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 Ian Bremmer and David Gordon

Pakistan is experiencing a near perfect storm of political, economic, and social crises, and the Pakistan People's Party-led government is not equipped to manage the fallout. A full-on military coup like the one that brought Pervez Musharraf to power in 1999 is unlikely in 2011, but the government's ineptitude and a worsening security situation across the country could fuel still more unrest, encouraging the army to play a more direct and active role in the country's politics. President Asif Ali Zardari will fight any bid by the army to remove members of his inner circle from power, and even if the military were to install a technocratic administration, it would struggle to reverse the effects of years of weak governance.

Zardari and Prime Minister Yusuf Raza Gilani face challenges on multiple fronts. Gilani is focused on rebuilding the ruling coalition and fighting a Supreme Court and media set on undermining Zardari and other senior PPP members. This political battle will continue to distract the government from addressing pressing problems, like the need for structural reforms to slow the expansion of a fiscal deficit that leaves the government little room to invest in much-needed development projects. It's hard to get accurate statistics on inflation and unemployment, but both are high enough to arouse widespread public anger. Food prices are a particular source of anxiety. Severe flooding has created emergency conditions. The government will continue to struggle to hold together a fractious parliamentary coalition.

The government has no political control in the unstable Federally Administered Tribal Areas and Khyber Pakhtunkhwa (the new name for the Northwest Frontier Province). Nothing new there, but the bigger worry is that instability is spreading to the heart of the country and the provinces of Punjab and Sindh. Both have been relatively isolated from the turbulence of the tribal areas, but militants have been increasingly encouraged by the Pakistani government's weakness and the success of allies across the border in Afghanistan. The governor of Punjab, Salman Taseer, was assassinated in Islamabad just three weeks ago. Social upheaval is generating a surge in crime (including kidnappings, extortions, and robberies), protests, and other forms of unrest in Pakistan's large cities --especially Karachi. Further social and ethnic turmoil in the heart of the country might push the military to argue that urban unrest and terrorism are undermining national unity -- and that political change has become an urgent necessity.

These risks have clear implications for U.S. troops across the border. Following a sharp spike in the number of U.S. boots on the ground in Afghanistan, U.S. gains, though limited, are real. But they aren't sustainable without a much more stable Pakistan that can limit the militants' room for maneuver. That will require a political sea change in Karachi, and that's not in the cards for 2011.

On Wednesday, we'll examine Top Risk no. 9: Mexico, where the government's battle against drug cartels continues.

Ian Bremmer is president of Eurasia Group. David Gordon is the firm's head of research.

Late last week, Ecuadorean President Rafael Correa, having tried to pass a new public servant law that would have significantly cut police wages, found himself roughed up, tear-gassed, and barricaded inside a Quito hospital by rebellious cops for several hours before loyal officers finally shot their way inside and freed him. It was all the result of Correa's attempt to roll back spending in one of South America's most challenged economies, in a context where he has precious few financing options (having defaulted on his country's debt in 2008, Correa's finding it a little hard to get loans these days).

Because Ecuador's military and its top police commanders remained loyal, the coup quickly fizzled and the plotters were soon jailed. Order, for the time being, has been restored. But last week's unpleasantness in the Andes reflects a broader story with potentially more worrisome implications: how the extended economic downturn is dramatically exacerbating popular discontent with regimes where political instability had already been percolating -- and how, in some cases, that discontent can quickly and without warning spiral out of control.

This isn't much of a concern for the world's key emerging markets -- think China, India, Turkey, or Brazil -- since they've all performed well over the past year. Nor is it an issue for most of the underperforming developed states, since even the worst of these laggards have enough built-in social and political stability to weather the slow, painful recovery to come (think Japan). Even Greece, basket case that it is, should be able to soldier on, thanks to all the funding and outside support it has received from Europe and multilateral bodies such as the IMF.

