Note: Today is the third in a series of posts that detail Eurasia Group's Top Risks for 2013.
The Middle East will enter a new phase in 2013. Arab Spring will give way to Arab Summer, as the region faces a series of increasingly complicated overlapping conflicts. As Americans and Europeans resist deeper involvement, rivalries among Saudi Arabia, Iran, and Turkey, competition for influence between Sunni and Shia, a lack of economic progress, and a resurgence of militant groups will each heighten tensions.
Syria remains the central arena of conflict, as Shia powers -- Iran and Lebanese Hezbollah -- on the one side, and Sunni states -- Turkey, Saudi Arabia and Qatar -- on the other compete for leverage. Jihadists have also entered the fray, and turmoil has spilled across the country's borders into Lebanon, Turkey, Jordan, and Iraq.
Emerging conflicts elsewhere are less obvious. Egypt, Tunisia, and Morocco now have moderate Islamist governments. In Jordan and Kuwait, Islamist opposition groups threaten the governing dominance of secular administrations. But while the words and actions of mainstream parties like Egypt's Muslim Brotherhood and Tunisia's Ennahda make headlines in the West, the more serious risk comes from militant organizations that threaten the ability of new leaders to govern and maintain security.
Fueling this trend is the reality that, across the region, new leaders are trying to consolidate power and build popularity at a time when complicated economic problems demand solutions that will make large numbers of people angry. New governments in Tunisia, Libya, Egypt, and Yemen will last only if they can deliver tangible economic progress for an increasingly frustrated and impatient public.
The risk that a Salafist or jihadist group can exploit these frustrations to seize power in 2013 is low, but groups like al Qaeda in the Islamic Maghreb, al Qaeda in the Arabian Peninsula, al-Shabab, and smaller affiliates continue to attract support and new followers by using resentments against local regimes to foster anger at America and the West.
But Iraq may become 2013's newest hotspot. Sunni-Shia tensions are growing, and none of Syria's neighbors is more vulnerable to the threats created inside that country by radical Wahhabi clerics, often with Saudi or Qatari support, now fueling the emergence of an increasingly radicalized and militarily experienced Salafist movement. The Kurdish regional government is becoming more aggressive in promoting its energy development agenda at Baghdad's expense, and Sunni-led violence inside the country might well encourage Iraq's Shia-led government to forge closer ties with Tehran, antagonizing the governments of Saudi Arabia and Turkey.
The Obama administration wants to focus on domestic challenges and an ongoing foreign policy shift toward Asia. But regional rivalries are heating up, and Americans and Europeans will only add to the uncertainty by keeping their distance -- in hopes that they don't get burned.
On Wednesday, we'll profile Risk #4: Washington Politics.
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.
SAJJAD HUSSAIN/AFP/Getty Images
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.
GIANLUIGI GUERCIA/AFP/Getty Images
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.
GIANLUIGI GUERCIA/AFP/Getty Images
By Aditya Bhattacharji, Daniil Davydoff, and Scott Rosenstein
Attacks on U.S. interests in the Middle East are not the only security threats to have emerged from the region in recent weeks. In epidemiological circles, concern has been mounting over the discovery of a novel coronavirus in Saudi Arabia, just as Muslims from all over the world begin the annual hajj pilgrimage to Mecca at the end of October.
In the coming weeks, much-needed surveillance and scientific analysis will likely yield important details regarding this virus's threat to human health. But healthcare system shortfalls in some of the countries that dispatch the most pilgrims present obstacles to disease monitoring. And regardless of the microbe's eventual health, economic, and political impact, these deficits are a vivid reminder of institutional challenges to global disease prevention and control.
Little is known about the novel pathogen, but it does belong to the same family as the virus behind the 2003 SARS outbreak, a previously unknown microbe that killed nearly 800 people and sickened more than 8,000. SARS revealed the political and economic risks attendant to emerging infectious diseases. But attention to these dangers has increased considerably since SARS, and this novel virus has thus far been confirmed in only two patients, one of whom is under intensive care at a hospital in London.
