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.

By Hani Sabra and Willis Sparks

Thousands of Egyptians are now gathering across their country to chant their denunciations of Egypt's new draft constitution, a document completed by the Islamist-dominated constituent assembly just days ago. Pro-democracy revolutionaries, the young people who sparked the movement that toppled Hosni Mubarak in 2011, warn that the new constitution will give the military enormous power, fail to force the president to appoint a vice president, and the vague language on freedoms of religion and the press, and protections for the rights of women could actually be used to discriminate.

But when the constitution is put to a popular vote less than two weeks from now, it will pass. Why? Because its authors (the Muslim Brotherhood) and their sometime political partners (the military), remain the two most powerful groups in the country. Because the Islamists campaigning for it are organized and popular. And because they will argue, as they did in March 2011 during a debate over temporary constitutional amendments, that it is the duty of Muslims to vote for a document that will provide longed-for stability and that reflects the will of a people that elected the Muslim Brothers to power. (Seventy-seven percent of voters approved the 2011 constitutional amendments.)

There is another reason why the draft constitution will pass. The non-Islamist opposition has not made a clear and compelling case to voters that a "no" vote will make Egypt more stable and prosperous. The protesters warn that this constitution does not reflect the aspirations of those who ousted Mubarak to gain "bread, freedom, and social justice." They're right. But they haven't explained to large numbers of voters why a rejection of this document will improve their lives. The Islamists insist that a vote against the constitution is a vote for uncertainty, instability, and continued conflict.

In short, the protesters offer no clear alternative. There is no constitution B. Faced with a choice between yes and no, most Egyptians will choose the path they believe will move things forward toward a restoration of order-even though a new constitution won't really accomplish that. It's not that the Muslim Brotherhood is unbeatable; when Egyptian voters have a choice, Brotherhood candidates sometimes lose. Their man, Mohamed Morsy, is president, but he only drew a quarter of the vote in the first round of a hotly-contested election, and in the runoff, he barely defeated Ahmad Shafik, Mubarak's right hand man. To win that second round, he needed support from millions of non-Islamist voters who chose him because he represented a viable alternative to continuation of the old regime.

And until the young protesters and the broader non-Islamist camp offer an alternative that voters can understand and accept, they will have more defeats ahead. 

Hani Sabra is an analyst in Eurasia Group's Middle East practice. Willis Sparks is an analyst in the firm's Global Macro practice. 

By Ayham Kamel and Willis Sparks

When a Tunisian vegetable vendor's act of suicidal despair ignited fury and demands for change across the Arab world last year, the rulers of Saudi Arabia, the wealthiest and most influential of Arab states, went on high alert. Saudis have grown used to trouble across their southern border in Yemen, and when protests swelled in tiny Bahrain last spring, Saudi troops moved quickly across the 16-mile-long King Fahd Causeway to save Bahrain's ruling family from angry Shia protesters. These exceptions aside, the oil-rich Persian Gulf monarchies have so far avoided the worst of the region's unrest.

There are signs that may change. In Kuwait -- a member of OPEC and the Gulf Cooperation Council, home to 3.6 million people, and a base for thousands of U.S. troops -- a long-simmering conflict between an opposition-led parliament and the ruling Al Sabah family has reduced Kuwaiti politics to an increasingly bitter stalemate.

The government, led by Emir Sabah al-Ahmed al-Sabah, appoints the prime minister and claims the final word on policy. Reform-minded opposition leaders now say a majority of the 50 members of parliament should be able to appoint the prime minister and that appointees should answer for their performance to elected legislators. Public protests, fueled by uprisings in other Arab countries, have upped the stakes in the battle for control of policy, and in recent months, things have gotten much hotter.

In November, demonstrators stormed parliament and forced the resignation of Prime Minister Sheikh Nasser al-Mohammed al-Sabah, the emir's nephew. In December, the emir responded by dissolving parliament. In February, new elections were held and, much to the ruling family's dismay, the Islamist-led opposition won a majority of seats.

In the last few months, opposition leaders have summoned several ministers to answer corruption and mismanagement charges. While the emir did not respond by dissolving parliament, the country's constitutional court then entered the fray by annulling the results of the February elections and ordering reinstatement of the previous (less confrontational) legislature. Kuwait's cabinet resigned on Monday. The emir will probably call for new elections to avoid a confrontation with opposition groups, but public tolerance for this pattern of confrontation and reformation is now more limited.

It's unclear what happens next, but in months to come, Kuwait may be headed for the kind of trouble that its fellow oil-producing Gulf neighbors have worked hard to avoid.

