand through the quarter. On the other hand, pandemic-related bankruptcies could continue to negatively impact fixed investment and job creation going forward, while the expiration of unemployment benefits and eviction moratoriums may also affect consumption, the largest part of gross domestic product.&nbsp;</p><p>In the meantime, China&#39;s recovery remains uneven, and its economy seems to be returning to longer term trends of relying on infrastructure investment, property development and export-led growth. The combination of clamping down on property developers and introducing greater regulation of technology companies could further slow consumption and delay rebalancing the economy. High amounts of domestic debt represent a significant threat to the economy, as are rising prices not being passed on to domestic consumers that undermine the financial stability of small- and medium-sized businesses. Continued government intervention in the economy to prevent or deflate bubbles is likely.</p><p>While Europe emerged from a recession in the third quarter, its output remains below pre-pandemic levels. Its vaccination campaigns have gained momentum in recent months, although progress is uneven among countries, and colder weather could bring new coronavirus outbreaks. Supply chain disruptions are slowing European growth as elsewhere, and inflation is pushing above European Central Bank targets, although an early end to easy money is unlikely.</p><p>Economic progress differs the most among emerging market and developing countries (EMDE), which continue to have widely diverging vaccination rates and are vulnerable to renewed COVID-19 outbreaks and lockdowns. Inflation is a particular concern in Latin America, where investment rates and growth lag global trends. A U.S. Federal Reserve reduction and ultimate halt in asset purchases that tightens global liquidity and eventually leads to higher interest rates will affect EMDE exchange rates and could spur capital flight, which would further stunt growth.&nbsp;</p><p>Despite a record number of sovereign defaults in 2020, financial pressure on EMDEs has largely been managed by officially sanctioned debt service suspensions (e.g., the G-20&#39;s Debt Service Suspension Initiative) and the creation of $650 billion in new international reserve assets by the International Monetary Fund. As exceptional financial measures run their course, the global architecture for dealing with sovereign financial issues could be tested, beginning with Zambia&#39;s possible negotiation of a new IMF-supported economic and structural adjustment program in the final months of 2021 or early 2022. A needed restructuring of Zambia&#39;s external debt would involve not just traditional official creditors, but large claims by China and the private sector that could test global cooperation under what the G-20 has declared a common framework for dealing with sovereign solvency.</p>

Global Economic Growth Will Slow Amid Renewed COVID-19 Uncertainty

<p><strong>The Glasgow climate change conference will highlight the remaining divergences between northern and southern countries, making it hard for governments to find consensus on funding for carbon-reducing initiatives.</strong> The Nov. 1 COP26 conference in Glasgow will cement the growing momentum toward climate initiatives in the private sector and much of the developed world. Without the momentum of the required five-year updates following the Paris Accord outlining new climate goals and progress that came ahead of Glasgow, however, the forum will also confirm the divide between the developed and developing world with regard to climate funding. Although the recent Intergovernmental Panel on Climate Change report emphasized the urgency and severity of <a href="https://worldview.stratfor.com/article/geopolitics-climate-change-race-new-energy">the climate crisis</a>, financial limitations in the developing world will limit progress in the global south. While the private sector will continue to present initiatives to cut emissions, the slow economic recovery from the COVID-19 pandemic will make it difficult for the developing world to secure climate funding through the rest of 2021 and into 2022.</p>

Climate Change Initiatives Hit a Wall

<p><strong>The Biden administration will continue to try to resolve trade disputes with its Western allies as it prepares to take a <a href="https://worldview.stratfor.com/article/strategic-implications-new-us-uk-australia-defense-partnership">harder line on trade against China</a> once the phase one trade deal ends at the end of 2021.</strong> The United States and the European Union will likely reach a deal by the end of the year to suspend or relax U.S. tariffs on European steel and aluminum. The United States is unlikely to drop the tariffs altogether because, while most U.S. manufacturers would favor doing so, dropping tariffs would alienate the powerful steel lobby and labor unions. The White House is likely to implement a quota system on European steel and aluminum instead. The Organization for Economic Cooperation and Development will likely make progress on negotiations to reform the global tax architecture by the end of the year, but some countries, like Ireland, are unlikely to join the initiative over concerns about the impact on their attractiveness as low-tax territories. Even if an agreement is reached, there will be logistical challenges for its implementation in the United States, and many countries may not follow through with their promises to remove the digital services taxes they have introduced over the last five years. The United States may complete its now eight-monthlong review of its China trade policy and launch a new investigation against China&#39;s use of subsidies to support strategic industries. Such an investigation is unlikely to conclude this quarter. If it did occur, it would signal that Washington is gearing up for an aggressive trade policy next year, and that a significant reduction in tariffs on China is unlikely.</p>

A Hard Line on Trade Holds

<p><strong>Governments in South Asia, the Middle East, Europe and other parts of the world will try to minimize the <a href="https://worldview.stratfor.com/article/world-reacts-looming-influx-afghan-migrants">arrival of Afghan migrants</a> as much as possible.</strong> Tens of thousands of Afghans have left the country in the wake of the Taliban takeover, and more are likely to attempt to do so in the fourth quarter. But as they find air travel increasingly difficult and expensive, many will try to leave via land, especially to Pakistan and Iran. Both countries will be hesitant to allow new migrants to enter in large numbers and are likely to limit arrivals as they seek to determine their own policies vis-a-vis the new Taliban government.</p>

<p>While European governments are likely to resettle some Afghans, they will seek to avoid a repetition of the 2015-2016 refugee crisis. Instead, they will offer financial assistance to countries like Pakistan, Iran and Turkey to host Afghan migrants and keep them from attempting to enter European territory. In the meantime, the Belarusian government may try to take advantage of the crisis in Afghanistan by sending Afghan migrants to the Baltic EU member states through Belarus, though the impact is likely to be modest considering that countries like Poland and Lithuania have increased their border controls, and will be willing to expel migrants entering their territory.</p>