But the dangers are out there. In Latin America, the worst fat tail risks -- that is, countries where serious unrest is still a relatively low probability but would be massively destabilizing if it erupted -- are in Cuba and Venezuela. That's because both countries are in disastrous economic shape, and are going to need to make some serious, painful cuts to stay afloat; yet in both countries, the regimes face major problems with popular legitimacy, which will make these cuts hard to sell to regular folks. Further afield, Ukraine, with its economic woes, deeply divided population, and perpetually dysfunctional political culture, also deserves to be added to the mix. (Indeed, the new president, Viktor Yanukovych, probably knows this, which is why he's recently tacked his foreign policy toward Europe, in order to connect to the broader electorate.) And while the developed states are generally well insulated, it's probably worth keeping half an eye on Spain -- which faces one of Europe's worst economic situations but must contest national and regional elections in the next twelve months. Portugal is also worth watching. This isn't to suggest that Iberia is about to erupt in flames. But if protests do occur and the Spanish and Portuguese take to the streets in real numbers, the narrow political consensus around the belt-tightening necessary to get through the economic crisis could crumble.

As for literal collapse, that's a real risk in a few places. Exhibit one is Pakistan, where this summer's massive floods worsened an already shaky political situation. The one saving grace so far has been that the military has little interest in intervening, since that would force the generals to assuming responsibility for governing the troubled country themselves. That said, don't rule out the chance of some sort of a sudden power transition. And then there's North Korea, which is trying to negotiate a leadership succession (from a coddled dipsomaniac to an overweight, untested 28-year-old, no less under disastrous economic circumstances; never an easy move).

The overall prognosis? Stay tuned. Place brittle regimes under great stress, and the one thing you're almost guaranteed to get is a larger number than usual of "unexpected" regime changes.

Ian Bremmer is president of Eurasia Group and author of The End of the Free Market: Who Wins the War Between States and Corporations? 

By Maria Kuusisto and Seema Desai 

Twenty months after the Mumbai terrorist attacks put Indian-Pakistani relations on ice, last week's much-anticipated meeting of the nuclear-armed neighbors' foreign ministers ended without a breakthrough. A contentious press conference held by Pakistani Foreign Minister Shah Mehmood Qureshi and his Indian counterpart S.M. Krishna underlined the reality that it will take more than time to heal the wounds inflicted by the attacks and their aftermath.

But beyond the outcome of any one meeting, there are four main obstacles to a stronger relationship. First, there's the ongoing risk of terrorism. Pakistan's foreign minister does not reflect the militant groups based inside his country that would like to launch more attacks on India. (And when he did speak during the press conference that followed last week's meeting, it was to condemn Indian accusations of Pakistani complicity in the Mumbai attacks.) With another attack in the Indian city of Pune in February, Indian security agencies also say they've foiled several planned strikes on high-profile government and commercial targets in large cities.

The terrorist risk will remain high for the foreseeable future, and another attack linked to Pakistan-based groups would trigger public pressure on India's government to respond with military force-with aerial attacks on suspected terrorist camps and infrastructure inside Pakistan, for example. Aware of the risk that escalation could spiral beyond either side's full control, Delhi would work hard to resist these pressures. But Indian leaders won't take military threats off the table for fear of emboldening militant organizations like Lashkar-e-Taiba, the group that India blames for Mumbai.  

There's also a political dimension to the terrorism problem. Under Indian and American pressure, Pakistani security forces briefly detained Lashkar-e-Taiba leader Hafiz Saeed. In June, a Pakistani court released him. Indian officials continue to insist that progress in Indian-Pakistani relations depends on Pakistan's willingness to bring those responsible for Mumbai to justice. Pakistani officials counter that better relations should have no precondition. And since Pakistan's foreign and security policy is managed by the country's military, not its civilian government, there is little that Pakistani negotiators can credibly promise their Indian counterparts on this issue at this time.

Second, there is Kashmir. This perennial flashpoint, which has triggered three wars between India and Pakistan, is off the negotiating table for the moment. Things had been improving in the region. Local elections last year in Indian-controlled Kashmir featured high voter turnout and little sign of violence. But in recent weeks, clashes between security forces and demonstrators have killed 15 civilians in the provincial capital of Srinagar, and Indian officials have placed the blame squarely on Lashkar-e-Taiba. A military confrontation remains unlikely for the moment, but the unrest makes clear that Kashmiri violence is not a thing of the past.  

Third, there is Afghanistan. The Obama administration plans to begin a U.S. withdrawal from the country next year, leaving India and Pakistan at cross-purposes as each prepares for a post-American power vacuum. Pakistan wants an allied government in Kabul, and elements of the Pakistani military and security services are pushing for a power-sharing deal between Afghan President Hamid Karzai and Sirajuddin Haqqani, leader of an al Qaeda-linked militant network and Islamabad's traditional regional ally.