The most obvious risk to Kuwait's stability could come from within the country's ruling family. By tradition, the post of emir is meant to pass back and forth between the family's Al Jaber and Al Salem branches. But with the death of the previous emir, an Al Jaber, in January 2006 following a nearly 30-year reign, a member of the Al Salem branch held the post for just nine days. The current emir, another Al Jaber, elbowed him aside. He is now 83 years old, and there is no clear plan for succession. When he dies, the Al Salems will probably become more assertive to ensure that their branch of the family is not reduced to permanent second-class status within the ruling elite. The Al Jabers will push back.

In addition, as in Saudi Arabia, some within the family worry that the current ruler has moved too quickly on reform, and there is a generation of younger royals who are already competing against one another for access, influence, and power. With every hint that a formal transfer of authority will soon begin, behind-the-scenes fighting will intensify as dozens of power players move to protect and enhance their positions. The resulting conflict could spill into the open -- and at a moment when determined opposition politicians and an increasingly restive public are ready to test their leadership.

Kuwaiti security forces can handle moderate levels of unrest. They've done it before. But an unexpected surge of demonstrations in a moment of divided leadership could provide them an unprecedented test.

That, in turn, could spook investors already worried about the impact of potential Middle East turmoil on the region's oil supplies. It could also bring higher levels of public anger into other Gulf states -- maybe even into Saudi Arabia. Kuwait is not Syria or Libya or even Egypt. It is a wealthy country unused to large-scale public unrest. But like regional heavyweights Saudi Arabia and Iran, Kuwait is an authoritarian country facing the medium-term prospect of generational change within the leadership in a volatile historical moment for the region.

That's why it will certainly bear watching in months to come.

Ayham Kamel is an analyst in Eurasia Group's Middle East and North Africa practice. Willis Sparks is an analyst in the firm's Global Macro practice.

By James Fallon and Ayham Kamel

On May 21, the Lebanese Armed Forces shot and killed prominent Sunni Sheikh Ahmed Abdul Wahed as his convoy passed through a checkpoint, triggering gun battles in Beirut's Tariq al Jdeideh neighborhood between two Sunni political parties, the anti-Syrian Future Movement and the pro-Syrian Arab Movement Party. The fighting followed clashes between Alawites and Sunnis in Tripoli in response to the arrest of Shadi al Mawlawi, a Sunni Salafist activist accused of aiding the Syrian opposition. Clearly, Syria's troubles have crossed the border into Lebanon.

In fact, Syria's turmoil is polarizing Lebanese factions and threatening the country's delicate political balance. Conflict in Syria has fallen largely along sectarian lines, and it is now fueling sectarian tension in Lebanon. The majority of protesters facing daily violence from the Syrian regime are Sunni, and this has driven moral and material support for their cause from Lebanon's mainly Sunni north. To avoid confrontation with his Sunni community, Prime Minister Najib Mikati has not actively interfered to stop such assistance, creating a perception that his government is at least tacitly complicit in supporting rebels.

Ironically, the one cross-sectarian institution in Lebanon that many consider capable and trustworthy -- the country's armed forces -- is a problematic tool for ending street violence between Lebanon's political parties. On the one hand, the sectarian diversity within the army gives it some level of credibility with all of Lebanon's various factions. In fact, in May 2008, when Hezbollah gunmen fought Sunni militias for control of mainly Sunni neighborhoods in west Beirut, the army helped defuse tensions on both sides -- greatly bolstering its credibility and national popularity. Yet, then as now, the army could not directly intervene to stop the bloodshed, because the sectarian fault lines that run through the country's politics and society are also apparent within its ranks. Prime Minister Najib Mikati knows that if he calls on them to engage directly, there's a risk that soldiers will join the various fights instead of breaking them up.

Recent unrest is exacerbating this fear. During clashes on May 21, Sunni gunmen directed their fire at the army. Following the checkpoint shooting, the army withdrew from some positions in the north, and several Sunni politicians called for a more permanent expulsion. The military's response was measured, but the rise of militant factions in northern Lebanon is making it much harder for the army to intervene in battles in which its soldiers may feel they have a stake. These conditions could be an indication that the army's tenuous role as super-sectarian arbiter is deteriorating among some Lebanese, particularly the Sunni population. As the Sunni-dominated northern region of Tripoli and its surroundings continue to serve as a logistical base for Syrian rebels, we'll probably see more of these clashes, and the government's ability to deploy forces without risking its credibility will definitely diminish.

