By Risa Grais-Targow

With Venezuelan President Hugo Chavez gravely ill and the Castro brothers in their twilight years, debate has begun to focus on the future of Chavez's brand of leftist politics in Latin America. There is widespread speculation as to which leader might assume Chavez's role in the region, even though his influence has arguably been on the decline. Among the possibilities bandied about is Ecuador's President Rafael Correa. Correa easily won a third term in the Feb. 17 elections, beating his closest opponent, Guillermo Lasso, by more than 30 percentage points. Correa also expanded his base of support in the National Assembly, where his Alianza Pais looks likely to achieve an absolute majority. Correa, like Bolivia's Evo Morales and Nicaragua's Daniel Ortega, owes much to Chavez, who served as a model for socialist policies, anti-imperialist rhetoric, and doled out hundreds of millions of dollars to his regional allies. While Correa may aspire to use his strong mandate to assume leadership of the Chavez-created Bolivarian Alliance for the Americas, his ability to do so will be limited.

First and foremost, Correa simply lacks the resources. Ecuador is a relatively small country (its GDP is about 20 percent of Venezuela's), and while it is a major oil producer, it does not boast the quantity of oil that can sustain Chavez-like regional "petro-diplomacy" and aid programs. Moreover, in the likely event that Chavez's chosen successor, Vice President Nicolas Maduro, wins a new election, there is no evidence to suggest that he doesn't want to fill Chavez's regional leadership role himself. So far, Maduro's actions suggest that he will represent policy continuity. He is close with the Cuban regime and has imitated Chavez's playbook thus far, including cracking down on the private sector and suggesting that foreign agents were planning an assassination attempt against him.    

That doesn't mean that Correa won't try. He boasts much of Chavez's charisma, and has taken every opportunity to vault himself, and Ecuador, onto the international stage, typically at the expense of US policy interests. This has been particularly true since Chavez first became ill in June 2011. Correa boycotted last year's Summit of the Americas in protest of Cuba's absence, and more recently made headlines by granting Julian Assange political asylum. While Venezuela grapples with its internal transition challenges, rather than its regional agenda, Correa could heighten his anti-imperialist rhetoric. Regardless, however, Correa's decisive victory-along with the endurance of Morales in Bolivia, Ortega in Nicaragua, and more center -- left governments in Peru and Brazil -- suggests that the left in Latin America has staying power, with or without Chavez.

Risa Grais-Targow is an associate in Eurasia Group's Latin America practice.

Eurasia Group's weekly selection of essential reading for the political risk junkie -- presented in no particular order. As always, feel free to give us your feedback or selections by tweeting at us via @EurasiaGroup or @IanBremmer.

Must-Reads

"New Rove Group Could Backfire on G.O.P."

By Nate Silver, FiveThirtyEight blog, New York Times

Nate Silver puts data to good use, analyzing the power of fundraising (or lack thereof) in Republican Senate primary races.

"Nigeria's Cardinal Francis Arinze: the next Pope?"

By Fraser Nelson, The Spectator

Two things that wouldn't ordinarily mix: the Pope... and Vegas odds.

"How to avert Armageddon"

The Economist

The asteroid that hit Russia on February 15 was quite a sight. If you're curious about strategies to defend against future collisions, this is the article for you.

Longer Reads

"A Middle-Class Paradise in Palestine?"

By Armin Rosen, The Atlantic

The planned city of Rawabi in the West Bank is a unique experiment -- a "Palestinian-directed private sector project, with support from both Israeli businesses and a major Arab government." Could it be the new way forward? 

"A Chinese Hacker's Identity Unmasked"

By Dune Lawrence and Michael Riley, Bloomberg Businessweek

To catch a cyber-thief: This piece details how the director of malware research at Dell SecureWorks used a notorious Chinese hacker's cyber-activities to reverse-engineer his real-world identity.

The future of Myanmar's National League for Democracy (NLD) seemed preordained when the trammels of political repression were removed in 2012. The party would parlay the popularity of its leader Aung San Suu Kyi and coast to victory in the 2015 elections over a ruling party led by widely despised former generals. But democracy is messy, and even its most fervent adherents can slip once the real challenges of governance and politics surface.

The NLD has stumbled in the past few months and its trajectory is now less certain. The party faces a growing list of constituent demands and the ruling Union and Solidarity Development Party (USDP) has demonstrated a talent for political maneuvering that is improving its outlook.