A Hostile Environment for Afghan Migrants

Asia-Pacific

<h3>China&#39;s Regulations Warp Major Industries</h3><p><strong>China&#39;s regulatory campaign will threaten business continuity for entire sectors, individual companies that come under Beijing&#39;s microscope and supply chains that rely on scrutinized Chinese businesses.</strong> Beijing will add more sectors of the economy to its cultural purity campaign, which has already banned for-profit tutoring and placed heavy restrictions on the video game and entertainment industries. Additional regulations on labor practices, borrowing and data privacy will put compliance burdens on industries. The government will also expand its practice of signaling to companies what products to produce and <a href="https://worldview.stratfor.com/article/protesting-xinjiang-cotton-western-companies-incite-china-s-ire">telling consumers what products to avoid</a>. Though Beijing will encourage foreign investment through official rhetoric and experimental financial market reforms in places like Shenzhen, the national economy will skew toward more regulation, red tape and unspoken rules regarding product content and corporate behavior.</p>

<p>These regulations will especially <a href="https://worldview.stratfor.com/article/china-suspends-didi-app-enforce-national-data-sovereignty">focus on data sovereignty</a>, user privacy and shared access to corporate data, increasing Beijing&#39;s influence over private investment in tech and research and development. In China&#39;s strategic emerging industries &mdash; including artificial intelligence, new energies, and telecommunications &mdash; Chinese companies will be given greater priority over foreign companies for contracts in sectors with mature domestic competitors.</p><h3>U.S.-China Tensions Deepen</h3><p><strong>Continued U.S-China tensions will reduce the room for bilateral cooperation on virtually all major issues, including climate change, the COVID-19 pandemic and trade. </strong>Beijing will continue to <a href="https://worldview.stratfor.com/article/amid-ongoing-talks-alaska-look-back-us-china-relations">blame the United States</a> for bilateral tensions and withhold significant cooperation on climate change until the White House softens its stance. Washington will remain hawkish on China, a position undergirded by bipartisan congressional support, and continue to emphasize issues of human rights in Xinjiang and Hong Kong, <a href="https://worldview.stratfor.com/article/evolving-taiwan-china-relationship-part-1-economy">regional security in Taiwan</a> and the South China Sea, and a thorough investigation into the origins of COVID-19, all while pushing China for more aggressive emissions-reduction commitments. Any high-level bilateral meetings in the fourth quarter will likely be lacking in substance, display accusatory language and exhibit diplomatic stonewalling. China&#39;s preparations for the Sixth Plenum in November &mdash; which will bolster Party unity ahead of <a href="https://worldview.stratfor.com/article/ccps-100th-anniversary-paves-way-xis-third-term">President Xi Jinping&#39;s third term</a> &mdash; and the February 2022 Beijing Olympics and the U.S. consideration of an Olympics boycott make this outcome even likelier. For their part, businesses increasingly will see this lack of cooperation as the new norm. Meanwhile, the impending Biden administration review of trade relations with China will likely focus on maintaining strategic trade competition in more areas than not. As the phase one trade deal expires at the end of 2021, the Biden administration may use a new Section 301 investigation into Chinese subsidies for strategic industries to expand tariffs or swap out existing tariffs for ones less damaging to U.S. infrastructure initiatives.</p><h3>China to Increase Political and Economic Encroachment on Hong Kong&nbsp;</h3><p><strong>China will deepen Hong Kong&#39;s political and economic ties with the mainland while attempting to maintain its attractiveness to foreign investors</strong>. The December 19 Legislative Council elections will yield a decidedly pro-Beijing council as ongoing national security trials against pro-democracy activists prompt more supporters in civil society to bow out of politics or <a href="https://worldview.stratfor.com/article/ambiguous-new-hong-kong-immigration-law-amendments-raise-risk-exit-bans">flee the territory</a>. Though this <a href="https://worldview.stratfor.com/article/mainland-finalizes-and-implements-hong-kong-electoral-reforms">political tightening</a> may prompt rare small-scale bomb and knife attacks, large-scale disruptions from protests and police violence are unlikely. Meanwhile, Beijing will continue deepening Hong Kong&#39;s economic and financial ties with the neighboring mainland megacity of the Greater Bay Area by encouraging greater reforms regarding China-Hong Kong investment flows, though top officials will still rhetorically promote foreign investment in Hong Kong amid concerns of the region&#39;s diminishing status as a global financial hub. China will slow the application in Hong Kong of mainland laws, like the <a href="https://worldview.stratfor.com/article/china-delays-extending-its-anti-sanctions-law-hong-kong-now">Anti-Foreign Sanctions Law</a> and recent cyber laws, in an attempt to ease foreign worries about the steady erosion of the region&#39;s judicial and regulatory independence. Laws in countries such as the United States, the United Kingdom, Australia, Japan and other U.S. allies supporting the relocation of refugees from Hong Kong and condemning Beijing for its suppression of democratic activities will cause further deteriorations in their trade, security and diplomatic relations with China.</p><h3>ASEAN Supply Chains Struggle Amid COVID-19</h3><p><strong>While manufacturing disruptions in Southeast Asia could force some multinational companies to reassess their regional supply chains, a significant escalation in relocations is unlikely.</strong> Some companies overexposed to <a href="https://worldview.stratfor.com/article/us-exchange-rate-deal-positions-vietnams-economy-growth">Vietnam</a> and <a href="https://worldview.stratfor.com/article/muhyiddin-s-resignation-further-muddies-malaysias-political-future">Malaysia</a> (where the supply chain disruptions are particularly acute) could decide to take their operations to other parts of the region.</p>

<p>Low vaccination rates in other Southeast Asian nations, the questionable efficacy of Chinese vaccines and the potential emergence of <a href="https://worldview.stratfor.com/article/what-happens-when-covid-19-becomes-endemic">new infection waves</a> due to COVID-19 mutations, however, will minimize the benefits of supply chain relocation for most companies during the quarter. Moreover, factors such as increasing regulatory scrutiny in China and significant regional disparities in labor costs and manufacturing capabilities suggest that widespread factory relocations would be unprofitable even if the pandemic subsides.</p>

Key Trends for the Quarter

<p><strong>Sept. 29:</strong> Japanese elections for president of the ruling LDP, which will decide the country&#39;s next prime minister.<br /><strong>November: </strong>Sixth Plenum of the Central Committee in China.<br /><strong>Nov. 29:</strong> Japanese House of Representatives elections on or before this date.<br /><strong>Dec. 18:</strong> Taiwan holds a four-question referendum, which could impact the future of nuclear energy in the country.<br /><strong>Dec. 19:</strong> Long-delayed elections for the Hong Kong Legislative Council.</p>