Whether it's a heretofore unknown virus, polio, or a host of other pathogens, the upcoming Hajj presents significant public health risks. The annual event attracts millions of pilgrims every year and is therefore an "ideal environment for spreading infectious diseases," according to the U.S. CDC. Although the Saudi government has mandated several vaccinations and dedicated considerable resources to lower infectious disease risks, its personnel cannot track pilgrims once they have left the country. And while the WHO has already issued basic case definitions for identifying infected patients, healthcare system deficiencies abroad could allow potential cases to slip through the cracks and go underreported.
Home to roughly 200 million Muslims, Indonesia is sending the world's largest contingent of hajj pilgrims (approximately 200,000). At home, the vast majority relies upon a decentralized healthcare system that suffers from poor information sharing and one of the most inadequately staffed healthcare workforces of any ASEAN nation. Those with means increasingly seek medical treatment abroad. The trend has become pronounced enough for Indonesian president Susilo Bambang Yudhoyono to implore the public, in August 2012, to utilize domestic medical facilities, despite having availed of foreign medical care himself. Indonesia is ill-equipped to track diseases over a territory that spans 17,500 islands even under normal circumstances. There's been speculation that an individual returning home from the Hajj was responsible for the reintroduction of polio into Indonesia in 2004 (via a strain of the disease traceable back to northern Nigeria).
As the second-largest Muslim majority country, Pakistan's quota for pilgrims is more than 179,000, though only about 95,000 Pakistani Muslims plan to take part in the hajj. Even so, recent developments in the country's healthcare sector could impede epidemiological surveillance of returning pilgrims. In 2011, Pakistan devolved its health ministry, relegating previously centralized functions to a variety of provincial and federal-level institutions. Responsibilities for disease surveillance are now fragmented between multiple government agencies and power struggles are reportedly common. While Pakistan may eventually develop a more cohesive public health system, the current state of surveillance is worrisome in the run-up to the hajj.
Some smaller contributors of pilgrims, such as Syria, may also be ill-prepared to catch cases of infection. Current unrest in that country, which has produced considerable strain on the healthcare system, could severely slow down the detection of unusual disease symptoms.
Should pilgrims come home with an infection acquired during the pilgrimage, there may be little to stop the disease from going undetected and infecting others. Whether the newly discovered coronavirus turns into a significant public health threat or not, its emergence reveals the danger that exists when health services are compromised, but the evolution and spread of disease are not.
Scott Rosenstein is director and Aditya Bhattacharji and Daniil Davydoff are analysts in Eurasia Group's Global Health practice.
KHALED DESOUKI/AFP/Getty Images
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 Crispin Hawes
The death of Saudi Arabia's Crown Prince Nayef bin Abd al-Aziz, though unsurprising, highlights the risk of policy stagnation, an issue of some significance for the Kingdom given its domestic challenges.
As expected Nayef's full brother and appointed successor, Minister of Defense and Aviation Salman bin Abd al-Aziz, has been anointed as Crown Prince. But the current generation of princes-the sons of the kingdom's founder, Abd al-Aziz Ibn Saud-is facing the end of its period in power, which has lasted since their father's death in 1952. There are a few potential candidates to succeed Salman, but the most obvious choices are the Deputy Interior Minister Ahmed (a full brother of Salman and Nayef), Muqrin, a longtime ally of King Abdullah and the General Director of the Saudi Intelligence Agency, and Sattam, Governor of Riyadh.
In broader policy terms, the government will delay any potentially controversial legislation or regulatory reforms. Moreover, there are unlikely to be any significant external or internal policy changes in the coming months. The Saudi regime will want to consolidate power and send a strong message (to both supporters and enemies) that stability will be maintained.
The longer-term danger is that more frequent changes to the succession driven by the age of the current princes will make policy stagnation more likely, creating significant political and economic risk. The Saudi Arabian economy faces considerable challenges and social discontent over economic issues, such as growing unemployment. The current response relies on spending to drive growth and legislative changes aimed at forcing employers to hire more Saudi nationals. These policies are unlikely to address the Saudi economy's significant issues. And as age claims more of the princes in coming years, the likelihood of successive policy freezes makes the adoption of more effective policies even less likely. That outcome would likely open the door to growing social tension and stresses in Saudi Arabia, a regional lynchpin and a vital source of energy for the global economy.
