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

Since the onset of the financial crisis in 2008, investors and companies have focused mainly on risks in developed world markets. But as conditions in the U.S. and Europe continue to improve in 2013, the most worrisome risks will again come from emerging market countries. These countries are fundamentally less stable than their developed world counterparts, and some of their governments used a period of favorable commodities prices and the benefits from earlier reform to avoid the tough choices needed to reach the next stage of their political and economic development.

Some of these emerging market nations face more difficult challenges than others, and much depends on the degree of political capital each leader will have in order to make unpopular but necessary changes. These countries can be divided into three broad categories according to the complexity and immediacy of the risks they face and the longer-term upside they offer.

The first category includes the best bets:

• Mexico: Newly elected President Enrique Peña Nieto is one of the few leaders of an emerging market country both willing and able to advance structural economic reforms.

• Turkey: Despite unrest near its borders and elite infighting over constitutional change, Turkey's institutions and balance of power support a stable and dynamic economy.

• South Korea: Seoul has demonstrated an ability to diversify its trade partnerships, has concluded free trade agreements with the U.S., the EU, and ASEAN, and is negotiating similar deals with Canada, Indonesia, and Vietnam.

The second category of emerging market economies are at risk of considerable volatility.

• India: Regardless of significant long-term structural and demographic advantages, dysfunctional politics and upcoming elections will probably paralyze reform efforts.

• Indonesia: President Susilo Bambang Yudhoyono is a lame duck, and the economic reform process is stalling.

• Thailand: Elites in Bangkok continue to fight over unresolved issues, generating unrest.

• South Africa: Political leadership has deteriorated steadily since Nelson Mandela's 1999 retirement, and populist pressures are increasing.

• China: The government's continued focus on social welfare, infrastructure, and industrial policy spending in 2013 will help bolster near-term growth. But geopolitical tensions and more competitive Chinese firms will make it more difficult for foreign companies and investors to secure profits.

Lastly, there are the underperformers, those countries where risks will overshadow returns.

• Russia: President Vladimir Putin retains a strong hold on power, but he has lost significant support from upper- and middle-class Russians, particularly in major urban areas. As a result, reliance on support from conservative Russians and economic elites will likely reduce his willingness to undertake needed reforms. Relations with both Europe and the U.S. are increasingly troubled.

• Pakistan: Political risk could reach critical levels due to a volatile election season.

• Venezuela: Challenges to restore economic health will probably suffer without the dynamic presence of the recently re-elected, but seriously ill, President Hugo Chavez.

• Argentina: Policymaking challenges are widespread due to populist pressure.

On Friday, we'll profile Risk #2: China vs Information.

Today, The Call presents our top risks for 2013. Click HERE for Eurasia Group's complete report.

1. Emerging markets -- The era of emerging market abundance is finished. As the United States and Europe slowly regain their economic footing, the political risk focus will return to the emerging market world, where differences among the largest players will become more obvious. Slower growth and rising expectations from larger and more demanding middle classes will create public pressure on governments, meaning that emerging markets -- including the increasingly suspect BRICs -- should no longer be treated as an asset class for outsized growth. Consideration instead should shift toward which developing country governments have enough political capital to remain on track to a more advanced stage of development.

2. China vs. information -- China's new leadership faces many challenges in 2013, most importantly the state's growing inability to control the flow of ideas and information across borders and within the country. Until now Beijing has been largely effective in isolating online discourse to focus on discrete issues without culminating in real challenges to the government's decision-making or policy. But every corruption scandal and example of official malfeasance makes the next event more difficult to navigate, and the risk is that a broad-based social movement for change will gain momentum in China in 2013, distracting the government from its domestic and foreign policy priorities and potentially weakening investor confidence in the stability of the mainland market.