Key Dates to Watch

Europe

<h3>EU Economic Recovery Loses Momentum</h3><p><strong>Supply chain bottlenecks, rising inflation and the potential emergence of new variants of the virus that causes COVID-19 will likely lead to a moderation in economic growth in Europe.</strong> After two quarters of significant economic growth, the pace of GDP expansion in Europe will slow as downside risks increase. Supply chain disruptions will negatively impact manufacturing, while relatively high inflation and rising energy costs may reduce domestic consumption. The delta variant, and especially the potential emergence of new, more infectious, variants also threaten a return to stricter social distancing measures &mdash; which would also weaken the economy. Governments across the European Union will delay the introduction of tighter restrictions for as long as they can, opting instead to expand the use of &quot;health certificates&quot; to pressure the hesitant to get vaccinated.</p>

<p>Constantly changing rules and uncertainty about the future of social distancing measures will harm the services sector (and tourism and hospitality in particular) especially hard.&nbsp;</p><p><strong>While high levels of government deficit spending across the European Union will help sustain economic growth in the quarter, they will also increase the risk of financial crises in the future as debt piles mount.</strong> Countries in Northern Europe will push for a return to fiscal discipline in the bloc, which would force member states to severely cut spending and borrowing. But the European Commission is unlikely to pressure member states to start reducing their fiscal deficits and their debt piles in the quarter, arguing that the economic recovery will remain fragile.</p>

<p>In addition, Brussels will continue to disburse billions of euros in grants and loans to boost economic growth and to help finance the transition to cleaner forms of energy across the bloc. Rising debt levels and unusually high fiscal deficits will increase the risk of debt and banking crises in the EU in the long run, though this is not a threat that will materialize in the quarter.</p><h3>A Fragile Brexit Truce in Northern Ireland</h3><p><strong>A temporary truce will open the door to negotiations between the European Union and the United Kingdom over the future of Northern Ireland, but long-term threats to the EU-U.K. free trade deal will persist. </strong>The decision to <a href="/article/eu-and-uk-reach-temporary-truce-northern-ireland">extend the grace periods</a> for the full implementation of the Northern Ireland protocol means that there will probably not be any meaningful disruptions in bilateral trade between the European Union and the United Kingdom during the quarter. It also reduces the probability of an escalation of tit-for-tat punitive trade measures between London and Brussels in the short run and opens the door for a continuation of EU-U.K. negotiations over the implementation of the protocol. The British push for a redesign of the protocol and the EU&#39;s intention to implement only minimal changes, however, mean that the risk of an escalation of the political conflict will persist during the quarter, as will the threat of the collapse of the EU-U.K. free trade agreement. The political situation in Northern Ireland will remain volatile as Unionist forces continue to denounce the protocol and threaten to exit the regional government. Against this backdrop, isolated episodes of social unrest or other attempts to boycott the protocol are possible, if unlikely to generate significant security issues in the region.&nbsp;</p><h3>Long Government Negotiations in Germany</h3><p><strong>Negotiations to form a government in Germany will take most (if not all) of the quarter, leaving the country with a caretaker government that will be skeptical of drastic changes in domestic or foreign policy. </strong>The <a href="/article/guide-germany-s-federal-election">Sept. 26 federal election</a> resulted in a fragmented Bundestag, where a deal between at least three parties will be needed to form a government. As a result, the negotiations to form a coalition will be complex and lengthy, keeping outgoing Chancellor Angela Merkel in charge of the government for several more weeks. Because of Germany&#39;s slow political transition, the EU will postpone decisions on many long-term reforms until there is a new administration in Berlin. Debates over issues including the reform of the EU Stability and Growth Pact, the completion of the bloc&#39;s banking union and the implementation of a capital markets union in Europe will increase during the quarter, but no significant decisions will be taken absent political clarity in Berlin. Progress on all these issues will be more likely if progressive parties control influential positions in the new coalition because they are more willing to increase financial risk sharing in the European Union than their conservative rivals.</p>

<p><strong>October:</strong> Parliamentary elections in Ireland.<br /><strong>Oct. 8-9: </strong>Parliamentary elections in the Czech Republic.<br /><strong>Oct. 17:</strong> Local elections in Estonia.<br /><strong>Oct. 21-22:</strong> European Council summit.<br /><strong>Nov. 14:</strong> Presidential and parliamentary elections in Bulgaria.<br /><strong>Dec. 16-17:</strong> European Council summit.</p>

Middle East and North Africa

<h3>Sunni States Temporarily Reconcile, Leaving Major Differences for Later&nbsp;</h3><p><strong>Competition between Sunni states will wane as governments focus on economic growth and temporarily put their ideological differences aside. This will result in better commercial ties, but not in deeper strategic resolutions.</strong> The goal of rebuilding economic ties by boosting mutual tourism, encouraging investments and facilitating trade will motivate <a href="/article/iraq-s-summit-shows-promise-improved-gcc-cooperation">Sunni rivals</a> to avoid foreign policies that might undermine business or undercut investor confidence in their countries. Egypt and Turkey are likely to ease their political rivalry through negotiations, though they are unlikely to agree on final maritime borders in the quarter. Qatar on one side and Saudi Arabia, the <a href="/article/after-its-four-year-blockade-uae-tries-reconcile-ties-qatar">United Arab Emirates</a> and Bahrain on the other will rebuild pre-blockade ties, restoring tourism and travel links and beginning to invest in one another. While reforms in their visa and economic policies to attract foreign investment and skilled workers will <a href="/article/inevitable-unraveling-saudi-uae-ties">result in greater competition</a> between Saudi Arabia and the United Arab Emirates, it will not result in strategic disputes or attempts to undermine each other.&nbsp;</p><h3>Iran&#39;s Return to Negotiations, and Economic Recovery, Remains Tenuous&nbsp;</h3><p><strong>While the United States and Iran will likely engage in negotiations over the Joint Comprehensive Plan of Action, a deal is unlikely during the quarter, which will result in Tehran continuing its brinkmanship tactics. </strong>Iran&#39;s <a href="/article/previewing-iran-s-presidential-election">new conservative government</a> under President Ebrahim Raisi will likely maintain <a href="/article/rejecting-draft-nuclear-deal-iran-tests-us-s-limits">hard-line demands</a> on sanctions relief in negotiations once they resume, and will likely refuse to give up all of its new nuclear equipment built up over the last few years.</p>