Crispin Hawes is the director of Eurasia Group's Middle East practice.
HASSAN AMMAR/AFP/Getty Images
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 Ayham Kamel
The recent failure of Saudi King Abdullah's proposal to turn the Gulf Cooperation Council (GCC) into a confederation of states illustrates Riyadh's recurring inability to integrate Gulf nations into a counterweight against Iran. As wary as the Gulf states are about Iran's influence, they aren't ready to turn any of their independence over to Riyadh. It looks increasingly likely, however, that Saudi Arabia and Bahrain will establish a mini-confederation of Sunni-ruled states, an alliance that is sure to make Shia Iran uneasy. Heightened sectarian tension and the Gulf states' continued reliance on the US security umbrella will, in turn, make it difficult for the US and other Western powers to disengage from the region.
Abdullah had originally proposed a political union for the GCC, but stepped back in response to negative reactions from fellow Gulf states. Saudi Arabia then pushed for a less ambitious confederation at last week's GCC summit in Riyadh, but even that was anathema to other Gulf states. Both in private and public meetings, GCC leaders had expressed deep reservations about an immediate and broader process of creating a political union. This led Saudi Arabia's foreign minister, Saud al Faisal, to clarify that the new framework for integration would preserve sovereignty over domestic issues. Still, there was no traction.
Riyadh and Tehran could not espouse more different ideals, but Gulf states fear Saudi Arabia's Sunni dominance as much as Iran's power. The rulers of Qatar, Kuwait, the UAE, and Oman have built the foundations of their polities on the principle of remaining independent from Riyadh. In the past 40 years, they sought to reinforce their independence by developing security pacts with Western powers and pursuing policies that distinguish them from Saudi Arabia. Even Kuwait's Emir Sheikh Sabah al Ahmad al Sabah, the father of the GCC proposal in the 1980's, is not particularly enthusiastic about the trajectory of Saudi Arabia's union plan. The Arab Spring and shared perception of Iran's aggressive intent are creating a new environment, but common fears will probably not translate into the creation of a common polity.
In the meantime, it is increasingly likely that Saudi Arabia and Bahrain will
establish a mini-confederation. While formally labeled as a GCC union, there
are few indications that other states are currently interested in joining under
the new structure. Riyadh has long contemplated a union with the al Khalifa
regime as a means to resolving the perceived problem of Bahrain's
Shia majority. Saudi Arabia continues to believe that Bahrain represents a
strategic challenge to the kingdom, and a collapse of the al Khalifa ruling
family could prompt an uprising in Saudi Arabia's oil rich Eastern Province
where the Shia population is believed to represent a solid majority. There is
an emerging realization in the palaces of the al Saud that Bahrain's political
challenges are here to stay and that a proactive policy to contain threats from
the small gulf island is more of a necessity than a choice.
Last year's uprising in Bahrain prompted Saudi Arabia to reassess its strategy. Despite the Bahrain regime's uncompromising stance with the Shia population, Saudi Arabia still worries about the long-term stability of its Sunni allies. These worries are reinforced by Saudi suspicion of active Iranian interference in Bahrain. Last month's visit by Iran's president to Abu Musa, the first by a head of state to an island claimed by both Iran and the UAE, increased Saudi fears of Iran's disruptive role in the region. Riyadh probably believes that visit signals Iran's willingness to infringe on the internal affairs of Gulf countries and that Tehran could once again claim that Bahrain is part of its historical territories.
A Saudi Arabia-Bahrain confederation would do little more than formalize Riyadh's leverage in Bahrain's affairs. Most importantly, a confederation would almost definitively put an end to prospects of a negotiated compromise with Bahrain's Shia population. Iran would consider the mini-confederation as Saudi Arabia's de facto annexation of Bahrain, and would feel that it needs to be more proactive in confronting Sunni monarchies in the Gulf. Meanwhile, the failure of the broader confederation means that other Gulf states must continue to rely on the US security umbrella. None of this fits nicely with US aspirations to extricate itself from the region, or with hopes for a calmer oil market.