3. Arab Summer -- We are far beyond the Arab Spring, and an Arab Winter, where dictators rebound and consolidate power, has not materialized. Instead we are approaching an Arab Summer, whereby the region will witness radicalized movements -- both sectarian and Islamist -- playing a much more important role. As outside powers look to avoid direct involvement in the region's risks, local powers -- Iran, Turkey, Saudi Arabia and others -- will compete for influence and play out their rivalries. At the center of this lies Syria, whose civil war now has implications that extend far beyond the humanitarian. Syria has become a proxy conflict for Shiite and Sunni powers, as well as a magnet for jihadists, increasing the geopolitical risk overall and sparking further insecurity throughout the region, most notably in Iraq, Jordan, and Turkey.

4. United States -- Every silver lining has a dark cloud. While the fiscal cliff was averted, the process by which the deal was reached casts a large shadow over hopes that the election might create a more conducive environment for cooperation, and dysfunctional American politics will weigh on both the U.S. economic recovery and President Obama's legislative agenda. This is not about a politically induced new recession, let alone a major financial crisis. But political uncertainty over corporate taxes and a series of noisy brinkmanship episodes will generate a modest but real drag on growth.

5. JIBs (Japan, Israel, Britain) -- These are the three current global trends that matter most: China is rising, the Middle East is exploding, and Europe is muddling through. Set against a G-zero backdrop, the structural losers of these trends are the JIBs (Japan, Israel and Britain): countries influenced most directly and problematically by changes now underway in the geopolitical order. All three countries are now in a similar position for three reasons: their special relationships with the United States are no longer quite as important; they sit just outside the major geopolitical changes underway, without the means to play a constructive role; and key domestic constraints in all three countries (political, social, historic, and otherwise) make it particularly difficult for them to respond effectively to the challenges posed by a shifting global order.

6. Europe -- There will be no grand implosion, but the muddle-through approach to crisis management carries risks of its own. The eurozone is headed for neither breakup nor resolution, and in 2013 the risks shift from a threat of financial crisis to a loss of momentum in creating the institutional and policy frameworks for a redesigned union. The weak economic outlook and the politics of crisis-fighting will also remain sources of uncertainty. Simultaneously, euro-skepticism is on the rise and resistance to reforms is increasing in the face of protracted austerity and few prospects for an economic turnaround.

7. Asian geopolitics -- In 2013, geopolitical risk will continue growing in East Asia in a new and potentially more dangerous way. Facing increased nationalism in China and Japan, the United States will look to play a larger role, giving oxygen to the hedging strategies of many regional states seeking closer American ties. Territorial disputes over the East China and South China Seas will also create new friction, and at risk overall is East Asia's decades-long distinction as a zone where positive-sum commerce and economics trumps zero-sum geopolitical tension.

8. Iran -- The significant risk in Iran this year is not the one everyone's thinking about. A strike on the country's nuclear program is unlikely, but biting sanctions, other forms of international pressure, and leadership tensions make Iran less predictable and heighten the stakes of an ongoing shadow conflict with Israel and the United States -- one with the potential to rattle markets and put upward pressure on oil prices.

9. India -- India in 2013 will be one of the prime examples of the intrusion of political factors into what had until recently been seen as a long-term economic success story. The country's dysfunctional politics and looming elections feed the risk of an economic shock, and in 2013 the ability of the government to implement robust economic policies will decline even further, perpetuating India's "stalling or falling" outlook.

10. South Africa -- In aggregate growth terms, Africa as a whole looks to be on a trajectory to continue its recent position of positive performance. But in South Africa -- one of the continent's largest and most sophisticated economies -- the outlook is far less rosy. Populism, spearheaded by the ruling ANC party, is on the rise, and it is hard to see any real movement on labor, education, and budgetary reforms. Coming retrenchments in mining will almost certainly spur another bout of labor unrest, which has the potential to spread into other sectors as well. Taken together, all these factors increase the risk of further credit downgrades.