Delhi sees this Pakistani maneuvering as a direct threat to Indian national security, since it could allow the Taliban to resume support for terrorism in Kashmir and provide sanctuary for anti-Indian militants. India will look to boost its own influence in Afghanistan through anti-Taliban elements, including the Northern Alliance.

Finally, there is water. India plans to build several hydropower projects on rivers that cross the border to irrigate 80 percent of Pakistan's agricultural land and fuel 50 percent of Pakistan's hydropower capacity. Islamabad worries that India could use hydropower projects to trigger a flood or a drought -- and the economic crisis that either might provoke. This fear reached new heights in August 2008, when India withheld a considerable amount of water from the Chenab River and stored it in a local dam, worsening already serious problems for Pakistan's farming sector. Pakistan claims that India's projects violate a 1960 treaty that governs the use of water resources in the Indus River System. India says they do not.

Given the complexities of their shared history, it's little wonder that Qureshi and Krishna could agree last week on little more than the value of meeting again. That's why, if every journey begins with a single step, Indian and Pakistani diplomats should pack for a long trip.

By Maria Kuusisto

On 7 December, the Supreme Court of Pakistan started hearing a case that challenges the legitimacy of the National Reconciliation Ordinance (NRO), granting immunity to President Asif Ali Zardari and thousands of other politicians and bureaucrats against corruption cases dating back to the 1990s. Zardari has little option but to relinquish some of his powers if he wants to survive. While this may buy the president some time, tension is likely to continue, risking a major political shake-up.

The opposition Pakistan Muslim League - Nawaz (PML-N) and the military desperately want to push President Zardari into a ceremonial role. They see Zardari as putting Pakistan's national interests (as well as the military's institutional interests) at risk and are pressing him to give up his powers under the constitution, thereby empowering Prime Minister Yusuf Raza Gilani. Zardari's most significant power is his right to sack an elected government and appoint the military leadership. In return for giving up his key powers, the PML-N and the military say they will not support efforts to remove Zardari.

If Zardari refuses to give up his key powers, he is likely to face intensified pressure and potential removal. The Supreme Court, led by Chief Justice Iftikhar Muhammad Chaudhry, is likely to strike down the NRO case, using it as an opportunity to settle a long-standing political score with Zardari. This development could lead to the re-opening of corruption and criminal cases against him, some of which are suspected of having some real merit. If he's convicted, the opposition could bring an impeachment motion against him in the national assembly, where Zardari enjoys a narrow, often case-by-case majority.

Until recently, Zardari has refused to see the writing on the wall, thinking that he can manage the political pressures against him through a combination of political and judicial manipulation. However, on Nov. 29, Zardari handed over control of the National Command Authority (NCA), which is the agency in charge of the deployment and development of Pakistan's nuclear weapons, to Gilani. This could signal that Zardari is finally starting to realize he has few options but to give up his key powers. But he needs to act quickly, as the opposition and the military are growing impatient.  

Even if Zardari eventually gives up some of his powers, political tension will remain in Pakistan. The president is likely to try to dominate government. While Prime Minister Gilani is trying to take a more independent role, he remains a weak leader. He does not enjoy strong support within the PPP, which sees him as a political nobody and little more than Zardari's hand-picked choice. This makes Gilani highly dependent on Zardari's support. If Gilani refuses to fall in line, Zardari could sack him and replace him with someone else.

For the time being, the PML-N and the military want to work with the PPP government. The PML-N feels that an early fall of the PPP government would only invite the military to re-intervene in politics and undermine its longer-term political aims. Moreover, it feels that it needs more time to prepare the ground for national elections and it does not want to take charge of the government now when the country is facing multiple crises. Meanwhile, the military feels fears that a fall of the PPP government would strengthen PML-N's position.

While both Zardari and the PPP government may survive in the short term, pressure is likely to build up against them. Since the Feb. 2008 national elections, the popularity of Zardari and the PPP has taken a nosedive. They have become involved in a series of political scandals, which have undermined their credibility and distracted them from effective governance. Moreover, they have failed to meet their key pre-election promises of clean governance, pro-democratic reforms, and pro-people policies, and are perceived to be taking dictates from Washington. This weakened popularity is creating differences with the PPP's coalition partners and emboldening the opposition, which could lead to another crisis.