Ayham Kamel is an analyst in Eurasia Group'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.
Peter Macdiarmid/Getty Images
By Ayham Kamel
It may be tempting to view the plethora of recent gatherings -- the Arab League summit, the U.S.-Gulf Cooperation Council Strategic Cooperation Forum, and the Friends of Syria conference -- as evidence that the global community is getting more serious about addressing the violence in Syria. But the summits really just exposed the rifts among the relevant players that will prevent a viable and coordinated response. Syrian President Bashar al Assad, in turn, will profit from the lack of coherence; he will only nominally entertain Kofi Annan's peace plan as he maintains his grip on power, and the bloodshed will worsen.
International powers remain hesitant regarding any form of direct intervention. They considered initiatives calling for buffer or humanitarian zones, but ultimately no country seems prepared to act. Key powers appear to be pursuing their distinct policies, with only a hint of coordination.
Saudi Arabia and Qatar will provide extensive support -- including arms -- to the Syrian opposition, but are unlikely to supply the heavy arms that would lead to an immediate change in the balance of power. Heavy arms are more difficult to smuggle and training rebels would be much more challenging than during the Libyan conflict. Moreover, the escalation could provoke an un-calculated response from Assad's military. While their interests differ, the two powers see Assad's survival as a threat to their influence. Riyadh's purpose is to limit Iran's regional influence. Meanwhile, Doha has invested significant diplomatic and political capital in the struggle against Assad and any failure to deliver would represent a tangible setback to its prestige. Behind the armament policy is also a deep concern that if Assad regains control, Damascus and Tehran would aim to destabilize the al Saud and al Thani ruling families' grip on power.
Arming the rebels, who have had trouble obtaining ammunition sine the regime began its extensive military campaign in early February, will provide much needed psychological support and will help weaken Assad's forces. While the resolve of Syria's opposition will not abate, arms from the Gulf will neither arrive overnight nor will they immediately change the balance of military power, which is still heavily tilted in the regime's favor. An equally important element of the Gulf strategy is providing monetary incentives to officers in the Syrian army to incite defections. But Assad has built multiple safeguards to prevent defections, a tactic he inherited from his father.
The U.S. is willing to overlook, perhaps even support, GCC efforts to weaken Assad. But Washington is definitely not interested in playing an active role. It is concerned about Saudi Arabia's and Lebanon's support of Salafist rebels and al Qaeda leader Ayman al Zawahiri's call for jihad in Syria. While Sunni monarchies in the Gulf benefit from rising sectarianism in Syria, the U.S. interest in long-term regional stability could be compromised if the Sunni-Shia confrontations spread to Iraq and other countries. U.S. officials believe that a political settlement will be needed to prevent prolonged instability. Verbal support for the Annan process is a reflection of the desire to keep negotiations open, but U.S. officials are convinced that under current conditions the Annan plan will only enable Assad to retain power.
Assad will probably not implement key elements of the Annan peace plan, which calls for a halt of hostilities from all sides, and a negotiated settlement between the regime and the opposition. The regime views cooperation with the UN envoy as a way to secure the successes achieved by its military strategy and to gain some breathing space. While Annan is a shrewd diplomat, there are few reasons to think that success is in reach. Syria's opposition will probably not negotiate with Assad or agree to a settlement that keeps him in power. Meanwhile, there are no indications that the Lion of Damascus has reached a point where he would accept his own ouster.
Ayham Kamel is an analyst in Eurasia Group's Middle East and North Africa practice.
Mohammed Ameen-Pool/Getty Images
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.
DON EMMERT/AFP/Getty Images
Today, we turn to risk #6 in our series of posts on Eurasia Group's Top Risks for 2012 and answer the most common questions we've gotten about it.
Here's a summary:
Pakistan: Turmoil and spillover -- Pakistan's economic and security challenges will become more difficult in 2012, driven by weak governance, the spread of extremism, and deteriorating ties with the U.S.. The state will not collapse, but the risk of severe political instability is growing, not just for Pakistan but also the region, as the U.S. withdraws from Afghanistan.