In addition to these, Eurasia Group's red herrings for 2013 include:

The geopolitics of energy -- 2013 isn't the year to get overly concerned about geopolitical risk spiking energy prices. For one thing, most of the Middle East risk in the coming year isn't about energy -- it's about everything else -- and the energy revolution happening in the Western Hemisphere will be a boon for consumers across the globe. 

Global protectionism -- The G-20 can afford to agree on protectionism because there's less of a threat here than meets the eye. The trend in fact is toward hints of competitive trade liberalization, especially within the European Union, which is generating a strong internal consensus on the need for a new major transatlantic economic cooperation package.

Radicalism in the developed world -- Many fear the growing gap between rich and poor will instigate class warfare and cause significant instability across the developed world. We think not. For much the same reason that emerging markets are the top risk this year, it's the underlying stability of advanced industrialized democracies that will come through in 2013.

European separatism -- There is no doubt that there are very real separatist pressures building in Catalonia and in Scotland, and national unity remains fragile in Belgium. However -- as much as we all would love to watch Barca field its own team in the World Cup -- there is almost no chance that any of these issues will grow into an actual crisis leading to separation in 2013.

? - North Korea -- Sometimes, you just can't know what's happening, and with North Korea in 2013 that's really the case. In the face of a sudden leadership transition in the world's most totalitarian state -- now run by an untested 28-year-old -- it's almost impossible to assess whether North Korea is becoming more stable. All signs point to the country remaining a perilous bet, but what causes trouble and when? It's hard not to lose sleep over it, but at the same time working harder to assess what exactly is going bump in the night doesn't feel very purposeful. Sorry.

Over the next three weeks, we'll be posting more ideas and information on each of these risks.

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.

Must-Reads

1. "Freshmen From Kennedy to Double Amputee Join Polarized Congress"
Steve Walsh, Bloomberg

An interesting glimpse at some of the new personalities in the 113^th Congress, a group of representatives that runs the gamut of conceivable paths to Washington -- and the new Congress breaks records, with 81 women in the House and 20 women in the Senate (both all-time highs).

2. "Discordant Development and Insecurity in Africa"
Richard Joseph, allAfrica.com

How to reconcile the similar economic growth we've seen in Mali and Ghana with their starkly different development trajectories? There's no simple answer, but this piece is a good primer on many of the variables involved. 

3. "The Art of Snore"
John Arquilla, Foreign Policy

On US defense spending, are there more than budget cuts to fear?  Is there an innovation deficit? Arquilla outlines what he perceives as shortcomings in the current military spending approach -- as well as some interesting solutions.  

4a."Myanmar Launches Airstrikes on Kachin Rebels"
Simon Roughneen, Christian Science Monitor

4b."Burma's Military Follows Own Course in War against Kachin Rebels"
Jonathan Manthorpe, The Vancouver Sun

When Barack Obama and Hillary Clinton visited Myanmar in November, it was an historic occurrence -- the first-ever US presidential visit to the country, and a firm endorsement of the recent reforms that have taken place. But while national hero and opposition leader Aung San Suu Kyi warmly greeted the visitors, she also admonished that "we have to be very careful that we are not lured by a mirage of success." Fighting between the military and Kachin rebels in the north has clouded reform efforts. And, as Jonathan Manthorpe explains, Myanmar's relations with China -- and water security issues -- underpin much of the issue. These are two sources of conflict that are only trending upward throughout the region as a whole. 

Longer Reads

5. "Better Than Human"
Kevin Kelly, Wired

At Eurasia Group, we've devoted a lot of attention to the long-term labor force impact that the advent of robotics and 3D printing will have, particularly on emerging markets like China, where the country's greatest resource -- cheap labor -- could very well become one of its biggest obstacles as its citizens are displaced from manufacturing jobs following technological advances. Kelly looks on the bright side of a robotic future, outlining the opportunities for innovation and productivity that come with a mechanized work force. His vision is a bit rosy, but it's a useful counterweight to the much-discussed downside risks.  

Vladimir Putin isn't just the second most powerful person in the world. As this FP Slide Show makes clear, the Russian leader is also a race-car driver and a blackbelt in judo.