<p>This means most sanctions will likely remain in place through the end of the year, limiting the amount of oil Tehran can export and ensuring that the Iranian economy remains weak. In addition to continuing to advance its domestic <a href="/article/nuclear-talks-stall-over-iran-s-hesitance-renew-iaea-deal">nuclear program</a>, Iran will maintain its regional behavior in terms of supporting proxy forces, engaging in opportunistic cyberwarfare against adversaries and conducting maritime harassment as Iran seeks to maintain leverage against its negotiating partners. But when negotiations likely resume within the quarter, some of its most aggressive behavior could ease.</p><h3>Turkey Builds a Wall&nbsp;</h3><p><strong>Turkey&#39;s ruling Justice and Development Party (AKP) will enact policies designed to prevent another <a href="/article/turkey-more-afghan-refugees-risk-fueling-xenophobia">wave of refugees</a>, this time from Afghanistan, from entering the country as <a href="/article/turkey-afghan-migrants-will-create-political-catch-22">nativism</a> grips the country&#39;s political system.</strong> The AKP will reinforce and expand physical barriers along its border with Iran and encourage local politicians to carry out their own measures to deter new migrants, leaving refugees stranded in Iran and Iraq, and perhaps even pushed back to Afghanistan.</p>

<p>Turkey&#39;s political parties will try to capitalize on the rising trend of nativism in Turkey to gain new supporters ahead of the <a href="/article/why-turkeys-government-wants-lower-election-threshold">national elections</a> scheduled for 2023. Abroad, the AKP will be more cautious in its foreign policy, building ties when possible and trying to avoid military confrontations abroad in places like Syria, Azerbaijan and Libya. Ankara is unlikely, however, to draw down from these current engagements, meaning the country could find itself embroiled in skirmishes caused by local actors on the ground.&nbsp;</p><h3>Israel&#39;s Motley Government Carries on as Regional Crises Loom&nbsp;</h3><p><strong>Israel&#39;s government will be stable during the quarter and focus on threats from Hamas and Iran. </strong>Israel&#39;s coalition government will likely survive the quarter and pass a budget for 2022 because its disparate members will seek to avoid an early general election that could allow former Prime Minister Benjamin Netanyahu to return to power. With a new election unlikely, Israel will focus on regional priorities, like managing the Palestinian challenge. While Israel will maintain its new hard-line strategy against Hamas in Gaza, in which the government will respond quickly and with greater force to militants&#39; attacks on southern Israel, Israel and Hamas will both carefully calibrate these exchanges to avoid a return to war. Israel will also work with Egypt, Jordan and the Gulf Arab states to <a href="/article/greater-engagement-palestinians-could-win-israel-more-normalization">boost the Palestinian Authority economically</a> in a bid to keep it from losing control of the security situation in the West Bank. Finally, Israel will lobby the United States for closer cooperation on covert operations against <a href="/article/possible-iranian-attack-israeli-ship-suggests-widening-tensions">Iran</a>, its proxies and its nuclear program, though it will remain wary of carrying out actions that could trigger a regional war or undermine the U.S. strategy of renegotiating a nuclear deal with Tehran.&nbsp;</p><h3>Morocco and Algeria&#39;s Rivalry Comes to a Head&nbsp;</h3><p><strong>North African rivals Morocco and Algeria will continue their <a href="/article/risks-algeria-and-morocco-s-latest-diplomatic-row-over-western-sahara">diplomatic skirmish</a>, negatively impacting cooperation across the Maghreb.</strong> Diplomatic tensions between Morocco and Algeria will reach new heights, threatening to cause commercial disruptions for Morocco and Algeria even if it is unlikely to result in outright military aggression between the two neighbors. The <a href="/article/moroccan-military-drive-puts-algeria-alert">rivalry</a> between Algiers and Rabat &mdash; which has waxed and waned over the last couple of decades &mdash; is poised to increase through the end of the year, as the two countries are highly unlikely to resolve the Western Sahara dispute that divides them. Violent conflict between the two countries is unlikely but clashes and skirmishes between Moroccan forces and Algeria-backed Polisario Front forces along the sand berm in disputed Western Sahara territory are possible. The aggravated dispute will disrupt negotiations over critical Algerian gas exports to Morocco prior to the Oct. 31 expiration of a key pipeline contract, creating a risk of electricity shortages in Morocco and prolonging the existing block on deeper intra-Maghreb security and economic cooperation.</p><h3>Iraq, Libya Hold Contentious Elections</h3><p><strong>Elections in Iraq and Libya will select new government representatives with a limited ability to ease their countries&#39; woes.</strong> The parliament that emerges from Iraq&#39;s early general elections in October is unlikely to solve the country&#39;s economic and security challenges. Although the early date is an answer to civil society protesters&#39; demands for new elected officials, many activists will boycott the vote. They will argue it will not be truly free and fair, which will ultimately reduce the new parliament&#39;s popular mandate and compound its inability to answer Iraq&#39;s economic issues. Political parties aligned with Iranian-backed militias are poised to maintain their significant number of seats in the new parliament, ensuring they keep their prominent political position in Baghdad and influence over Iraq&#39;s security sector. In Libya, officials will continue to make piecemeal progress toward holding long-delayed elections in December supposed to decide on a president and new parliament for the divided country. Despite the success of having passed the necessary presidential law, parliament and other political bodies continue to squabble over a new election law and passing a unified budget. These are necessary for full elections to take place, meaning the likelihood of parliamentary and presidential elections occurring Dec. 24 becomes increasingly unlikely, even though international pressure on Libyan stakeholders to hold elections will remain high. If full elections do not occur, the division within the country&#39;s institutions will remain in place, exacerbating the risk of ongoing civil conflict and hampering the government&#39;s ability to respond to Libya&#39;s need for economic recovery.</p>

<p><strong>Oct. 10:</strong> Iraqi parliamentary elections.<br /><strong>Oct. 31:</strong> Expiration of key Algeria-Morocco natural gas contracts.&nbsp;<br /><strong>Nov. 4: </strong>Deadline for Israel to pass a national budget, or the Knesset automatically dissolves.<br /><strong>Dec. 24:</strong> Tentative date for Libyan parliamentary and presidential elections.</p>