Maria Kuusisto is an analyst at Eurasia Group.

Chris Hondros/Getty Images

By Eurasia Group analyst Maria Kuusisto

Pakistan is experiencing multiple crises. First, the political system remains unstable. The civilian government is fragile, and facing a range of internal and external pressures that are undermining its effectiveness. Second, the security situation is deteriorating. The Taliban is expanding its influence in the northwestern tribal belt and carrying out frequent terrorist attacks in the large cities, causing fear among the population. Third, the economic outlook is not showing any signs of improvement. While Pakistan's foreign exchange situation has improved, its GDP growth has declined to 2 percent and the key manufacturing and textile sectors are in recession, leading to increased unemployment and poverty. To make things worse, the country is facing a power supply and demand gap of some 4,000 megawatts, hindering economic activity and spurring popular discontent.

After the 2007 political crisis, a civilian government returned to Pakistan. The country's politics have long been dominated by two main parties: the left-leaning Pakistan People's Party (PPP) led by President Asif Ali Zardari and the conservative Pakistan Muslim League-Nawaz (PML-N) led by former prime minister Nawaz Sharif. These parties have a history of intense, highly personalized political rivalry that dates back to the 1990s. The PPP won a landslide victory in the February 2008 elections, largely because of popular sympathy for the party after popular PPP leader Benazir Bhutto was assassinated in December 2007. This election result paved the way for a PPP-led coalition government, including the PML-N. After a few months of cooperation, however, the PML-N resigned due to differences over democratic reforms.

Since then, the PML-N has become an increasingly powerful opposition force. While the PPP is widely perceived as having failed to address the multiple crises facing the country, the PML-N is seen as being more in touch with people's problems, increasing its popularity. A major turning point was the March pro-democracy campaign sponsored by Sharif, which led to the reinstatement of Chief Justice Iftikhar Muhammad Chaudhry. The PML-N is hoping to carefully manage a transition in civilian politics -- while preventing the military from intervening -- and prepare for early elections. It is taking up highly populist issues, forming alliances, and delivering relatively effective governance in Punjab, where it has a provincial government. Early elections are likely to lead to a PML-N-led coalition government.

Meanwhile, the US is trying to broker a power-sharing deal between the PPP and PML-N. The Obama administration has formed a good working relationship with Zardari and the PPP-led government. It is concerned about the prospect of early elections and related political instability, which risk undermining Pakistan's fight against al Qaeda and the Taliban. Moreover, it is concerned about PML-N's political agenda, which is highly populist, less accommodating toward Washington, and more sympathetic to conservative religious forces. The Obama administration hopes that a power-sharing deal would lead to a national government, including the PML-N, and prolong the life expectancy of the current political set-up.

The United States is unlikely to succeed in its brokering efforts. In 2007, Washington tried, albeit unsuccessfully, to broker a similar power-sharing deal between Bhutto and former president General Pervez Musharraf. In this case, the PML-N has little interest in a power-sharing deal, particularly if Zardari remains the most powerful person in the political arrangement. Such a deal would undermine PML-N's popularity and long-term political prospects. Many Pakistanis would view such a deal as a sell-out for short-term political gain. They would also make PML-N liable for the perceived failing policies of the government. For its part, the PML-N has little trust in PPP's willingness or ability to meet its end of the bargain. That said, the PML-N is likely to continue talks about a potential deal because it needs to accommodate the United States and because it needs more time to prepare the ground for early elections. The likely collapse of talks also will eventually provide the PML-N with a convenient excuse to mobilize opposition against the PPP.

The continuing political tension in Pakistan undermines the government's ability to tackle the country's multiple crises. On the political front, the government needs to implement constitutional reforms to strengthen democracy and civilian institutions. On the security front, it needs to shift from carrying out counterterrorism military operations to delivering better governance (eg, integrating the tribal belt into the political and institutional mainstream). On the economic front, the government needs to improve domestic revenue collection -- instead of relying on international assistance -- and stimulate the economy through well-channeled incentives to key sectors and social protection schemes. If the government fails to tackle these crises, it risks social unrest and the increased influence of conservative political and social forces.

AFP/GETTY IMAGES