Q- What are the Pakistani government's biggest problems?
A- There is the weak economy, the government's deteriorating finances, a hostile military, judges spoiling for a fight over corruption charges, determined militants who have proven they can strike virtually anywhere inside the country, and worsening ties with a key source of direct and indirect financial aid -- the United States. Flooding last year did considerable damage to exports of rice and cotton, undermining the country's balance of payments position. Higher electricity subsidies and renewed pressure for large financial bailouts for cash-strapped public sector enterprises (especially airlines and railways) will also limit the government's ability to mind the budgetary gap.
The best thing this government has going for it is that neither the opposition nor the military wants responsibility for this mess and aren't ready to try to force the ruling party from power -- at least not yet.
Q- How does the beginning of withdrawal of U.S. troops from Afghanistan feed these problems and what is the risk of spillover?
A- A smaller U.S. footprint in the region will feed financial
insecurity in Pakistan, because Washington will probably reduce development aid
to the country and roll back Coalition Support Funds, a reimbursement program
for Pakistan's counter-terrorism cooperation. Pakistan isn't totally dependent
on U.S. aid, but it does plan on external financing from the U.S. and other
donors when it prepares a domestic budget.
The U.S. drawdown will also add to Pakistani fears that
Washington is passing leadership in Afghanistan to India, allowing Pakistan's
long-time rival to encircle the country. That's not purely paranoia. India's
development and diplomatic presence in Afghanistan is real, and the two
governments signed a strategic partnership agreement
last year. India also wants to build on traditional ties with the country's
Northern Alliance groups, the Taliban's most obvious rival for power. That's
why Pakistan will resist calls from Washington to increase pressure on the
exiled Taliban leadership living within its borders this year, because the Pakistani
military and security services may calculate that the Taliban will again become
their most reliable friend inside Afghanistan.
This dynamic is bad for the entire region, because it undermines progress toward South Asian economic integration at a time when India's fast-growing energy demand, Pakistan's energy crisis, and Afghanistan's obvious development needs are only becoming more urgent. The Afghanistan-Pakistan Transit Trade Agreement, for example, probably won't be extended to include India anytime soon.
Q- Does all of this raise the terrorist threat to India?
A- Whenever the Pakistani government pushes the Pakistani military to attack militants inside the country, those militants have a compelling incentive to try to launch an attack inside India. That's because when India goes on high alert, Pakistan's military will always turn its attention to threats from India's military. Let's be clear: heightened risk does not mean an attack will happen. The success of a particular attack comes down to the capabilities of the attackers, the effectiveness of Indian security officials and police, and some degree of luck. But this is certainly a threat that India will take seriously
Next up, China and its nervous neighbors.
Arif Ali/AFP/Getty Images
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.
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
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 Hani Sabra
Ballot counting continues as Egypt's first round of elections, in which a third of the country voted, comes to a close. We now know that the Muslim Brotherhood's Freedom and Justice Party, with the weight of an 83-year old organization behind it, will come out on top. But the real surprise has been the success of the more hardline, ultraconservative Salafi Nour (Light) Party. Nour could capture roughly a quarter of the seats in the first round, and there's no reason to believe that it can't replicate that performance in the upcoming two rounds.
Nour's success unsettles many moderate Egyptian Muslims, liberals, and Christians who fret about the potential impact on their personal lives. How will an Islamist-dominated parliament approach banking, tourism, and foreign investment? But Nour has probably unsettled the Muslim Brotherhood too. The upstart Salafis, who until recently did not participate in politics -- many of them still say that democracy is "kufr" (non-belief) -- have encroached on the Muslim Brotherhood's traditional territory. Thus, an increasingly critical question in post-Hosni Mubarak Egypt is not how the liberals will fare against the Islamists; that's already been answered. Rather, it is: Who wins the right to speak for Egypt's Islamists?
