January 2020

Country Ranking Trends

January was another of the occasional months where there were no changes in Magni Country Governance Scores.

Brexit Is Happening

  • The Withdrawal Agreement Act has passed the upper and lower parliamentary chambers, and Queen Elizabeth II signed off on the legislation thus making the law official. The European Parliament voted on January 29th to pass the withdraw treaty. The United Kingdom will end its 47-year relationship with the European Union on January 31. An eleven-month transition immediately starts during which the UK will continue to follow EU rules, but without representation in the bloc’s institutions. Brussels’ opening negotiating position on the long-term relationship with the UK will be adopted by EU ministers at a meeting on February 25th. Negotiations with the UK will begin in March, and they are expected to be fraught given the tight timeline and the two sides competing objectives. The EU will demand a “level playing field”, while the UK believes their ability to diverge from EU rules is the essential element of Brexit.
  • Implications: The Magni Country Governance Score for the UK is unlikely to change in a material way. The country had good governance before the EU and during its time in the EU, and it likely will have good governance after the exit. Disruption during and after the exit is inevitable, though there is uncertainty on the scale and duration. The EU still must address its existential issues, though the current year will be focused on negotiations with the UK.

Opaqueness Makes the Virus in China a Bigger Challenge

  • A new coronavirus has been spreading rapidly across the globe after first being identified in Wuhan, China. Handling the outbreak has been a challenge for China’s opaque authoritarian government. Local officials initially downplayed the scale of the problem, stating that they did not believe there could be human-to-human transmission. Chinese authorities have finally agreed to permit experts coordinated by the World Health Organization (WHO) to visit China to help contain the outbreak, and the WHO has praised China’s response to the outbreak, including its rapid identification of the virus. However, in other aspects the Chinese response has fallen short. The mayor of Wuhan blamed the slow release of information on their having to obtain approval from Beijing before releasing sensitive information. The delay allowed the disease to spread rapidly as fewer precautions were taken early in the outbreak that could have stanched the spread. The number of cases continue to grow, with confirmed infections jumping nearly 60 percent over a recent 24-hour period and the death toll exceeding one hundred.
  • Implications: Opaqueness is a major weakness in governance. It is one of the many reasons for China’s relatively low Magni Country Governance Score. Opaqueness manifests itself in many forms, including communication issues between the municipal leaders and the national government, external communications to the world, timely and effective responses, and the ability of non-Chinese organizations to help control the spread of the virus.

Taiwan Election Increases China’s Challenges

  • Taiwan President Tsai Ing-wen received over 57% of the vote to win reelection in a historic landslide. Her party, the Democratic Progressive Party (DPP), also maintained its legislative majority. Tsai’s DPP party advocates for a distinct Taiwanese identity and favors Taiwanese independence. The result was considered a rebuke of China’s efforts to gain control over the island democracy, which has been ruled separately since the end of the Chinese civil war in 1949. The DPP benefited from public sympathy for the Hong Kong protesters with Tsai citing them as evidence of the failure of China’s “one country, two systems” framework. Chinese premier Xi said in a speech just before the election that such a framework was the only acceptable outcome for Taiwan. In contrast the main challenger from the Nationalist Party, or Kuomintang (KMT), pledged to restore relations with China. Official ties were suspended when Tsai assumed office in 2016, and her second term will likely see a continuation of cross-strait tensions.
  • Implications: Despite its closer alignment with countries in the developed markets, Taiwan retains a low Magni Country Governance Score based on its opacity. The election is unlikely to change Taiwan’s score. The bigger implication regards the ever-growing challenges faced by Xi in China. The challenges require significant attention and, hence, reforms to improve Chinese governance are less likely.

Will Russia’s Constitutional Overhaul Help or Hurt?

  • In his annual state of the nation address, Russian president Vladimir Putin outlined his plans to overhaul the country’s constitution. The changes would transfer powers away from the presidency and strengthen the parliament. The proposed amendments would also remove the president’s ability to sidestep term limits as Putin had done. Prime Minister Dmitry Medvedev later announced that the government was resigning to help facilitate the changes. The relatively unknown director of the Federal Tax Service, Mikhail Mishustin, was chosen as the next prime minister. He is best known for developing technologies that allowed the government to improve tax collection, but which have also been criticized because they expanded the state’s surveillance capabilities. Medvedev will become deputy chairman of the State Council where Putin also serves as chairman. The changes appear aimed at giving Putin multiple options for how he can maintain power beyond his term ending in 2024, and as well will serve to weaken his successor.
  • Implications: The implications of these changes are not yet evident. Some may eventually boost Russia’s relatively low Magni Country Governance Score, though many will either have no or an adverse impact on the score.
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