Political instability is likely to rise in Lebanon as the Syria crisis worsens, and efforts better spent on the already difficult task of governing will be redirected toward buttressing the fragile balance necessary to maintain any government at all. Lebanon's political institutions have proven resilient in the face of serious challenges over the years, but that resilience is often the result of choosing to do nothing that might fan the country's flames.

Inaction may avoid making matters worse, but it does little to resolve the underlying causes of persistent instability in Lebanon.

James Fallon is an associate with Eurasia Group's Middle East practice. Ayham Kamel is an analyst in the firm's Middle East and North Africa practice.

By Hani Sabra and John Watling

Egypt's presidential election is devolving into a comedy of errors, but with potentially tragic consequences. It is no longer primarily a contest about who voters believe is the most credible and trusted politician to lead Egypt through a potentially tricky transition. Instead, it is turning into a war of wills between the Muslim Brotherhood and the ruling Supreme Council of the Armed Forces (SCAF). These natural antagonists have accommodated one another for the past year in an effort to marginalize the young revolutionaries who ignited regime change. But the tensions inherent in the relationship have turned them into frenemies. The process has been particularly apparent during the past few weeks as their interests have diverged. When and how that relationship unravels completely -- and the presidential election is a key element -- is critical to Egypt's future.

On 31 March, the Muslim Brotherhood reversed the position it had maintained since Hosni Mubarak's ouster and announced that it was fielding a presidential candidate. The Brotherhood had claimed for more than a year that it would not do so, ostensibly because it wanted to reassure Egypt's political class that it was not interested in dominating power as Mubarak's National Democratic Party had done. The more likely reason was an understanding with SCAF about the division of power; the Muslim Brotherhood would get domestic policy portfolios (the premiership and control of the cabinet) while SCAF would control the security and foreign policy portfolios by having a weak and friendly president. Yet, the Brotherhood became both cocky and nervous. At the same time that it saw broad public support, it was losing confidence that SCAF would hold up its end of the bargain. Finally, the Brotherhood's leaders decided that without a new constitution and with no guarantee that the president's power would be reduced, that the group needed to contest the election. Indeed, the courts today disbanded the assembly that was set to write the constitution, and which was dominated by the Brotherhood and other Islamists, signaling that the Brotherhood was perhaps right to be concerned.

Additionally, in a dramatic scene fit for inclusion in a political thriller, Omar Suleiman reversed his decision not to run and submitted his candidacy papers less than an hour before the 9 April deadline. Suleiman is a stalwart of the old regime; he was Mubarak's right hand man, the director of internal intelligence, a friend to Israel, and a sworn enemy of the Islamists. But unlike Mubarak's other confidantes, who have been arrested, several signals hint at possible military support for Suleiman, including a military escort when he filed his papers. Even though SCAF denies that Suleiman is their candidate, the optics and timing suggest his candidacy is intended at the very least to send a message to the Muslim Brotherhood. While Suleiman is not popular, SCAF still has strong influence over Egypt's courts and other resources that will help his candidacy, like the state-controlled media. 

But the comedy of errors continues. Critics of Hazem Salah Abou Ismail, a hardline Salafist and the only candidate with an explicitly anti-U.S. platform, recently revealed that his mother was a U.S. citizen at the time of her death in 2008 and apparently had even registered to vote in California. Under Egypt's tough electoral laws, he is now technically disqualified from competing in the election. It is also possible that Khairat el Shater, the Muslim Brotherhood's senior policy chief and presidential candidate, will also be disqualified based on his felony conviction during the Mubarak era.

The tragedy is that this maneuvering may mean nothing. Egypt's economy is suffering and none of the candidates has outlined a real rescue plan or a vision for the future. Economic collapse would change the calculus completely, given the likelihood for widespread societal discontent.

Hani Sabra is an analyst with Eurasia Group's Middle East and North Africa practice.

John Watling is a senior editor with Eurasia Group.

By Ayham Kamel

Recent, though futile, efforts to resolve the crisis in Syria have demonstrated the absence of leadership from global powers such as the U.S. and likely set the stage for possible contagion. The unwillingness of the major powers to intervene in crises such as in Syria -- a marker of what Eurasia Group has called the G-Zero World -- has allowed regional players to step into the breach, notably Qatar via the Arab League. But the League's efforts have also exposed a regional power vacuum and tensions among Middle East nations that could potentially escalate into a proxy war in Syria.

The Arab League's late-January initiative called on President Bashar al-Assad to step down, leaving the vice president to negotiate with the opposition, but it reflects neither the complexity of the Syrian conflict nor the domestic power balance. For example, the opposition is still deeply divided and there is still considerable support for the regime among business interests and some minorities. The Syrian regime is likely to retain power throughout most of 2012, but the risk of collapse will rise considerably in the last quarter.