The Belarusian and Russian flags

Eurasia

<h3>Russia Solidifies Its Influence Over Belarus&nbsp;</h3><p><strong>Russia and Belarus will sign an <a href="https://worldview.stratfor.com/article/new-integration-pact-russia-cements-its-grip-belarus">integration agreement cementing Moscow&#39;s influence</a> on Minsk through the alignment of their economic policies and regulatory regimes, formalizing Belarus&#39; near complete economic dependence on Russia.</strong> While the agreement will create a framework for the steady erosion of Belarus&#39; economic sovereignty through the bureaucratic dependence of Belarusian institutions in areas such as taxation, customs and transportation on their Russian counterparts, political integration will be limited to mitigate the risk of destabilizing fractures within the Belarusian regime and to avoid significant new U.S. and EU sanctions. Additional (but probably mild) U.S. and E.U. sanctions &mdash; over the ongoing migration crisis, for example &mdash; will remain likely. Russia will likely continue to increase its military presence in Belarus through the establishment of joint training centers and a potential <a href="https://worldview.stratfor.com/situation-report/belarus-lukashenko-approves-negotiations-extend-agreements-russian-military">expansion of its current military installations</a> in the country. Belarus is also likely to announce additional details about cosmetic constitutional amendments and political reforms intended to set the stage for President Alexander Lukashenko&#39;s eventual transfer of power to another leader acceptable to Moscow, but no concrete actions are expected during the quarter.&nbsp;</p><h3>Ukraine Questions the Minsk Agreement&nbsp;</h3><p><strong>Ukraine&#39;s refusal to enact the Minsk agreement on Moscow&#39;s terms will push Russia to consider escalating the conflict.</strong> While the United States and Ukraine will reinvigorate their &quot;Strategic Partnership Commission&quot; (SPC) to reflect the <a href="/article/obstacles-us-and-ukraine-s-strategic-partnership">newly elevated status of their strategic cooperation</a>, the White House will resist Ukrainian requests to play a larger role in the Donbas conflict and will reaffirm its support for the Normandy Format, a dialogue group consisting of France, Germany, Ukraine and Russia that seeks to resolve the conflict. At Ukraine&#39;s request, the United States will likely cease insisting on the Minsk agreement &mdash; specifically, the <a href="https://worldview.stratfor.com/article/ukraine-zelenskiy-peace-effort-encounters-resistance-donbas-russia">controversial Steinmeier formula</a> granting the Donbas region special constitutional status within Ukraine and forcing Kyiv to recognize local elections there before regaining control of its border with Russia &mdash; as the solution to the conflict, and will pressure Germany and France to do the same. In reaction, Russia will threaten to escalate the conflict (by, for example, <a href="https://worldview.stratfor.com/situation-report/russia-ukraine-moscow-refuses-extend-osce-mission-border-donbas">signaling it could recognize the Donbas republics</a> as independent nations rather than part of Ukraine, or even annexing them) if Kyiv does not enact the agreement on Russian terms. Against this backdrop, Ukraine will continue to effectively resort to a policy of &quot;strategic patience,&quot; formally staying in the Minsk agreement to prevent an escalation but without fully enacting it, and waiting for a change in Russia&#39;s stance, a prospect that could take years and does not eliminate the risk of a worsening of the conflict.&nbsp;</p><h3>Moscow&#39;s Moves Against Big Tech Worsen U.S.-Russian Relations&nbsp;</h3><p><strong>U.S.-Russia tensions will continue because of issues such as the Donbas conflict and Moscow&#39;s pressure on large foreign tech companies, while the dialogue on issues such as <a href="https://worldview.stratfor.com/situation-report/russia-us-biden-and-putin-agree-cybersecurity-talks-summit">cybersecurity</a>, arms control and restoring their bilateral diplomatic representation will make little progress.</strong> This will mean that U.S. President Joe Biden&#39;s self-declared time frame of six months to see whether his June meeting with Russian counterpart Vladimir Putin resulted in productive negotiations will pass with few achievements to point to beyond the lack of any major flare-ups in the relationship. The slow progress in the negotiations over cybersecurity, where the <a href="https://worldview.stratfor.com/article/cyber-diplomacy-arrives-another-fork-road">two sides&#39; views are widely divergent</a>, could lead <a href="https://worldview.stratfor.com/article/symbiotic-relationship-between-russian-officials-and-cybercriminals">Russia to signal to domestic ransomware groups</a> that attacks on the United States can resume if the talks are going poorly. Meanwhile, the <a href="https://worldview.stratfor.com/article/russia-tightens-reins-foreign-social-media-firms">Kremlin&#39;s pressure campaign on U.S. tech giants</a> such as <a href="https://worldview.stratfor.com/situation-report/russia-facebook-telegram-and-twitter-fined-again-content-violations">Google, Apple and Facebook</a> will continue amid accusations that they violated Russian laws after numerous warnings, and that their failure to restrict access to content related to jailed dissident Alexei Navalny constituted election interference.</p>

<p>Encouraged by significant <a href="https://worldview.stratfor.com/article/digital-crackdown-moscow-slashes-navalnys-ability-influence-vote">improvements in their internet regulator&#39;s abilities to block unwanted content</a>, Moscow will maintain pressure on companies to comply, with the implicit threat of <a href="https://worldview.stratfor.com/situation-report/russia-authorities-slow-down-twitter-s-speed-threaten-total-ban">slowing their traffic</a> if Western social media platforms fail to do so. Russia will continue to push the issue to bolster its talking points in cybersecurity talks with the U.S.&nbsp;</p><h3>Security Risks in Central Asia Amid the Rise of the Taliban&nbsp;</h3><p><strong>The Taliban&#39;s seizure of power in Afghanistan will pose a persistent security threat to Central Asian states already dealing with economic and social instability due to the pandemic.</strong> Central Asian governments&#39; main goal regarding Afghanistan will be ensuring that militants do not use the country as a base to destabilize the region through refugee flows, covert radicalization efforts or armed incursions. Additionally, the mere possibility of the Taliban receiving international recognition will threaten the secular governments of Central Asia. While many refugees will attempt to move through the Central Asian states on their way to Russia and Europe, some will stay in the region, most likely in Uzbekistan and Tajikistan. Both countries will continue to display their <a href="https://worldview.stratfor.com/situation-report/russia-tanks-moved-afghan-border-show-force-drills">security cooperation with other states</a>, primarily Russia, with new <a href="https://worldview.stratfor.com/situation-report/pakistan-tajikistan-countries-sign-defense-pact-amid-afghan-security-concerns">intergovernmental agreements</a> and <a href="https://worldview.stratfor.com/situation-report/tajikistan-president-orders-20000-troops-afghan-border-amid-taliban-gains">military drills to deter malign efforts</a> and protect themselves against Islamist forces in Afghanistan. In particular, Tajikistan, which does not recognize the Taliban, is likely to support efforts by Afghan Tajiks to resist the Taliban, overcoming fears that such a strategy could make Tajikistan a bigger target for destabilization efforts and increase the probability of refugee flows. For its part, Uzbekistan will alternatively quietly engage in dialogue with the Taliban and moderate its rhetoric as it seeks to avoid becoming a target prior to Uzbekistan&#39;s Oct. 24 presidential election.</p>