By Ian Bremmer

A few days ago, I took a quick, informal survey around Eurasia Group on power and global politics. The question: Who are the world's most powerful people? We're defining power as "a measure of an individual's ability to (singlehandedly) bring about change that significantly affects the lives and fortunes of large numbers of people."

Here's what we came up with:

1. Nobody -- In a G-Zero world, everyone is waiting for someone else to shoulder responsibility for the world's toughest and most dangerous challenges. The leaders you'll see named further down this list are preoccupied with local and regional problems and don't have the interest and leverage needed to take on a growing list of transnational problems.

2. Vladimir Putin -- In Russia's personalized system, this is still the person who counts. He isn't as popular as he used to be, and his country has no Soviet-scale clout or influence, but no one on the planet has consolidated more domestic and regional power than Putin.

3. Ben Bernanke -- The world's largest economy is still struggling to find its footing. To help, no one has more levers to pull and buttons to push. The world needs the U.S. economy back on its feet, and Bernanke has more direct influence than anyone else on when and how that happens.

4. Angela Merkel -- For the moment, her commitments are the glue that binds Europe. Merkel's ability to bankroll Europe's emergency funds, win concessions from the governments of cash-strapped peripherals, and maintain solid popularity at home continues to be a remarkable political and policy achievement.

5. Barack Obama -- Even at a time when Washington is focused almost entirely on Washington, the elected leader of the world's most powerful and influential country carries a lot of water. The Obama administration will watch the eurozone from the sidelines and keep commitments in the Middle East to a minimum, but America will continue to broaden and deepen security and commercial relationships in East Asia, and Obama's decisions on how far and how fast to move will be crucial.

6. Mario Draghi -- Europe's backstop. Europe's Central Bank has kept the continent's blood flowing at a crucial moment in its history, and his work is far from done.

7. Xi Jinping -- China's forward progress is the world's most important variable, and Xi Jinping is now the man behind the wheel. Over the next decade, economic and political reforms will be needed to keep China on track, and Xi will make some difficult (and profoundly important) decisions.

8 (tie). Ayatollah Khamenei -- The supreme spiritual and political authority in a country at the heart of a volatile region. Halfway through 2013, Ahmadinejad will give way to a new president, but it is still Khamenei who will decide how the international fight over Iran's nuclear program plays out -- and what the future holds for the Islamic Republic.

8 (tie). Christine Lagarde -- The world's fire marshal. Here is that rare leader whose contribution will be crucial in multiple regions at once. But nowhere will the IMF's work be more important than in keeping Europe on track.

10. King Abdullah Bin Abd al-Aziz -- King of a kingdom with a unique power to move markets. The Saudi monarch is not in the best of health, but the choices he makes in determining who lead the world's hydrocarbon powerhouse into the next generation will help shape the entire global economy for many years to come.

What do you think?

Ian Bremmer is president of Eurasia Group.

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.

Must-Reads

Banyan Asia blog, The Economist

On Wednesday, Park Geun-hye was named president of South Korea by a small margin, making her the first woman to hold the post in the nation's history. How will her presidency differ from Lee Myung-bak's? What are the implications for North-South relations? 

Sanjaya Baru, The Hindu

A much more momentous Asian election took place this past weekend, as Shinzo Abe and the LDP returned to power. Many are focusing on the possible conflicts that the election could provoke between China and Japan, but this piece asks: Are Japan and India the "natural partners in Asia?" In light of the conflict over the Senkaku/Diaoyu islands, it seems Japan is pursuing an ABC policy (Anybody But China). Why not India?

Sami Yousafzai, The Daily Beast

The eradication of polio has been tantalizingly within reach, as its presence has dwindled to just a handful of countries. But wiping the disease out of Pakistan comes with substantial risks. This piece focuses on the dangers to the anti-polio mission in the wake of Bin Laden's death and the role that vaccinations played in gathering intelligence for the operation. 

