July 2, 2021
Iran’s newly elected Ebrahim Raisi has yet to stray from the hardline path that has led him straight to the top, but his ruthlessness could be his downfall. It was no surprise when Raisi won the rigged Iranian presidential election on June 18 and he is expected to continue his ascent straight to the eventual position of Supreme Leader. Raisi, who was sanctioned by the U.S. in 2019 for human rights violations he has conducted over the past several decades, was effectively appointed President by Iranian Supreme Leader Khamenei who likewise served as Iranian President before taking the Supreme Leader position in 1989. Khamenei entrusted Raisi just as Ayatollah Khomeini before him who tapped Raisi for jobs that required cold efficiency, including overseeing the execution of thousands of leftist prisoners and political opponents in 1988. The so-called “death commission” was debated even among the most conservative religious leaders, but Raisi never wavered in his hardline stance, later praising the achievements of the system to quash dissent and rule by fear. Since then, he has continued his path of repression, notably cracking down on Iran’s Green Movement protestors in 2009 – an indication of how he might respond to the civil unrest that is once again brewing. The economy is in dire condition and domestic grievances are apparent via the lowest voter turnout since the Iranian Revolution. But Raisi will likely follow the Iranian playbook and continue to escalate efforts in the region, such as supporting proxy groups and militias like the ones that just attacked U.S. troops in Syria, and those who will avenge the death of Qasem Soleimani. While Raisi doubles down on hardline politics and external diversions, a new Middle East is unfolding around him and unlikely allies under threat might suddenly find it possible to unite against him.
New FATF rulings highlight both conventional and novel regulatory challenges. Last week, delegates from Paris-based financial crimes watchdog coalition the Financial Action Task Force (FATF) met virtually to discuss the latest financial crime threat areas and evaluate global Anti-Money Laundering (AML) compliance efforts by country. Of note, FATF elevated the risk levels of Malta and the Philippines, downgraded Ghana, and kept Pakistan in the “grey list,” much to its dismay. While FATF rulings have no direct legal repercussions, according to a working paper from the IMF issued in May, investors take heed and negative FATF ratings lead to a statistically significant reduction in capital inflows. Maltese Prime Minister Robert Abela called Malta’s addition to the grey list “unjust,” but the nation has been subject to ongoing international criticism due to its sale of national passports, weak regulations on terrorist financing and money laundering, and lax beneficial ownership requirements. Pakistan, who has been on the grey list for several years, reportedly complied with 26 out of 27 recent demands set out by FATF in 2018 but failed to fully investigate and prosecute senior leaders and commanders of UN-designated terror groups. More broadly, FATF is now looking at how countries regulate Ethnically or Racially Motivated Terrorism Financing and Virtual Asset Service Providers (VASPs), two areas that straddle civil liberties and privacy issues, and will likely challenge nations that already have strong regulatory regimes. Increased attention to Money Laundering from Environmental Crime is also expected to impact nations across the board.
Brazil’s President Jair Bolsonaro is under fire for corruption allegations linked to a Covid-19 vaccine deal with India. The Brazilian opposition is blasting Bolsonaro for allegations of corruption involving a health ministry official, bribery, and a Covid-19 vaccine deal with Indian company Bharat Biotech. Bolsonaro fired the official and Health Minister Marcelo Queiroga said he would investigate. On Wednesday, federal prosecutors launched a criminal investigation into the $324 million Indian vaccine deal. Bolsonaro has suspended the contract, but it may be too little too late as calls for Bolsonaro’s impeachment are growing again. Bolsonaro’s popularity has fallen since the start of the pandemic, as Brazilians have been critical of his handling of the crisis. From the start, Bolsonaro was dismissive of the virus, resisted lockdowns, scoffed at masking, and appeared callous to the rising death toll in the country. Over 500,000 Brazilians have died from Covid-19, and many blame Bolsonaro. He has been criticized for a slow vaccination rollout and not jumping on the opportunity to secure vaccine supplies, like from Pfizer which reportedly offered but received no response from the Brazilian government late last year. At the same time, his main political rival, former Brazilian President Luiz Inacio Lula da Silva, seems to be gaining momentum and support. New polling data by Inteligencia em Pesquisa e Consultoria (IPEC) found that 49% backed Lula compared to 23% for Bolsonaro, meaning that if the 2022 presidential contest were held today, Lula could win a first-round vote. Economically, Brazil is recovering from the last pandemic year and GDP is expected to grow by more than 5% in 2021, but this may not be enough for Bolsonaro in the next election.
Happy 4th of July! Have a safe and happy holiday!
