Riots this week have yet again exposed the weakness of the French government. There is now a very real prospect that its budget will not pass, and a subsequent confidence vote that brings the government down. This is happening six months before a presidential election that Marine Le Pen leads in the polls.

We've got an election focus elsewhere this week. The Middle East is holding its breath for Israeli and US elections. The former is likely to be inconclusive, the latter likely to be a disaster for President Trump. He is using Ukraine to confuse the narrative on fuel prices, but that's unlikely to make a difference. The real question will be what he does afterwards.

Politics & Governance·Europe & Eurasia

Riots and curfews in France as protests turn violent

More than half a million people marched across France on 17 October against rising living costs and failing public services. Protests turned to looting and arson in several cities, with town halls attacked in Limoges and Marseille. About 2,400 people were arrested over the weekend. Prime Minister Lecornu then ordered local curfews, including in parts of Paris and Lille. Our view is that the movement which began in Paris high schools is becoming an existential threat to the government. The unrest leaves Lecornu's 2027 budget, which was due to freeze public-sector pay and most pensions, very unlikely to pass. His allies hold just over 200 of 577 seats. We expect heavy concessions or another fall of government before the end of the year.

Sanctions & Export Controls·Europe & Eurasia

Trump pauses new Russia tariffs as talks move to St Petersburg

On 16 October President Trump suspended most measures in the new Sanctioning Russia and Iran Act, two days before they were due to take effect. Secretary of State Marco Rubio called it a 60-day pause linked to high energy prices. Trump has tied it to the diplomatic track, in which US envoy Steve Witkoff met President Zelensky in Oslo and is due in St Petersburg on 21 October. The Kremlin has floated a Trump, Putin and Xi meeting in China next month. Our view is that Trump is continuing his efforts ahead of the midterms to draw the fuel price narrative away from his war on Iran. Pausing sanctions, undermining Ukraine's war effort, while looking serious about talks is almost entirely a domestic play. It is unlikely these rounds of talks will deliver meaningful results, the prospect of an energy ceasefire (as falsely announced by Trump previously) is the best that can be hoped for.

Trade & Supply Chains·Middle East & North Africa

Qatar and Pakistan put a new proposal to Iran and the US

Qatar and Pakistan submitted a new peace proposal to Iran and the US on 20 October. Pakistan's army chief, Asim Munir, delivered it in Tehran. Under the reported terms, Iran would allow an unannounced visit to its nuclear sites by the UN nuclear watchdog. In return it would receive the interest on $6 billion of its funds frozen in Qatar. In parallel, Iran's Revolutionary Guard claimed that several tankers had hit mines near the Strait of Hormuz, although this has been challenged by the Joint Maritime Information Centre. Our view is that the proposal is an attempt by Qatar and Pakistan to prevent re-escalation after the US midterms. Trump has said he expects a deal after the vote but the expectation is that he chooses renewed strikes first.

Also this week

Saudi Arabia postpones its flagship investment conference. Saudi Arabia on 20 October postponed this month's Future Investment Initiative until next year as Houthi strikes continue. Offices in Riyadh's financial district have sent staff home, and Western countries are advising against non-essential travel. Trade & Supply Chains · Middle East & North Africa

Egypt, Turkey and the UK move to back Riyadh. Egypt's parliament is debating a request to defend Saudi Arabia if asked, and Turkey sent its defence pact with Riyadh to parliament on 20 October. The UK announced it will send Typhoon jets for air defence. None of the three has yet committed to strikes on the Houthis. Defence & Security · Middle East & North Africa

Drone strike hits a market in disputed Abyei between Sudan and South Sudan. Drones suspected to belong to Sudan's army struck a market in Abyei on 19 October, with local reports of 73 civilians killed. The market supplies fuel to Darfur. The army appears to be targeting supply routes into areas the Rapid Support Forces hold. Conflict & Instability · Sub-Saharan Africa