Other players have taken advantage of major powers' unwillingness to get involved in Syria. Qatar has been pushing for more hawkish Arab League policy on Syria, but the organization lacks the power to push through such initiatives. Turkey, Iran, and Saudi Arabia have also staked out a role. But, the lack of interest in producing a negotiated solution effectively means that the Syrian regime can disregard the Arab League on many issues.

Divisions in the League between Gulf Cooperation Council (GCC) states and other members also limit the group's ability to formulate and pursue effective policies. The 24 January decision by the GCC to withdraw monitors from Syria highlights this division. Both Egypt and Algeria, traditionally important players in the organization, are uncomfortable with what is increasingly seen as Qatari and Saudi dominance. In the near term, Egypt's leverage will likely decrease given its own political transition, but major stakeholders (such as the military and the Muslim Brotherhood) will eventually seek a more proactive foreign policy. Within the GCC, there is also a subtle, but important, tension between Qatar and Saudi Arabia. Saudi royals are wary of Qatari calls for direct military intervention as a tool for democratic reform in Syria or any other Arab countries, a precedent that could be later used against Riyadh.

Syria is a key part of the regional balance of power between moderate pro-U.S. states and the so called resistance camp lead by Iran. Seeking a broader realignment in the Middle East, regional powers are likely to increase their support of their local allies. Saudi Arabia, Turkey, and Qatar are actively encouraging the uprising driven by conservative Sunnis. Meanwhile, Iran is providing the Assad regime with intelligence, and technological equipment to suppress the uprising.

The Syrian conflict has fanned Sunni-Shiia tensions and the risks of contagion in Lebanon, Jordan, and Iraq are considerable. In Iraq, Sunnis are emboldened by a resurgence of conservative movements across the Middle East. Lebanon could become more unstable as the Syrian conflict has divided political factions in an increasingly delicate struggle. Jordan's own communities could reconsider their allegiance to the Hashemite monarchy as communal divisions between Jordanians of Palestinian descent and tribal elites begin to increase. Potential Syrian or Iranian support to Kurdish separatist groups in Turkey is likely to become a problematic issue. Finally, covert action by either the Sunni axis (Saudi Arabia, Qatar, and the Arab League) or Shiias (Iran and Iraq) entails significant risks to regional stability and could spur a violent proxy war that would hurt the business environment and oil flows.

Ayham Kamel is an analyst in Eurasia Group's Middle East practice.

Today, The Call presents our top risks for 2012. Click HERE for Eurasia Group's complete report.

1. The End of the 9/11 Era -- It was a truism of globalization: economics drives markets, and national security drives geopolitics. No longer. Following the 2008 financial crisis, the killing of Osama bin Laden, the withdrawal of U.S. troops from Iraq, and an end date for the war in Afghanistan, politics and economics will overlap almost entirely in 2012. Political officials around the world will worry mainly over economic risks -- the eurozone crisis, the strength of U.S. recovery, and China's evolving role in the global economy in 2012. Market players, in turn, are anxious mainly about political decisions, especially those that will be made in Europe, America, and China this year, as shortsighted leadership from virtually all the major geopolitical players generates policy stalemate and uncertainty.

2. G-Zero and the Middle East -- The inability/unwillingness of major powers to bolster the region's balance of force will generate greater turbulence across North Africa and the Middle East as unresolved religious, sectarian, and ethnic tensions threaten more unrest. The lack of a viable regional security framework, continuing protests, autocracies at risk, and enormous challenges facing newly democratic regimes will add to the potential turmoil. As this dynamic plays out in Syria, Egypt, Iraq, Libya, Yemen and Bahrain, regional heavyweights -- Saudi Arabia, Iran, and Turkey -- will generate friction as they vie for proxy influence.

3. Eurozone: the rollercoaster ride rolls on -- In Europe, it's not the breakup of the Eurozone we need to fear in 2012 but the "reactive incrementalism" that could spin beyond the control of political officials. The uncertainty and volatility we saw in 2011 has only just begun.

4. United States: right after elections -- Once the votes are counted in November, lawmakers will take up the $5 trillion worth of tax and savings decisions that must be taken in the final nine weeks of the year. Investors face uncertainty about their taxes and government contracts as well as about the broader impact of lawmakers' choices on economic growth.

5. North Korea: implosion or explosion -- The world's most opaque nuclear-armed state enters a year of uncertainty as the battle for power and influence within the regime gathers force.