The NLD's internal disorder is in part a natural consequence of having to shift its focus from opposing a hated military government to winning an election in a diverse country. Burma has 135 recognized ethnic groups, many of which live along the eastern, western, and northern borders. Some of them have never yielded to rule by an outside force, making the majority-ethnic Burman NLD's task of building an effective national party more difficult. But the party has also been accused of mishandling internal party elections, delaying the first party congress until the second week of March. Several hundred disgruntled members defected from the party in Pathein several months ago, and recently party members gathered in Mandalay to protest party election fraud. The aging party leaders are also rumored to be excluding party youth from the policymaking process, which could result in more defections that could bolster the NLD's competitors or provide the core of new parties ahead of the 2015 national elections.

Aung San Suu Kyi's new role has also forced her to make compromises that have alienated some would-be NLD supporters. She has exhibited greater pragmatism and less ideological conviction in her role as member of parliament than she did as an activist. Though her silence on the Rohingya humanitarian crisis is less problematic in Myanmar than it is among international donors, Aung San Suu Kyi has not won allies through her silence on the conflict in Kachin State. Her silence may cost the NLD dearly if it finds that it must rely on ethnic parties to form a ruling coalition after the 2015 elections, much as the NLD did in 1990 when it formed an alliance with ethnic coalition the United Nationalities League for Democracy.

Meanwhile, the USDP has improved its ability to govern, thanks in part to personnel changes that have promoted technocrats and its experience with the exercise of power. The USDP has been increasingly vocal about taking credit for the recent political liberalization, and as economic liberalization begins to improve the standard of living, the party's leaders will no doubt seek to burnish the USDP's reputation. From a policy perspective, this means that development will likely be steered toward areas that return the biggest, quickest, and most obvious improvements in living standards, which includes areas such as electrification, telecoms, and agriculture.

Finally, the USDP will use the familiar divide-and-rule tactic of the past, working to undermine their opponents by fostering personality-based rivalries and distrust across ethnic lines. The USDP and military have pursued an aggressive effort to broker ceasefire deals with 11 groups since November 2011, whom they will then encourage to register as political parties. If successful, this tactic will force the implicit acceptance of the 2008 Constitution by Myanmar's ethnic groups and will also present the NLD with new challenges in minority ethnic electoral districts. And if the NLD cannot improve its relationship with ethnically based parties -- either because of concerns about the selection of local party officials or because of its silence on the Kachin -- then it may find itself competing with them instead of building a coalition. That outcome would divide the opposition vote and cede the advantage to the USDP.

Similarly, in an effort to raise the stock of the breakaway NLD competitor, the National Democratic Force, President Thein Sein on Feb. 6 appointed one of its members of parliament as the first non-USDP cabinet minister. And if Thein Sein feels he can succeed, he may also encourage the pro-democracy group, 88 Generation Students (88 GS), to form a party. The organization's moral authority in Myanmar approaches that of Aung San Suu Kyi, and an 88 GS party would challenge NLD's pro-democracy bona fides.

The result is that the NLD is too weak to shape the reform agenda for the next three years, and perhaps longer. Aung San Suu Kyi is probably aware of this and as a result will be careful not to overreach and risk alienating international stakeholders. For the USDP's part, Thein Sein and his cabinet will continue with reforms that are intended in part to gradually legitimize both the military and the USDP while entrenching their privileged economic and political positions.

Christian Lewis is a researcher in Eurasia Group's Asia practice.

To understand how the world is changing, it's not enough to identify the risks most likely to move markets. We also have to point out the threats we think are significantly over-rated. Eurasia Group calls these its "red herrings." The most important for 2013 is centered on the intersection of political risk and energy prices.

Political and security worries in and around oil exporting countries have put a lot of pressure on energy prices over the years, but despite the continuing upheaval in the Middle East that we highlighted in Top Risk #3, we don't expect this will be a year of geopolitical risk for energy markets. 

In part, that's because the worst of this year's regional turmoil is likely to center on Syria, its neighbors, and North Africa rather than the major energy exporters. The pressures on Iran continue, of course, but with sanctions in place and little appetite among outsiders for another Middle East conflict, the likelihood of major military action and an Iran-related energy shock is exaggerated -- at least for 2013. And, of course, a lot of Iran's energy exports have already come offline.

More important is the supply-side of the equation. Technological breakthroughs in production in the United States and Canada are a game-changer for the entire global energy market, reducing imports into North America and alleviating unease about supply scarcity. In years to come, new fossil fuels will come increasingly from these two countries as well as from stable developing states like Brazil and Mexico. That's good for consumers around the world, because even a modest economic recovery isn't generating overwhelming demand growth -- and tighter fuel efficiency standards and shifts in consumer behavior are adding to the bearish price outlook.

On the other hand, this is not good news for poorly governed resource-rich countries like Russia and Venezuela, which need relatively high energy prices to provide crucial state revenue and keep their economies in gear. Five years ago, Russia needed an oil price of just $34 per barrel to balance its books. In 2012, that number was about $117. The already wretched state of oil-export-dependent Venezuela's economy forced a currency devaluation last week.