J.J. Gould, The Atlantic

Another atrocity that hasn't disappeared: human trafficking and forced labor. These are new terms for what Gould still dubs 'slavery.' Even by conservative estimates, there are more people enslaved today than at any point in history. This is an epidemic that needs global attention. 

Brian Whitmore, Power Vertical Blog

If there were a foreign-policy edition of People magazine, Putin would fill the pages. Why all the hype for his most recent press conference? Consider analysis of his performance as our guilty pleasure political risk story. 

Longer Reads

Joshua Foer, The New Yorker

This piece is not political per se, but the treatment of language as an art -- communicable and easily repurposed the world over -- has global as well as philosophical implications. Foer follows a man who spent 34 years inventing a language designed to more precisely mirror reality. The story of who ended up co-opting it -- for political purposes no less -- makes for a fascinating read.

By Hani Sabra and John Watling

Egypt's first round of the referendum on the new constitution delivered a blow to the Muslim Brotherhood and boosted the hopes of the non-Islamist opposition. The draft constitution received a strong yes vote with 56 percent support, but it fell far short of the two-thirds majority that the Brotherhood had likely calculated would be the minimum vote it would win. In addition, voter turnout was low at just 31 percent and Cairenes reportedly rejected the draft 58 percent to 42 percent. The most significant point of comparison is the result of the March 2011 vote that set in motion efforts to draft the new constitution. The Brotherhood and other Islamist groups also backed that poll and it was approved by a massive 77 percent of voters while turnout was also stronger at 41 percent.

The implications for the upcoming parliamentary elections are potentially dramatic, with the non-Islamist opposition emboldened, united for the moment, and possibly on track to win a significant proportion of the seats, though it will still probably fall short of a majority. Egypt's electorate is fluid and a plurality of Egyptians are probably unaffiliated. The non-Islamists probably have a core support of around 20 percent, while the Muslim Brotherhood's core support is probably at around 25 percent. The Muslim Brotherhood also retains its robust electoral machine, and likely support from Salafists, who have their own parties but generally support Brotherhood initiatives. However, the Brotherhood's peripheral support among the remaining plurality of the population -- the unaffiliated voters -- appears to have taken a hit and is waning.

The results are likely to push the Brotherhood to take a less conciliatory approach to governing in the short term, as it scrambles to maintain its advantage. Despite rhetoric about so-called talks, Brotherhood leaders, such as Supreme Guide Mohamed Badie, are becoming increasingly nervous about opposition challenges, and do not want to appear as though they are negotiating from a position of weakness with groups they believed were irrelevant. In addition, as protest activity against the Muslim Brotherhood has increased, the movement has looked inward rather than reaching out to the broader Egyptian society.

The referendum results will fuel the tensions between the Brotherhood and the non-Islamist opposition. The confrontation, played out through protests, strikes, and clashes between opposition supporters and police, will make governing even more difficult. This will be compounded by the ongoing battle between the bureaucracy and the presidency.

Hani Sabra is an analyst with Eurasia Group’s Middle East practice. John Watling is a senior editor with Eurasia Group.

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. 

Must-Reads

1. "Why the Reset Should Be Reset"
Thomas E. Graham and Dmitri Trenin, New York Times

In light of Vladimir Putin's State of the Union address on Wednesday, a speech which signaled more of the same on the home front, it's worth tracking the shifting dynamic between Russia and the United States. With relations deteriorating, is a grander "longer-term strategic framework" out of the question? 

2. "For Better Planning, Watch Global Demographic Trends"
Joseph Chamie, Yale Global

In a world of economic uncertainty, some demographic trends hold predictive power. Here are seven of them. 

3. "Saudi Arabia Makes Big Bet On Solar"
Danny Kennedy, Forbes

Saudi Arabia's $100 billion investment is merely a launching point for an interesting wider treatment of the viability of solar power from an investment standpoint.