6 - Pakistan: turmoil, spillover -- The end of the 9/11 era threatens neglect of other hotspots, and none is more combustible than Pakistan, a terrorism-plagued, nuclear-armed power burdened with an unpopular civilian government, a meddlesome military, politically motivated judges and an increasingly dangerous security environment. The expected withdrawal of thousands of U.S. troops from Afghanistan this year will fuel regional competition for new influence.

7. China: trouble in the neighborhood -- The Obama administration's recent emphasis on Asia will embolden China's neighbors to take more assertive positions with Beijing. Rising nationalism in China, its ongoing political transition, and the leadership's unwillingness -- perhaps inability -- to resolve internal debates about the country's role in the world suggest Beijing is especially likely to meet provocation with provocation in months to come with both naval and economic muscle.

8. Egypt: a transition in trouble -- Egypt faces the risk of political disintegration this year as anger builds between military and civilian political forces, both Islamist and secular. Egypt's base-line stability, its economic recovery, and its broader regional influence will suffer.

9. South Africa: populism ascendant -- The struggle for leadership of the ruling African National Congress will slow the pace of both policy and economic growth at a time when the eurozone crisis already weighs heavily on South Africa's trade and currency.

10. Venezuela: a no-win election -- The country's big political story this year is October's presidential election, which incumbent Hugo Chavez, if healthy enough for a vigorous campaign, is likely to narrowly win. But the outlook for economic and political stability is bad no matter the election result. Should Chavez die or abandon the race, the deep fissures between the Chavista movement and the opposition could stoke violence.   

In addition, Eurasia Group identifies four red herrings, the big stories we don't believe will happen in 2012.

Fallout from the 2012 political transitions -- In 2012, we'll see political transitions in the U.S., China, Russia, and France, countries that together represent nearly half of global GDP and four-fifths of the UN Security Council. But there's surprisingly little at stake in the outcomes for geopolitics and the global economy.

Eurozone breakup -- This is probably the single most overrated risk of 2012. The political will to maintain the eurozone remains strong among all the major political parties in the core Eurozone states, almost across the board in the European periphery and, just as importantly, among eurocrats in the ever-growing European bureaucracy. And there's no effective political mechanism for a Eurozone breakup.

China's hard landing -- There are signs of overheated growth in China, but the state has the tools and resources to manage short-term trouble, and it will pull out every stop to prevent a serious slowdown, especially during a major political transition.

Mayan apocalypse -- Just isn't happening. And if it does, well, sorry.

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

By James Fallon

Yemeni President Ali Abdullah Saleh last week signed a deal crafted by the Gulf Cooperation Council (GCC) to exit from power. While a marginally positive development, the pact is not sufficient to restore political stability in the near future. There are serious challenges to implementation and the ten-month political crisis has made ink on paper less relevant than the competing interests of Yemen's political players. Military and political power has fragmented to such a degree over the past ten months that repairing the state will be a difficult and protracted process. Furthermore, the deal does not satisfy the demands of protestors who have emerged as influential political stakeholders over the course of the crisis. And while most establishment players will likely work with the deal, they are not likely to quickly abandon any territorial, political, or military advantage gained over the past ten months.

Under the agreement, Saleh is to transfer his presidential powers to Vice President Abed Rabo Mansour Hadi while remaining honorary president for 90 days. Within this time, the vice president is expected to steward the formation of a national unity government chaired by an opposition figure (Hadi has tapped opposition leader and long-time Yemeni politician Mohammed Basindwa for the task) and preside over a presidential election, currently slated for February 2012. Hadi will also lead efforts to restructure the military. In return, Saleh is to receive immunity from prosecution.

But the deal is unlikely to usher in the return of a normal political process in such a neat timeframe. The most immediate challenge will be demilitarizing major cities such as Sana'a and Taiz and restructuring the military. Certain units remain under the control of Saleh's family members and allies, and others are controlled by their political rivals -- the GCC deal does not change this reality. Tribal forces have also proven formidable and have gained military control of some parts of the country; on-again off-again clashes between tribesmen and pro-Saleh units continue north of the capital. Should Saleh leave the country during the transition period, as has been rumored, it could reinforce the transition process's credibility. But he would still exercise influence. On Nov. 26, he issued a general amnesty, highlighting the ambiguity of his current position; a tactic that he has employed consistently to maintain his power. Protesters will continue to fill the streets in order to draw concessions from the political establishment; they reject the immunity clause in the GCC deal and remain suspicious of establishment opposition figures. Street protests alone are unlikely to derail the political process, but will influence its credibility and ultimate success or failure.