As we've written, there are plenty of serious political risks in 2013, but a political risk-inspired surge in energy prices won't be among them.

Eurasia Group's weekly selection of essential reading for the political risk junkie -- presented in no particular order. As always, feel free to give us your feedback or selections by tweeting at us via @EurasiaGroup or @IanBremmer.

"U.S. counterterrorism efforts in Africa defined by a decade of missteps"

Craig Whitlock, Washington Post

Hindsight is 20-20. In light of recent events in Mali and Algeria, this is an interesting look back on a decade of U.S. counterterrorism efforts in Africa. 

"Red Obsessions: Film Business Moves from Hollywood to Asia"

Lars-Olva Beier, Spiegel Online

With China slated to replace North America as the world's #1 film market by 2020, navigating the Chinese market is increasingly difficult -- and necessary.

"Fertility and Immigration"

Jonathan V. Last, Los Angeles Times

There are 38 million people living in America who were born somewhere else. How do global fertility rates shape U.S. immigration -- regardless of policy? 

"North Korea accused of ripping off ‘Call of Duty' in propaganda video"

Ramy Inocencio, CNN

Posting a video of New York in flames? Not cool, North Korea. Using Michael Jackson's "We Are the World" as the background music? For shame. Lifting parts of the video from the latest Call of Duty video game? That's where YouTube draws the line.

"The new capitalists"

The Economist

To understand Kim Jong Un, it's important to put him in historical context. In the post-war era, North and South Korea's economies were roughly on par. Today, output per capita in South Korea is over 17 times that of the North.

Bonus Read

"Daring to Ask the PED Question"

Bill Simmons, Grantland

While it's not political per se, reporting on doping requires a great deal of diplomacy -- especially if you want to make the case that "innocent until proven guilty" does not always apply. This is one of the boldest, most honest pieces of sports journalism you'll ever read.

Note: Today is the tenth in a series of posts that detail Eurasia Group's Top Risks for 2013.

Jacob Zuma's reelection as ANC president will hasten the decline of South Africa's dominant political party and increase social pressures on the continent's most advanced economy. As elections loom in 2014, critical reforms will fall victim to more populist policies.

On the surface, the ANC's December 2012 national conference at Mangaung struck a surprisingly market-friendly tone: Zuma and his allies defeated his most populist challengers, elected labor-leader-turned-tycoon Cyril Ramaphosa as deputy president, dropped any mention of nationalization from the party's platform, and rammed through an endorsement of the pragmatic National Development Plan (NDP). But beneath the surface, worrying trends have become apparent.

The ruling party's policy of strategic state ownership introduced further policy uncertainty to the mining sector (especially on taxes) and paved the way for a heavier state presence in industries like energy and steel. The government is now more likely to use the threat of new taxes to try to secure cheaper inputs for state-run energy and infrastructure projects.

The NDP will probably provide too little, too late. The plan's most critical reforms -- more flexible labor laws, education reform, and rationalizing local government -- will probably be scuttled by vested interests and weak governance, and its 20-year plan for expanding employment and reducing inequality is too broad and too long term to offer much-needed near-term help. As a result, the plan's more populist elements -- including boosting public-sector employment and social spending -- will be implemented first, further limiting government's ability to find longer-term, structural fixes. Ramaphosa's business experience and negotiating skills will help the NDP's cause. But the plan lost its primary champion when former finance minister Trevor Manuel resigned from the ANC's National Executive Committee.

Zuma's demonstrated ability to survive internal challenges will relieve some of the factional pressures within the ANC leadership: All top six party executives are now Zuma allies, and the president's most vocal challengers were uniformly eliminated from the 80-member NEC. Yet this winner-take-all outcome will also reduce the ANC's so-called broad church of leaders and supporters, further undermining the party's monopoly on political legitimacy among black South Africans and increasing the risk of social unrest.

Despite its electoral dominance -- the ANC won 65.9 percent of ballots cast in 2009 -- growing voter apathy and discontent with the pace of economic change has substantially reduced turnout, meaning the ANC now has the support of just 50 percent of registered voters. Anger over inequality has also driven a rise in violent protests, including frequent demonstrations against poor service delivery and last year's wildcat strikes in mining and farm communities. In general, these actions have been instigated by disgruntled or former ANC-affiliated leaders trying to exert influence from the outside.

