Americas: Proposed central bank reform in Argentina to strengthen monetary discipline
Sectors: all
Key Risks: economic risks
In Argentina, on 13 August Economy Minister Luis Caputo announced that banks would be allowed to lend up to 15 per cent of their dollar deposits to companies, supporting credit and investment as the government seeks to mobilise undeclared dollar savings. The move signals a gradual shift towards easing financial conditions as weaker-than-expected growth increases pressure to support the recovery, although persistent inflation will limit the scope for monetary easing. This followed President Javier Milei’s 30 July proposal to reform the central bank’s charter, strengthening its independence and prohibiting the institution from financing fiscal deficits. The reforms are expected to reinforce monetary credibility and help sustain disinflation, but their durability could become a risk if a future government seeks to reverse them. Meanwhile, elevated foreign-currency debt repayments in 2027 could test investor confidence and constrain the government’s ability to support growth.
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Asia Pacific: Trump orders reduction of US-South Korea military exercise
Sectors: all
Key Risks: political instability; war on land
In South Korea, on 16 August US President Donald Trump ordered the Pentagon to reduce the Ulchi Freedom Shield exercise, hours before it began with 18,000 South Korean troops alongside US forces. Trump cited cost, his relationship with Northern Korean leader Kim Jong Un and Seoul’s refusal to join the US in denuclearising Iran, calling the exercise hostile and inappropriate. President Lee Jae Myung has offered talks with Pyongyang without preconditions and proposed ending the Korean War. Seoul’s Defence Ministry stated the exercise would proceed as scheduled, before the presidential office announced it was reviewing the announcement. Pyongyang, which fired two ballistic missiles on 6 and 12 August, warned on 14 August of a new level of deterrent, but has not responded. Pyongyang is likely to continue weapons testing through the exercise period, likely treating anything short of full cancellation as insufficient.
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Eurasia: Russian media claim US negotiators to visit Moscow by end-August with “specific ideas”
Sectors: all
Key Risks: war on land
On 11 August reports emerged indicating that Ukraine had conveyed proposals to US negotiators for plans to end the war with Russia. No further details were disclosed, but it came as US negotiators Steve Witkoff and Jared Kushner are expected to visit Moscow “soon”. Russian state media reported the visit could take place before the end of August, adding that they are expected to “bring specific ideas”, although no official date has been announced. The renewed diplomatic push would come as the war in Ukraine intensifies, with Moscow and Kyiv exchanging massive drone barrages with increasingly low interception rates amid stretched air defences. Ukraine’s President Volodymyr Zelensky also warned that Moscow was preparing mobilisation following the State Duma elections on 20 September and could send up to 500,000 troops to Ukraine. Even if negotiations resume, prospects for a peace agreement remain low.
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Europe: LDK party withdraws demands to name Kosovo’s next president but deadlock persists
Sectors: all
Key Risks: political stability
In Kosovo, on 13 August the opposition Democratic League of Kosovo (LDK) withdrew its demand to name the next president to break the political deadlock that has paralysed Pristina since the 7 June snap parliamentary elections. Acting PM Albin Kurti welcomed the party’s willingness to include other parties in negotiations. LDK leader Lumir Abdixhiku stated the move removes “any reason, alibi or right to delay the inauguration of parliament, the formation of the government and starting negotiations on a new president.” However, no decision had been reached as of 17 August. Acting President Albulena Haxhiu, from Kurti’s Vetevendosje party, invited parties to negotiations, but they all declined. Opposition MPs gathered in front of the closed Assembly building on 16 and 17 August in protest against the continued failure to constitute parliament. Political stability risks will remain high in the coming weeks.
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MENA: Iran weighs offensive posture as Trump calls for surrender after MoU expires
Sectors: all
Key risks: war on land; war at sea; regional conflict
In Iran, on 16 August senior Islamic Revolutionary Guard Corps (IRGC) commander Brigadier General Yadollah Javani stated Tehran could shift from a defensive to an offensive posture. This occurred after the 17 June Memorandum of Understanding (MoU) expired amid stalled negotiations between Tehran and Washington, with neither side having abided by the commitments as Tehran keeps the Strait of Hormuz shut and Washington maintains the naval blockade. US President Donald Trump commented that Iran should “put up the white flag of surrender”. On 14 August Trump vowed to hit Iran hard economically; however, the resumption of US strikes on the country, as well as a broader military escalation, cannot be ruled out in the coming days. In such a scenario, Tehran would likely retaliate against US assets and critical infrastructure across the Gulf and on vessels in the Strait of Hormuz.
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Sub-Saharan Africa: 15 soldiers killed, seven injured in MPLJ attack in northern Niger
Sectors: all
Key risks: targeted attacks; political violence; insurgency
In Niger, on 15 August 15 soldiers were killed and seven others were injured after the Patriotic Movement for Liberty and Justice (MPLJ) attacked a National Guard camp and military checkpoint in Seguedine, Agadez region. The attack marked the latest in the continued targeting of military and oil infrastructure as the MPLJ calls for the release of former president Mohamed Bazoum, who has been detained since the July 2023 coup. Rebel activity in the north of the country continues to complicate the security situation, particularly due to growing instability along the border with Libya. Additionally, with Islamist insurgencies in the country’s east, south and west, MPLJ activity in Agadez creates greater pressure on an already overstretched military. Military operations in the aftermath of the attack are likely, but are unlikely to prevent future MPLJ attacks on isolated military patrols and outposts.
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