Apart from political wrangling, Yemen will also continue to face serious territorial challenges. The issue of southern independence, which has been largely eclipsed by the political standoff, will likely resurface as the country grapples with building a new governing structure. Further, the situation in Sa'ada province has deteriorated significantly, with increasing clashes between Salafist and Houthi militias. Clandestine financial or military assistance for these groups from the Gulf countries and Iran is difficult to gauge, but the perception alone heightens tensions. Al Qaeda in the Arabian Peninsula (AQAP) has also gained room to operate as a result of the crisis and the state will remain constrained in its ability to confront the group. AQAP, however, will be hard pressed to cause any sustained disruptions to Saudi oil output or sea transport through the Gulf of Aden, and is highly unlikely to exercise any direct influence in the political process. The United States and Saudi Arabia will continue to use their military and intelligence capabilities to confront the group -- but neither of these countries has the capacity to effect a sustainable military solution to Yemen's problems.

James Fallon is an associate with Eurasia Group's Middle East practice.

By Hani Sabra

On Oct. 1, Egypt's ruling supreme military council and several large political parties struck a deal on a new electoral law that effectively restores the military council's relationship with the Muslim Brotherhood and extends the Brotherhood's electoral advantage. The agreement also means that the presidential election may be held 18 months from now. While the presidential election's timing may be a point of contention in 2012, political tensions are also set to rise in the first quarter next year if Egypt's revolutionary youth activists -- who have lost faith in the transition process and who have been shut out of the conversation with the military council-decide to return to the streets in protest on the anniversary of the revolution.

The new law, finalized a day after street protests in which the Brotherhood did not participate, is a clever move by the military. Without getting bogged down in the minutiae of the new legislation, it effectively benefits established political groups such as the Muslim Brotherhood and the Mubarak-era National Democratic Party (NDP). But the changes will hinder the newly established liberal secular political parties, who are still finding their footing. (The new liberal parties were pushing for the whole parliament to be elected through PR.) Under the new system, the Brotherhood's electoral alliance, which includes the old liberal Wafd party, is likely to dominate parliament. The military council will not get as weak a parliament as it would have liked, but the council made the changes to the electoral law in part to appease the Brotherhood, which had threatened to rejoin protests.

The Wafd-Brotherhood alliance is becoming a very convenient partnership. The Wafd is not very popular, but along with the NDP and the Brotherhood, it is the only other party with wide spread name recognition. The Brotherhood is the dominant figure in the partnership, but the Wafd provides the Brotherhood with the cover of a secular, respected ally. If the Brotherhood-Wafd alliance scores a victory in parliamentary elections, it is likely that high-profile government positions will be held by senior Wafd party members, undermining any charges of an Islamist takeover.

The military council may have secured its short-term goal, but the continued alienation of the youth groups means a tricky, complicated transition in the medium term. The military council did not consult with any of the revolutionary youth activists or groups on the electoral law. In fact, the council now has an overtly hostile relationship with groups such as the April 6 Youth Movement and the Revolutionary Youth Coalition, the groups that organized the anti-Mubarak protests earlier this year.

These activists no longer view the transition as credible. They are less concerned with election results than they are about the transparency of the process. Many of the young protestors now believe that they have been frozen out the new power deal in which the Brotherhood runs parliament, the Wafd runs the government, and the military maintains the presidency. In part this is based on the fact that Egypt may be without an elected president until 2013, leaving Field Marshal Hussein Tantawi in control of the country for the next year and half. Tantawi's popularity has plummeted among the revolutionaries since his testimony at former president Hosni Mubarak's trial. Suspicions were also raised when he donned civilian clothes for a visit to downtown Cairo, a move that many young activists perceived as an attempt to build a public profile ahead of efforts to take a clearer leadership role.

Hani Sabra is an analyst with Eurasia Group's Middle East practice.

By Greg Priddy

There are several political factors adding upward pressure on oil prices at the moment. Libya, Africa's third largest producer, has descended into civil war. Saudi assurances of increased supply haven't been as specific as some would like. Most importantly, there is worry that spare capacity could be essentially tapped out if we see a second big disruption in the Middle East or North Africa.

For the moment, the worries are exaggerated. Market fears are not easily quelled, and the risk premium in prices will be with us awhile longer. But if Libya's troubles continue for several more weeks, the Saudis have very good reasons to eventually make up the full volume, and the risk is small that any of the region's other major oil producers will face the turmoil we see in Libya.

The majority of Libyan crude oil export volumes will probably be offline for months, not weeks. Saudi and other Gulf Cooperation Council members can cover Libyan volumes, but the risk that a second substantial disruption elsewhere in the region would reduce spare capacity to dangerously low levels would provide genuine cause for alarm.