These trends will continue in 2013. The new ANC leadership will alienate leaders and constituencies from the same areas where protests and strikes are most common, and government efforts to exert tighter control over provincial resources will exacerbate local tensions. Cutbacks and shutdowns by gold and platinum miners in the first half of 2013 -- as well as the June expiration of wage agreements in the gold and coal sectors -- will almost certainly spark another bout of labor unrest in the mining sector, especially given the weakened position of the government-aligned National Union of Mineworkers and the rise of more militant bodies such as the Association of Mineworkers and Construction Union. Combative stances are also likely from the Congress of South African Trade Unions.

The bottom up pressures will weigh on the ANC in advance of the 2014 elections, as will the scandal-plagued leadership of Zuma himself. Though Ramaphosa's respectability provides the party with badly needed cover, the ANC government will still have to focus on short-term spending and patronage to shore up support. Looser monetary policy is also a real possibility, as is a more aggressive (though still tempered) approach to land reform. Without these steps, continued bouts of social unrest may well shake investor confidence more than unwelcome policies.

Bottom line: Zuma is not Nelson Mandela, and the ANC no longer has enough credibility with poor South Africans to (once again) ask for patience in achieving a better life.

Next, we'll profile our "red herring" risks for 2013.

Note: Today is the ninth in a series of posts that detail Eurasia Group's Top Risks for 2013

With slow growth, persistent inflation, and large fiscal and current account deficits, India desperately needs to implement a range of economic reforms. But due to its own shortcomings and a constraining political environment, the ability of the Congress party-led United Progressive Alliance to tackle structural problems is limited -- and will wane further in the run-up to national elections.

Elections are due by May 2014, and the Congress party is scrambling to shore up its popularity in the wake of high-profile corruption scandals. Other coalition members and issue-based supporters, sensing weakness, will try their hardest to extract political concessions from the Congress while the opposition Bharatiya Janata Party (BJP) will likely remain relentlessly obstructionist in its quest to regain power.

Consequently, parliamentary gridlock will persist, with only minor administrative reforms politically feasible in 2013. P. Chimdambaram's return as finance minister in July 2012 has buoyed foreign investor confidence and market sentiment, but he needs to make deep, politically difficult spending cuts to improve India's chance of averting a sovereign credit downgrade to junk status.

And parliamentary elections are not likely to lead to an improved policymaking environment. Like the Congress party, the BJP is in the throes of a prolonged leadership transition and has been largely unable to capitalize on the decline in public support for Congress. This leadership vacuum has enhanced the influence of swing regional and state parties. Elections will likely result in a hung parliament and an even more unstable coalition that will be capable of approving only lowest-common-denominator policies.

Growth will improve in 2013 but India will likely miss its fiscal deficit targets of 5.3 percent of GDP for fiscal year 2012-2013, and 4.8 percent for fiscal year 2013-2014, without substantial subsidy cuts unprecedented in an election year budget.

Expectations for India's performance in 2013 are limited. While it can hope to accomplish just enough on fiscal policy and economic reforms to avoid a sovereign downgrade, India will make negligible progress on structural problems that have long vexed its economy.

On Wednesday, we'll profile Risk #10: South Africa.

Eurasia Group's weekly selection of essential reading for the political risk junkie -- presented in no particular order. As always, feel free to give us your feedback or selections @EurasiaGroup  or @IanBremmer.

China has been all over the news this week, with the New York Times hacking episode dominating headlines. But recent stories related to China venture much further than cyberspace. This week's must-reads has a China theme.

Must-reads

1. "The resource race: China dips toes in Arctic waters"
Christoph Seidler, Spiegel Online

This piece outlines China's new ventures to the Arctic -- and how China's diplomatic tactics are shifting.

2. "China's love affair with cars chokes city air"
Louise Walt, Associated Press

Over the last decade, the automobile industry has skyrocketed in China. Last year, 13 million cars were sold. But what kind of environmental impact will such a rapid shift have?

3. "Making room" 
The Economist

In 2010, there were roughly 4,000 cities with populations of 100,000 or more. (China had about 400 of those). But between 2010 and 2050, the UN anticipates that the world's urban population will double. This piece reviews a new book by Shlomo Angel called Planet of Cities -- the book predicts how future urbanization will play out. Here's an interesting rule of thumb: usually, a country's biggest cities break down such that the largest city has twice the population of the second largest, three times that of the third largest...etc.

4. "Chinese labour pool begins to drain"
Jamil Anderlini and Ed Crooks, Financial Times

China's working age population unexpectedly shrank last year -- a trend that wasn't meant to begin until later this decade. What do China's shifting demographics mean for the economy?

5. "Mexico: the new China"
Chris Anderson, The New York Times

Is cheaper always better? This piece highlights some of the advantages of using Mexican manufacturing from an American business perspective. Anderson argues that it allows for more product evolution, innovation, and customization -- and Chinese labor is getting less and less cheap.