<p><strong>Oct. 2:</strong> Local elections in Georgia.&nbsp;<br /><strong>Oct. 14-15:</strong> CIS summit in Minsk.&nbsp;<br /><strong>Oct. 24:</strong> Uzbek presidential election.<br /><strong>Oct. 26-27:</strong> VI Caspian Sea Summit.&nbsp;<br /><strong>Nov. 4:</strong> Scheduled signing of Belarus-Russia integration agreement.&nbsp;<br /><strong>Nov. 28:</strong> Early parliamentary elections in Kyrgyzstan.</p>

<h3>High Social Spending Ahead of Midterm Elections in Argentina</h3><p><strong>Social welfare spending will remain high in anticipation of Argentine midterm elections, which will create problems for debt restructuring negotiations with the International Monetary Fund.</strong> In the lead-up to the <a href="https://worldview.stratfor.com/article/argentinas-political-crisis-will-give-populism-boost">Nov. 14 midterm elections</a>, Argentina&#39;s Peronist government will likely maintain an export cap on beef products and may institute additional price controls, raise the minimum wage and expand welfare programs in an effort to boost its support. The government may also resort to measures such as hiking export taxes amid a boom in agricultural production to help finance the extra welfare spending. While these measures may somewhat increase domestic consumption, they are also likely to keep inflation high and make it increasingly hard for Buenos Aires to reduce its fiscal deficit. Capital controls meant to protect a continually weakening peso and stockpile of US dollar reserves will remain in place during the quarter. If the ruling coalition retains control of the Congress, it will likely demand the IMF take losses on their loans to Argentina and refuse to institute strict fiscal readjustment measures. Should the government lose legislative control, however, the internal disputes within the executive branch are likely to deepen, generating uncertainty about the future of the government and making it increasingly inefficient and dysfunctional. Such a scenario would make it harder for Buenos Aires to come up with a coherent negotiation strategy with the IMF or to implement effective measures to boost economic growth.&nbsp;</p><h3>Political and Energy Crises in Brazil</h3><p><strong>Corruption and criminal investigations will continue to fuel political polarization, while the upcoming dry season could worsen Brazil&#39;s energy crisis.</strong> Investigations against President Jair Bolsonaro and high-level members of his Cabinet will likely continue through the quarter, deepening political polarization and increasing the likelihood of politically motivated demonstrations and social unrest, although Bolsonaro is <a href="https://worldview.stratfor.com/article/cabinet-shuffle-bolsonaro-tries-shield-himself-impeachment">unlikely to be impeached</a> unless his centrist allies in parliament break their alliance with him. In addition to dealing with political challenges, the government will likely have to find solutions for the energy crisis caused by the lack of rainfall affecting hydroelectric dams, which account for over 60% of Brazil&#39;s energy sources.</p>

<p>As the dry season approaches, the government will likely be forced to import liquified natural gas or restart thermal energy plants to cover energy needs. Similarly, the government is unlikely to pass an effective fiscal readjustment program due to congressional pressure, likely leading the government to overspend the constitutionally mandated spending cap and raising questions about Brasilia&#39;s ability to <a href="https://worldview.stratfor.com/article/central-bank-policy-can-t-fix-brazil-s-economic-conundrum">return to fiscal discipline</a>.</p><h3>In Venezuela, Government-Opposition Negotiations Continue</h3><p><strong>Local and regional elections in November will test the continuity of negotiations between Venezuela&#39;s government and the opposition.</strong> The Venezuelan opposition and authoritarian President Nicolas Maduro&#39;s government are likely to <a href="https://worldview.stratfor.com/article/venezuela-opposition-talks-prospects-progress-are-low">continue their negotiations</a> in Mexico City over ways to facilitate an international audit ahead of the Nov. 21 local elections. The opposition will participate in the elections for the first time since 2017 as a part of a strategy to rally support ahead of future presidential and parliamentary elections in 2024. The Nov. 21 elections, however, are unlikely to be fair or transparent and the government is likely to claim victory in a majority of races to ensure the appearance of widespread domestic support, which may threaten the negotiation process. Should the two delegations reach a consensus ahead of the elections, the negotiation process will continue through the rest of the quarter. If they do not reach an agreement, or if fraud in the Nov. 21 election is widespread, the negotiations could be stalled or halted, which would reduce the probability of a softening of <a href="https://worldview.stratfor.com/article/reviewing-role-and-effectiveness-sanctions">foreign sanctions</a> against Venezuela.&nbsp;</p><h3>Struggling Mexican Energy Reform</h3><p><strong>Mexican President Andres Manuel Lopez Obrador will struggle to implement reforms to bolster state-owned energy companies.</strong> Lopez Obrador will likely attempt to reverse the 2013 business-friendly energy sector reforms by proposing a constitutional amendment or a public referendum on the issue. The president has campaigned on bolstering state-owned energy companies CFE and Petroleos Mexicanos against private sector competition in an effort to increase their contribution to state revenue. Lopez Obrador&#39;s National Regeneration Movement <a href="https://worldview.stratfor.com/article/mexicos-lopez-obrador-loses-ground-midterm-congressional-election">lost control of the legislature</a> in the June&nbsp;elections, however, which meaning the government probably cannot enact constitutional reforms through this mechanism. As a result, it may choose to pursue a public referendum. At least 40% of the population must participate for such a vote to be binding, something highly unlikely given the most recent such referendum saw just 7% participation.&nbsp;</p><h3>Constitution Drafting in Chile Will Usher in Reformist Ideas</h3><p><strong>The drafting of a new constitution will influence Chile&#39;s Nov. 21 general elections and usher in fresh political leadership and reformist ideas. </strong>Chile&#39;s <a href="https://worldview.stratfor.com/article/chile-appoints-left-wing-body-draft-its-new-constitution">left-leaning constitutional convention</a> is likely to begin the process of drafting a new constitution this quarter after spending over three months hashing out a deal on the process. The convention will likely discuss how to increase the presence of the state in the country&#39;s health care and education systems, which are currently dominated by the private sector, and how to tackle water rights issues. As the constitutional body has been slow to address the <a href="https://worldview.stratfor.com/article/midst-crisis-chile-sets-out-writing-new-constitution">social issues many Chileans entrusted them with</a>, many voters will likely see the presidential election as a way to accelerate the implementation of progressive policies. Front-runners Gabriel Boric, a left-wing candidate, and the conservative Sebastian Siche will have to address key campaign issues such as rising inflation and allowing the public to withdraw an additional 10% from their private pension funds to cover additional household costs <a href="https://worldview.stratfor.com/article/south-america-s-response-p1-covid-19-threat">relating to COVID-19</a>. Should domestic activists sense that the political establishment is not going to implement change, they may stage medium to large protests in cities.</p>