Market anxiety focuses on countries with large volumes potentially at risk. Algeria, Iran, and Oman have faced protests in recent days, and loud demonstrations in Bahrain and Tuesday's arrest of a prominent Shiite cleric in Saudi Arabia's Eastern Province have stoked fear for the stability of Saudi Arabia itself.

Demonstrations in all these countries will continue, but none of them are likely to face the risk of military fragmentation we've seen in Libya. Clearly, there are risks of further output disruptions across the region, particularly in Yemen, a smaller producer. But none of these countries faces the kind of unrest that would shut in enough oil to deplete Saudi spare capacity.  

And the Saudis have good reason to keep oil prices in check. Moderate prices will bolster economic vitality among the Saudis' best customers in America, Europe, and Asia. They will help prevent regional rival Iran from filling its coffers with extra revenue at a moment of Sunni anxiety about Shiite power in the region. They will also ease pressure for development elsewhere in the world of hydrocarbon alternatives.

Greg Priddy is a Global Energy & Natural Resources analyst at Eurasia Group.

By Eurasia Group's Middle East practice

Egyptians are hardly the only people in the Arab world burdened with an economic system that provides them few opportunities and a political system designed to frustrate their aspirations. Just as upheaval in Tunisia captured the imaginations of Egyptians, so the rest of the Arab world is watching as protection of privilege collides with demand for change in the heart of Cairo. Particularly if Hosni Mubarak is forced from power, other authoritarian regimes in the region will be at risk. The most vulnerable are Jordan, Yemen, Algeria, and Bahrain.

In Jordan, the only other Arab government to sign a peace treaty with Israel, King Abdullah faces a serious surge of dissent. His regime is not yet at risk, but if Egyptian protesters are able to force Mubarak from power, Jordan's opposition will demand fundamental and immediate political reform. In recent weeks, thousands of protesters have demonstrated against economic conditions and the monarch's monopoly hold on political power. Abdullah responded by sacking unpopular Prime Minister Samir Rifai and replacing him with Marouf Bakhit, a loyal member of the country's East Bank elite and most recently the king's special advisor on security issues.

Jordan's Muslim Brotherhood has much broader and deeper public support than its counterpart in Egypt. In addition, divisions between Jordan's royal family and tribal leaders on one side and Jordanians of Palestinian descent on the other are growing. The country's large gap between rich and poor and the government's unwillingness to tolerate dissent make Jordan a country to watch if things in Egypt get much worse.

Yemen's stability faces even greater challenges. Its government faces a secessionist movement in the south, a dormant conflict with Houthi rebels in the north, and al Qaeda in the Arabian Peninsula. In most of the country, the Yemeni government is not fully in charge. Unlike the spontaneous uprisings in Egypt and Tunisia, recent protests in Yemen have been organized by the country's largest opposition movement. But if angry, unemployed youth decide to join the protests, Yemen's government could find itself in real trouble.

Like Hosni Mubarak, Yemeni President Ali Abdullah Saleh has been in power for more than 30 years. And like Mubarak, he has moved to limit pressure on his government by declaring on Wednesday that he won't run for another term in 2013 and won't pass the presidency to his son, Ahmed. It remains to be seen whether these concessions will be enough to deflect calls for his immediate resignation.

Pressure is also mounting on the Algerian government. Long-standing economic and political grievances have fueled a recent burst of public unrest, and in the wake of the events in Tunisia and Egypt, opposition parties and civil society organizations have shifted their demands from economic to political reform. About 70 percent of Algerians are under the age of 25, and the majority of young men are unemployed. A few government officials and businessmen control the vast majority of the proceeds from the country's oil wealth. Widespread demonstrations could upset the delicate balance of the country's political and economic structure and possibly provoke divisions within the ruling elite over how to respond. 

As in all these countries, President Abdelaziz Bouteflika has offered concessions intended to bolster his popularity, including an offer on Thursday to end a 19-year state of emergency in the country. Public calls for political freedoms and possibly early elections will dominate an opposition march scheduled for Feb. 12, and uncertainty over who and what will follow Bouteflika will create tremendous political uncertainty. If the unrest can't be managed, it's possible that key military figures will abandon Bouteflika or that junior officers might move against the old guard.

Finally, public frustration in Bahrain, a majority Shiite country ruled by a Sunni monarch, could reach the boiling point if the al-Khalifa family cannot tamp down recent sectarian tensions. Bahrain saw significant unrest last summer and fall in the run-up to parliamentary elections, and Shiite youth clashed with Sunni security forces in nightly riots. There's also a small risk that Iran would exploit further confrontations by providing material support to Bahrain's Shiite population. That's a move that would have serious repercussions for security across the region.

