Political Risk Analysis - Legislative Elections To Dominate Political Landscape In 2018 - MAR 2018

BMI View: Bhutan ' s political landscape will likely be dominated by the run up to the 2018 legislative elections and we believe that the elections are likely to be more closely contested than the previous polls. However, pre-election rhetoric is likely to be limited out of respect for the king and various parties are likely to focus on key issues such as development and sovereignty. We have downgraded our short-term political risk score to 60.4 from 61.0 previously to reflect the slight increase in political uncertainty.

Bhutan's political landscape over the coming months is likely to be dominated by the run up to the 2018 legislative elections and we believe that these are likely to be more hotly contested than the previous elections in 2013 amid the gradual development of democracy in the country. While all parties have pledged to conduct campaigning in a civil manner, the lack of a clear frontrunner and the changing of party allegiances by politicians seeking to secure their positions are likely to lead to a slight rise in political uncertainty. However, we do not expect a sharp rise in pre-election rhetoric out of respect for Bhutan's king. Debates over key issues such as development and sovereignty are likely to shape the political discourse and we have downgraded our short-term political risk score to 60.4 from 61.0 previously to reflect the rise in pre-election uncertainty.

Lack Of Clear Frontrunner To See Potential Rise In Political Uncertainty

There appears to be no clear frontrunner in the legislative race as various parties seek to position themselves to gain advantage. This has resulted in considerable shifts in the political scene, with political candidates starting to switch party affiliations in preparation for the upcoming polls. The opposition Bhutan Peace and Prosperity Party (DPT) has seen the defection of several high profile members, including the former information and communications minister Nandalal Rai, who joined the ruling People's Democratic Party (PDP). Two other DPT members also joined the Druk Nyamrup Tshogpa (DNT). At the same time, the DPT has attracted other candidates from other parties. With the various parties seeking to differentiate themselves in the run up to the elections, we believe that more politicians are likely to move parties as they seek to shore up their positions, leading to a more hotly contested race than in 2013.

However, we highlight that all parties appear intent on ensuring that the pre-election rhetoric does not escalate, with all five parties pledging during a panel discussion to refrain from mudslinging and corrupt practices to achieve their political goals. During the discussion which was organised by Bhutan Democracy Dialogue (BDD), the various parties raised the need to focus on achieving national development goals and to put national interests ahead of party ones. They also discussed the need to encourage voter turnout. According to the secretary of the Election Commission of Bhutan (ECB), only 20% of the youths voted in the 2016 local elections and that the youths were 'the main target' for the parliamentary elections.

King To Provide Considerable Stability

The 2018 legislative elections will mark the third time the landlocked country has held elections since 2008 and King Jigme Khesar Namgyel Wangchuck has been seeking to develop democracy since the country transitioned from an absolute monarchy to a constitutional monarchy in 2008. Given the prestige of the King, we believe that he is likely to remain as one of the key pillars of power as democracy slowly develops and believe that this will provide a degree of stability.

Although the King is the head of state, executive power is held by the council of ministers, headed by the prime minister. The King can also be removed by a two-thirds majority vote by the parliament followed by a national referendum, which must pass by a simple majority in all twenty districts of the country. However, the current King is extremely popular among the population and his efforts to improve the lives of his people through investing in education and public health have largely been viewed positively. As such, political parties have tended to be respectful of the King's wishes, suggesting that there is likely to be a considerable degree of policy continuity regardless of who wins the elections. This commitment to the throne was seen when PDP's general secretary stated that his party would 'first listen to the King and do things according to his vision', indicating that they would not compromise on national interests such as security and foreign policy.

Development To Be A Key Issue

Bhutan's relatively underdeveloped economy and ongoing efforts to boost growth suggest that development issues are likely to be one of the key election topics. The country continues to be heavily reliant on hydropower as its key driver of growth and we expect this to remain intact in the near term amid continued investment in the sector from the government. In addition, the country is also looking to grow its tourism sector while striking a balance with protecting the fragile environment.

Furthermore, the government has been seeking to strengthen its longer term outlook through the establishment of a comprehensive national development plan (CNDP) with Japan International Cooperation Agency (JICA). The CNDP aims to promote balanced development in urban and rural areas across the country to maximise Gross National Happiness. The plan will also seek to reduce the number of pertinent issues like rural-urban migration, social disparity, and bring about balanced development for human settlement, economy, environmental conservation and disaster management.

Border Dispute Suggests Sovereignty Will Be Another Concern

The issue of sovereignty is also likely to be a key election topic following the standoff at Bhutan's Doklam plateau between Chinese and Indian troops in June 2017. Bhutan has historically leaned towards India, having historical, economic, and cultural ties with New Delhi. However, tensions between India and China over the territorial dispute in the Doklam region (which both China and Bhutan claim) have led some in Bhutan to question the extent of New Delhi's influence over Thimpu. On June 18, Indian troops crossed the border with China in the Doklam plateau to interrupt China's road building activities while Bhutan remained silent, only issuing a statement ten days later. We believe that Bhutan is likely to come under greater pressure over the coming years as both China and India seek to expand their respective spheres of influence. With domestic concerns rising over Thimpu's relationship with New Delhi, we believe that the issue of sovereignty could see Bhutanese overcome their traditional aversion to Beijing and advocate for the development of bilateral ties in a bid to counterbalance India's historical influence in the country.