<p><strong>Nov. 7: </strong>Nicaraguan general elections.<br /><strong>Nov. 14:</strong> Argentine midterm elections.<br /><strong>Nov. 21:</strong> Chilean general elections.&nbsp;<br /><strong>Nov. 21:</strong> Venezuelan, regional, gubernatorial and local elections.<br /><strong>Dec. 14:</strong> Chilean presidential runoff.</p>

Herat Deputy Gov. Shir Ahmad Mohajer on Sept. 20, 2021, in Herat, Afghanistan.

South Asia

<h3>The Taliban Seeks to Stabilize Afghanistan</h3><p><strong>Facing growing social and <a href="https://worldview.stratfor.com/article/under-taliban-afghanistan-s-economic-outlook-goes-bad-worse?q=Afghanistan">economic challenges</a>, the Taliban will crack down on internal dissent and engage diplomatically with the international community to obtain humanitarian and development aid for Afghanistan, with moderate success.</strong> With banks closed and assets frozen by the West, Afghanistan will continue to rely heavily on foreign humanitarian aid to deal with its food and health crises. This will force the Taliban to maintain some degree of domestic stability to convince donors to continue their support. The Taliban will seek a balance <a href="https://worldview.stratfor.com/article/what-talibans-new-government-means-afghanistans-place-world?q=Afghanistan">between the position of the more hawkish members of the group</a> (which ideologically oppose social liberalization) and the more pragmatic members that defend more moderate domestic positions as a strategy to obtain foreign aid. This will cause internal disputes that may occasionally break into the open, but not to the point that their control of Afghanistan is threatened. Their security strategy will involve cracking down on rebellions across the country, such as the <a href="https://worldview.stratfor.com/article/what-s-next-afghan-resistance-after-fall-panjshir?q=Afghanistan">National Resistance force in Panjshir</a>. While fighting these rebels will consume time and resources, they are unlikely to pose a real threat to the Taliban regime during the quarter. Moreover, as winter sets in, most of the insurgent groups will shelter and reduce their activity. This will create a temporary appearance of decreased fighting by the end of the quarter that will not necessarily reflect the strength or likelihood of renewed opposition in the spring. Another significant part of the Taliban&#39;s security strategy will involve reining in terrorist groups like <a href="https://worldview.stratfor.com/article/jihadist-terrorism-after-taliban-takeover-afghanistan?q=Afghanistan">al Qaeda in Afghanistan</a>.&nbsp;</p><p>The Taliban will engage in international diplomacy and try to present an image of apparent moderation to the world, even if these will likely be cosmetic moves with no significant impact on their day-to-day handling of the country. Their success is likely to be modest, especially when it comes to Western countries, because while some Western governments and organizations will renew their humanitarian aid to Afghanistan, they will refrain from helping the Taliban on other fronts. Because of the dire state of the Afghan economy, there will be sporadic protests across the country during the quarter. Afghanistan&#39;s neighbors, concerned about terrorism and a potential <a href="https://worldview.stratfor.com/article/world-reacts-looming-influx-afghan-migrants?q=india">migration crisis</a>, will try to prevent instability in the region. In particular, Pakistan will seek to position itself as a facilitator between Afghanistan and the international community. Still, the Tehrik-i-Taliban Pakistan (aka the Pakistani Taliban) could be a source of friction between Kabul and Islamabad, because it has already stepped up low-level attacks into Pakistan. China could also emerge as another critical actor in the stabilization of Pakistan, as Beijing is likely to increase financial support for the country.&nbsp;</p><h3>Uncertainty About the Future of the Indian Economy Persists</h3><p><strong>India is likely to experience strong GDP growth during the quarter even if inflation remains elevated and the risk of new waves of COVID-19 persists.</strong> The Indian economy will continue to expand in the fourth quarter, as the relaxation of lockdown measures will boost internal demand and the central bank&#39;s expansionary policies will continue to support growth. But India&#39;s GDP will not reach pre-pandemic levels this quarter, unemployment rates will remain high, and inflation will continue to be a problem.&nbsp;</p>

<p>Moreover, <a href="https://worldview.stratfor.com/article/india-s-covid-19-surge-leaves-world-scrambling-vaccines?q=india">new waves of COVID-19 infections</a> could force the government to tighten lockdown measures (though these would be local and short), negatively impacting economic activity. Against this backdrop, the Indian government will focus on supply-side economic measures to boost manufacturing in various sectors as part of its Make in India and Atma-Nirbhar Bharat campaigns seeking increased self-reliance. It will also work toward its reform agenda to reduce bad loans in the banking sector and sell stakes in public sector companies. An improvement in production capabilities will probably allow India to accelerate its domestic vaccination campaign while also resuming exports of vaccines suspended earlier this year.&nbsp;</p><h3>Sri Lanka&#39;s Financial Crisis Will Worsen</h3><p><strong>Sri Lanka&#39;s need for financial support to deal with its economic crisis could play into regional competition between India and China for influence in the island nation.</strong> The <a href="http://Ekta Raghuwanshi Ekta Raghuwanshi 9:44 AM Sep 24 https://worldview.stratfor.com/article/wary-china-modi-courts-indias-neighbors-bri-china-infrastructure-belt-road?q=Sri%20AND%20Lanka  Turn on screen reader support">Sri Lankan economy</a> will face further problems during the quarter because of a rise in COVID-19 infections. The delta wave surging through the country will probably force the government to impose lockdowns, localized or nationwide, at a heavy price for the economy. Still, the Sri Lankan government will likely ensure that the vital textile industry is not disrupted. The tourism sector is unlikely to revive in the quarter because of prolonged lockdowns. In addition, Sri Lanka&#39;s dwindling foreign exchange reserves risk spiraling into a crisis that could force the country to tighten fiscal and monetary policy more aggressively and seek an IMF bailout.</p>