Ayham Kamel, Mohammed El-Katiri, Hani Sabra, and James Fallon are analysts in Eurasia Group's Middle East practice.

By David Bender and Jonathan Tepperman

Since last Friday's near-miss terror attack, when a Saudi tip-off revealed the presence of two bombs making their way by air freight from Yemen to the United States, much nervous speculation has focused on two issues. The first is the supposed sophistication of the sender, al Qaeda in the Arabian Peninsula (AQAP), the two year old Yemen-based franchise of the international terror group. Second is the likelihood that Yemen may be quickly collapsing into a Somalia-style failed state, which would allow AQAP to operate there unchecked.

Reports on the technical complexity of the bombs themselves -- which were disguised as printer cartridges and made it past (admittedly insufficient) cargo shipment screening  -- bolster the first point. Much of the conversation has also focused on Pentaerythritol tetranitrate (PETN), the malleable military-grade high explosive used in these most recent attempts, as well as in the aborted 2009 Christmas Day underwear bombing (also attributed to AQAP in Yemen). Such components mean that "these bombs have the hallmark of a higher degree of professionalism that we've ever seen come out of al Qaeda before," according to Robert Baer, a former CIA field officer in the Middle East.

Is Yemen the next Somalia? The debate over Yemen's fragility is framed by the severe challenges facing the government of President Ali Abdullah Saleh: tribal rebellion in the north, secessionist pressures in the south, and a dysfunctional economy marred by rampant corruption and dwindling oil and water resources. On top of all that is AQAP, which is now aiming its guns on the government: the group has killed 70 police officers and soldiers in the past four weeks.

Taking a closer look at both of these concerns -- in Baer's words a "new, more dangerous wave of terrorism" in the United States and impending disintegration in Yemen -- reveals that both are overstated. It's not that AQAP isn't worth worrying about. But the danger is not quite on the level of catastrophe.

For example, while AQAP has made several attempts at striking targets abroad -- printer cartridges, explosive underwear, and in one case, a bomb stuffed inside the bomber himself -- so far, all of these plans have failed.

While all of these attacks could have had devastating consequences if they actually succeeded, they pale in comparison to the sort of mega-strikes  al Qaeda central has pulled off. The Pakistan-based major league outfit is known for meticulous planning, simultaneous strikes (like the embassy bombings in Kenya and Tanzania), and monumental targets (such as the World Trade Center and the Pentagon). The Yemeni team, judging by its track record, relies on eager but untrained volunteers and luck to hit its much smaller objectives. This scattershot approach may make future attacks more difficult to uncover and stop. But it also means the organization is unlikely to succeed -- and that even if it does, the attacks won't have anywhere near the international impact of 9/11.

While Washington may not yet understand AQAP very well or its place in Yemen's complex political and tribal matrix, Saudi intelligence seems to have effectively penetrated the organization. The Saudis have been watching the group carefully since the Saudi and Yemeni branches of al Qaeda merged and started targeting Riyadh. And the Saudi efforts have paid off. The key role the Saudis played in disrupting the recent bomb attempts suggests that the kingdom's intelligence either has human assets in AQAP or at least has gained the ability to monitor its communications. As a result, Western and allied intelligence organizations have far more insight into this branch than they do into its Pakistan-based sponsor.

As for Yemen, there are good reasons not to count it out quite yet. Yes, the country's long-term prognosis is grim. But Saleh is a wily operator who has stayed in power for 32 years by relying on bribes, tribal manipulations, kidnappings, and military force. For the next few years, at least, Washington and Riyadh -- both acutely aware of the risks the country's collapse would pose -- will not abandon him. On the contrary, they'll keep supporting Yemen with generous financial and military aid. Of course, Sanaa must be careful how it proceeds. The United States and Saudi Arabia are the object of much hostility among Yemeni public. Public exposure of U.S. military counterterrorism operations killing Yemenis (as when the Bush administration leaked a U.S .operation in Yemen in 2002) could end up weakening Saleh's position and boosting AQAP's popularity.

AQAP is plenty dangerous and a failed Yemeni state is a big risk -- eventually. But Yemen is not yet in crisis and this is not the worst terrorist threat the United States has faced.

David Bender is an analyst in Eurasia Group's Middle East practice. Jonathan Tepperman is Eurasia Group's Managing Editor and a columnist at TheAtlantic.com.