There are roughly three main Islamist political trends in Egypt, and together they will form a supermajority in parliament. The Muslim Brotherhood represents the right-wing, conservative, pragmatic wing of the movement. The rising Salafis represent the more reactionary, uncompromising wing, and parties like Al-Wasat (The Center), who will be by far the smallest Islamist party in parliament, represent a third trend that seeks to emulate Turkey's ruling Justice and Development Party (AKP). The three groups have legitimate reasons to believe they can seize the Islamist mantle and settle the question of who speaks for Islam.
With their electoral success and their unparalleled organizational skills, the Muslim Brotherhood is in a strong, but delicate, position. It remains unlikely that Egypt will have an Islamist-only parliamentary coalition, and electoral success strengthens the Brotherhood's hand with non-Islamists parties, because it allows the Brotherhood essentially to dictate the terms of any parliamentary coalition that excludes Salafis. Non-Islamist parties may dislike the Brotherhood, but they understand that its leadership is essentially pragmatic and unlikely to introduce radical changes that impact the economy or peoples' personal lives in the short term. The Brotherhood leadership has spokesmen who shave their beards and talk up the need for foreign investment. It also includes a senior Christian member.
But the Brotherhood has to move carefully and can ill afford to alienate the Salafis. For rank-and-file Brotherhood members, the line between a Brother and a Salafi is blurry. It's almost certain that potential FJP voters chose Salafi candidates or parties at the ballot box. And more Brothers could jump ship if the Salafis illustrate that they better represent "true Islam."
The Brotherhood is in a complicated position, trying to hew to the right in the provinces, while behaving "moderately" in Cairo and outside Egypt. In some cases, the Salafis and the Brotherhood will collaborate, but it will likely be a more competitive (and unpredictable) relationship.
Hani Sabra is an analyst in Eurasia Group's Middle East practice.
AMRO MARAGHI/AFP/Getty Images
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.
As protests in Tunisia, Egypt, and Libya captured international attention, riots swept Algeria earlier this year. But as unrest elsewhere reached a crescendo, the turmoil in Algeria went quiet. Since then, Algeria has escaped the world's attention, but long-term damage has been done. Local anger at its government is high, and President Abdelaziz Bouteflika's reform program -- aimed at improving political representation and official transparency -- is unlikely to change that. Without a surge of fundamental political reform, Algeria could quickly become unstable, and the concentration of resources in a few hands, the resulting corruption, and weak governing institutions make successful reform highly unlikely. The regime is not on the verge, but widespread social unrest, regime infighting, and a looming presidential transition will only add to the risk of political instability over the next three years.
Algeria's oil and gas exports leave its government flush with cash. In fact, the country's central bank governor noted in September that foreign currency reserves had topped $170 billion. The Algerian government avoided the fate of President Hosni Mubarak in Egypt in part by using some of this cash on subsidies -- to reduce consumer prices and raise public sector salaries, for example.
But money alone can't buy good governance. The state continues to provide Algerians with lousy social services and all that wealth isn't creating nearly enough jobs. Rampant corruption at the highest levels and a near total lack of accountability exacerbate public anger. Events like major electricity outages and the exposure of corrupt public housing programs continue to spark unrest. Labor activism is on the rise.
Even as the regime's popular legitimacy erodes, its ageing leaders resist making plans for what will come next. Infighting between civilian and military power centers triggers dueling corruption investigations and abrupt leadership changes at key ministries and state-owned companies like oil and gas giant Sonatrach. President Abdelaziz Bouteflika is still widely credited as the man who brought a decade-long civil war to a close, but age is catching up with him, and he's been ill for years. His term isn't set to expire until 2014, but his sudden death or incapacitation would leave the transition in the hands of senior military leaders, some of whom carry the taint of atrocities committed during the fighting. An internal power struggle among civilian and military leaders -- or within the armed forces itself -- might well spill into the open and provoke a broader conflict. Even in the best-case scenario -- Bouteflika serves out his term and a managed transition begins in 2014-there is little reason for optimism that serious unrest can be avoided.
But the tipping point into violence could come much sooner. Legislative elections are scheduled for 2012. With expectations raised by the sweeping changes across North Africa and the Middle East this year, this could be all Algeria needs for a true test of the regime's willingness to tolerate dissent -- and of the people's tolerance for more of the same.