<p>While authorities maintain they will repay $1.5 billion of foreign bond payments due in January and July of 2021, the country&#39;s deteriorating economy increases the probability of a sovereign debt default. Amid emergency measures to curb hoarding of food and imposing restrictions on the import of nonessential goods, the government could impose further restrictions to stockpile foreign exchange. Sri Lanka could also opt for more loan or currency-swap arrangements with China or <a href="https://worldview.stratfor.com/article/wary-china-modi-courts-indias-neighbors-bri-china-infrastructure-belt-road?q=Sri%20AND%20Lanka">India</a>, playing into the economic and strategic competition between the two regional powers for influence in Sri Lanka.</p>

<p><strong>Sept. 27:</strong> Nationwide farmers protest in India.<br /><strong>Nov. 1:</strong> India and the United Kingdom commence free trade agreement talks.</p>

Mozambican soldiers on Sept. 24, 2021, in Pemba, Cabo Delgado province, Mozambique.

Sub-Saharan Africa

<h3>The African National Congress Faces Difficult Test in South African Municipal Elections</h3><p><strong>Municipal elections in November will likely highlight popular dissatisfaction with South Africa&#39;s government and deepen divisions within the governing African National Congress. </strong>The ANC and South African President Cyril Ramaphosa will put promises of economic reform and a continued anti-corruption campaign at the center of their electoral strategy, but this may not be enough to overcome public dissatisfaction with the economy and the COVID-19 crisis. July&#39;s riots and looting <a href="/article/south-african-troops-deployed-amid-violence-over-former-president-s-arrest">over former President Jacob Zuma&#39;s arrest</a> reflect the socioeconomic challenges the country faces, as well as the large dispute within the ANC between the Zuma-aligned faction and the rest of the party, now largely behind Ramaphosa. <a href="/article/south-africa-s-president-tries-consolidate-power-cabinet-reshuffle">Factional disputes in the ANC</a> will weaken its unity and give more space for opposition parties. The factional splits will make it harder for Ramaphosa to push through his economic reform agenda, particularly if the ANC performs poorly in elections and he is personally blamed for the outcome. A repeat in the fourth quarter of protests of the same scale, scope and intensity is unlikely, but violence in some areas around elections, including KwaZulu-Natal province, is likely.&nbsp;</p><h3>Mozambique Military Interventions Find Success, but Militant Threat Will Remain</h3><p><strong>While Rwanda and the Southern African Development Community&#39;s interventions in northern Mozambique will make additional gains against militants, Ahlu Sunnah Waljamaah will increasingly target them with terrorist insurgent attacks.</strong> Joint Mozambican-Rwandan operations have been successful in <a href="/article/mozambique-victory-against-jihadists-likely-signals-new-guerrilla-campaign">retaking towns like Mocimboa da Praia</a>, but the path to broader stabilization of the countryside will be more difficult. The two interventions will concentrate operations in the fourth quarter on consolidating control over the towns that they have retaken, but this will enable Ahlu Sunnah Waljamaah to carry out insurgency operations targeting both security forces and civilians supporting them.</p>

<p>Rwanda and the Southern African Development Community will also try to increase protection for TotalEnergies&#39; LNG site on the Afungi Peninsula, but the security situation is unlikely to improve enough for activities at the site to resume this quarter; a resumption in 2022 is more likely. The risk of reprisal attacks by Ahlu Sunnah Waljamaah sympathizers against countries involved in the intervention remains the highest for South Africa and Tanzania.&nbsp;</p><h3>Ethiopia&#39;s Tigray Conflict Likely to Worsen as Talks Remain Elusive</h3><p><strong>Western and regional pressure on the Ethiopian government and the Tigray People&#39;s Liberation Front (TPLF) to enter negotiations will increase in the fourth quarter, but a permanent cease-fire and formal negotiations are unlikely.</strong> <a href="/article/rebel-victory-tigray-leaves-ethiopia-s-abiy-hot-water">The conflict</a> is likely to continue to worsen before negotiations begin, creating a more significant humanitarian crisis that <a href="/article/abiy-calls-ethiopians-join-fight-against-tigray">increasingly spreads beyond Tigray</a> to Amhara and other regions in Ethiopia. Both sides may entertain talks as a delaying tactic and to appease the United States, <a href="/article/uphill-us-battle-resolve-ethiopias-tigray-conflict-sanctions">which is threatening new sanctions</a> over the conflict. But neither side is in a position to offer tangible concessions. The TPLF has the upper hand militarily in most of Tigray and has sought to establish a growing buffer zone around the region to limit potential counterattacks by Ethiopian federal and Amhara regional forces. Some Ethiopian opposition militias, including the Oromo Liberation Army, are now backing the TPLF, but it remains unclear whether any actual opposition collaboration will take place this quarter beyond rhetorical support for one another. Amhara and Eritrea, both of which back Ethiopia against the TPLF, are unlikely to support negotiations with the TPLF, limiting Ethiopian Prime Minister Abiy Ahmed&#39;s ability to pursue dialogue with the TPLF.&nbsp;</p>

<p><strong>Oct. 17: </strong>Indirect Somali presidential elections.<br /><strong>Oct. 24: </strong>Cape Verde presidential elections.<br /><strong>Nov. 1: </strong>South African municipal elections.<br /><strong>Nov. 6:</strong> Anambra state, Nigeria, gubernatorial elections.</p>

2021 FOURTH-QUARTER FORECAST

Americas

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