4. "Millions in Ransoms Fuel Militants' Clout in West Africa"
Adam Nossiter, New York Times

Mali has been all over the news this week, with discussion of the best response to extremist control of the northern part of the country. France put forward a plan, and US ambassador to the United Nations Susan Rice dismissed it as "crap." Add the lucrative kidnappings that al Qaeda in the Islamic Maghreb has been conducting over the past decade and we're left with an increasingly toxic mix of problems.

Long Reads

5. "The Insourcing Boom"
Charles Fishman, The Atlantic (December 2012)

"I think the era of inexpensive labor is basically over," said Jeffrey Immelt, CEO of General Electric. This profound shift is changing business models-and perhaps even outsourcing practices, as we see hints of manufacturing coming back to the United States. After all, if (A) labor is a smaller portion of a product's cost structure, (B) the difference between the cost of labor in China and the US is shrinking, and (C) manufacturing at home brings a slew of synergistic and innovative advantages, perhaps we are witnessing the rebirth of American manufacturing. This piece expertly weaves these global issues into a historical account of GE's Appliance Park in Louisville. 

Longer Reads

6. "Global Trends 2030: Alternative Worlds"
The National Intelligence Council (December 2012)

Whether you call it the G-Zero, as we do at Eurasia Group, or "a multipolar world" where the US is no longer the hegemonic power and no one country will take its place, the NIC's new report provides a compelling map of this new global order's significance in shaping the world of tomorrow. ‘Megatrends,' ‘Game-Changers,' ‘Potential Worlds', and everything from the impact of 3D printing to the potential for ‘black swan' events makes for a fascinating read. 

By Carsten Nickel

It's a trick not every political leader can pull off: put some 420 billion euro on the European table to protect Europe's weakest economies from default and remain your country's most popular politician. That's what Angela Merkel has managed. Despite having made unpopular concessions to Greece only a few days earlier, delegates of her Christian Democratic Union (CDU) re-elected her as party leader with close to 98 percent support last week. Her public approval ratings remain north of 60 percent, and the trust that German voters have in Merkel's management of the eurozone crisis puts the Chancellor and her party in a strong position ahead of general elections next September.

The reason behind these impressive figures is that Merkel's mix of strong commitment to Europe on the one hand and the push for structural reform in southern Europe on the other exactly reflects the policy preferences of the average German voter. Divert too far from this path to the right, as Merkel's junior coalition partner, the Liberals, attempted in some regional election campaigns last year, and German voters will punish you for your lack of European solidarity. Step too far to the left, like opposition Social Democrats (SPD) have tried with calls for Eurobonds and a debt redemption fund, and voters lose trust in your ability to defend the German taxpayers' interests. In the middle stands Merkel. Her calm, approachable persona and her centrist incrementalism have persuaded German voters that two conflicting goals can be achieved: Save Europe and limit the financial burden on Berlin.

With strategic clarity, Merkel has also drawn the right conclusions from the decline of her former coalition partner, the SPD. Social Democrats still suffer from the disappointment caused by the supply-side reforms introduced under former Chancellor Gerhard Schroeder during the early 2000s. The party's vote share has halved over the last 15 years. In response, Merkel maintains a centrist political position, enabling her to form coalitions with the Liberals, the SPD, or potentially even the Greens. And by offering little opportunity to attack her along the clear-cut lines of left-right politics, Merkel makes sure that traditional SPD voters do not return to the polls anytime soon, denying the party an easy way out of its misery.

Ahead of the 2013 elections, Merkel is therefore unlikely to come under pressure to depart from her current policies. The negative result is that silver-bullet solutions for the eurozone crisis remain unlikely and structural problems such as intra-eurozone imbalances will not be addressed. On the upside, investors in Germany will find it reassuring that the country's high-productivity export model is unlikely to be challenged by calls for demand-side policies. German companies will therefore remain in a strong position to compete for market share in emerging economies across the globe. In Berlin, meanwhile, only one politician wins: Angela Merkel.