“No Brexit” may carry far more future risk than you think

The resounding historic defeat for UK Prime Minister Theresa May whose deal to leave the European Union (EU) was rejected by 432 parliamentarians against 202, an unprecedented margin of 230, doesn’t bode well for both the UK and the EU.

On the one hand, a political setback of such a magnitude after two years and a half of harsh talks will likely plunge the UK into greater instability that may potentially deteriorate its financial standing worldwide as uncertainty generally deters investors and business people. On the other hand, in the people’s eyes, the EU could appear like it is actively working against democratic values by promoting a “no Brexit” approach as implied by Donald Tusk, the head of the European Council, who asked that “if a deal is impossible, and no one wants no deal, then who will finally have the courage to say what the only positive solution is?”

Overtly calling for the cancellation of the Brexit – yet voted by the British people in June 2016 – could be considered like “another anti-democratic move” by unelected Brussels-based EU officials and boost the still growing anti-EU sentiment in the UK as well as in other parts of the EU.

According to consulting firm Cyceon, the Yellow Vest political crisis that is currently ongoing in France stems in part from the disrespect in 2008 by former President Nicolas Sarkozy who signed the Lisbon Treaty of the 2005 referendum that voted against the “European project of constitution”. More than a decade later, the effects of such a move that’s been widely perceived as contradicting directly with the democratic will for the elite’s “sake of the Nation” has so large repercussions in French politics that incumbent President Emmanuel Macron has never seemed so close to be defeated by a “populist” candidate in 2022.

If managing to “cancel the Brexit” would serve the EU interests, it could be shortsighted since it would likely grow and accelerate the anti-EU and the anti-elites wave that is sweeping across Europe. From that standpoint, Theresa May is therefore utterly right when she says the government must respect the people’s vote, meaning the Brexit has to happen whether you like it or not.

Jihadists in Burkina Faso renew fears of instability in West Africa

France remains the main stabilizer and military force in West Africa thanks to its seasoned Special Forces, experimented soldiers and colonial history.

Despite a decade-long unabated engagement against terrorism – currently Operation Barkhane – in an area (the Sahel) that’s seven times larger than France, military officials noticed lately a scattered resurgence of the jihadist offensive especially aimed at destabilizing local governments and spreading fear among the population.

On December 17, 2018, President Emmanuel Macron and his Burkina Faso counterpart Roch Marc Christian Kaboré, while meeting in Paris, stressed on the fact that no additional French troops would be deployed in the country which is a member of the antiterrorist G5 Sahel group with Chad, Mauritania, Mali and Niger.

In the meantime however, Defense Minister Florence Parly and her Burkinabe counterpart Jean-Claude Bouda signed an intergovernmental agreement with a view to strengthening bilateral cooperation, including the delivery of 34 military vehicles by June 2019.

13 days before that, France had shown its willingness for more involvement after conducting an air strike against jihadist operatives who were attacking gendarmes at Inata, north of Burkina Faso. On December 28, 2018, a similar attack took place near the Malian border in Loroni, 250 kilometers north-east of Ouagadougou that left 10 gendarmes dead in an ambush, raising fears of increased jihadists’ operational capabilities and therefore greater potential of instability for West Africa as a whole.

“Average GDP growth in West Africa stalled in 2016, after several strong years, to 0.5 percent. It rebounded in 2017 to 2.5 percent, and was projected to rise to 3.8 percent in 2018 and 3.9 percent in 2019,” wrote the African Development Bank Group (AFDB) in its West Africa Economic Outlook 2018.

Such a growth dynamic could be at risk since the jihadist threat is increasingly developing outside the Sahel and spilling over into nearby countries, especially Ivory Coast and Burkina Faso.

Senegal-based researcher Bakary Sambe recently cited by the Washington Post pointed out “there are worries that West Africans are underestimating the threat” and the killing of ten gendarmes has come as a reminder of the growing challenge posed by jihadists to the Economic Community of West African States (ECOWAS).

Why should investors read James Mattis’ resignation letter?

Investors have been monitoring China’s economy for a long time and any good or bad figure from Hong Kong and Shenzhen does impact global markets. The resignation of US Defense Secretary James “Mad Dog” Mattis after two years with the Trump administration comes as additional evidence of how the United States might deal with the 21th century’s strategic environment.

Beyond the consequences of a US military withdrawal from the on-the-ground combat against the Islamic State (ISIS) in the Syria-Iraq area from stability and energy viewpoints, this is more about Russia and chiefly about China that Mattis’ resignation bears significant relevance.

“I believe we must be resolute and unambiguous in our approach to those countries whose strategic interests are increasingly in tension with ours,” wrote General Mattis in his resignation letter. “It is clear that China and Russia, for example, want to shape a world consistent with their authoritarian model”, stressed Mattis.

As a result, investors should understand that from a global strategic perspective, a number of US officials do envisage growing tensions – be it a cold or a hot warbetween the United States-NATO and a China-Russia axis. Although any military confrontation seems unlikely today, the loosening of nuclear weapons and nonproliferation treaties plus trade disputes have grown while China emerged as the world’s second largest economy and while the United States searched to meet the long-term challenge of its increasingly contested leadership.

Clearly, James Mattis writes that the relationship between the West and Asia is likely already engaged on a rocky road already, and any savvy investor should take this into account on a worldwide scale.