James Fallon is an associate with Eurasia Group's Middle East practice.
FAROUK BATICHE/AFP/Getty Images
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.
KHALED DESOUKI/AFP/Getty Images
By Willis Sparks
The unrest now rattling North Africa and the Middle East generates new headlines each day. Today, it's an announcement from Morocco's King Mohammed VI that important constitutional reforms are on the way. It's a report that Qaddafi loyalists have pushed rebels from a couple of important port cities in eastern Libya and news that France has become the first country to recognize the rebels as Libya's legitimate government. It's the news that the Gulf Cooperation Council has promised to provide $10 billion each to member states Bahrain and Oman to help restore confidence in their stability amid ongoing protests.
But beyond the Middle East, the upheaval is producing a lengthening list of winners and losers. Here are a few of them:
Security hawks within China Security Ministry and military
The Chinese Communist Party leadership is a pretty risk-averse group, and recent turmoil in North Africa and the Middle East has strengthened the argument of those within the security forces and People's Liberation Army who say Beijing must never underestimate the dangers of quickly evolving technological and foreign policy challenges. Given the threat to Arab autocracies splashing across the headlines, we can expect China to devote still larger volumes of state resources to monitor social networking and other tools of modern communication -- and to further develop cyber capabilities generally. And just as the British military was able to evacuate British nationals from Libya, and with more Chinese than ever working abroad in sometimes volatile places, China's military will be in stronger position to win the extra resources it wants to assert China's interests abroad.
Four months ago, Cote d'Ivoire's President Laurent Gbagbo stood for re-election against challenger Alassane Ouattara. The United Nations, the African Union, and the European Union agree that Ouattara won a fair contest. But Gbagbo has refused to accept defeat, and efforts at mediation have gone nowhere. The defeated incumbent has shrugged off international pressure for a graceful exit -- or any exit -- and hundreds of people have been killed in the resulting violence. With so much attention on events in the Arab world, there's not much international consensus on what to do about Gbagbo. Cote d'Ivoire is the world's leading producer of cocoa. That might boost international attention if so many of us weren't staring at the price of oil these days.
Turmoil in the Middle East and North Africa, particularly among major energy producers like Libya, Algeria -- and in Bahrain and Yemen, which border the biggest oil producer of them all -- has helped push oil prices past $100 per barrel. That's good news for ethanol producers in the United States, who will profit from a widening separation between prices for ethanol and gasoline.
Russian arms dealers
Russian weapons dealers have seen the door close (at least temporarily) on a Libyan arms market worth some $2 billion. Yesterday, Russian President Dmitry Medvedev signed a decree that prevents Russian firms from providing the Libyan government with "all types of arms and related materials, including weapons and ammunition, combat vehicles and military hardware." The move was intended in part to ease international pressure for imposition of a no-fly zone in Libya or any other form of direct military intervention there. We don't know how long the ban will last, but money will be lost in the near term.
Until earlier this week, there was an 11,000-seat football stadium in the eastern Libyan town of Benina named for Venezuelan President Hugo Chavez. But the support Chavez has offered the embattled Qaddafi has angered the Libyan rebels who now control Benina, and they have renamed the arena Martyrs of February Stadium.
Willis Sparks in an analyst in Eurasia Group's Global Macro practice.
ROBERTO SCHMIDT/AFP/Getty Images
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.
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.
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 Roberto Herrera-Lim
Protestors depose an authoritarian leader. Crowds revel in the streets. Optimism is high. What we just saw in Egypt happened in the Philippines in 1986, when strongman Ferdinand Marcos was ushered out, and in Indonesia in 1998, after the ouster of former president Suharto. But years after shaking off their autocrats, both countries remain stifled by vested interests and corruption, and progress will continue to be glacial.
Last week, around the same time that the Internet activist Wael Ghonim was reinvigorating Egypt's protesters, a former Philippine defense secretary apparently shot himself, fatally, in the chest. The retired general was embroiled in a scandal involving kickbacks and alleged golden parachutes. Such turbulence is nothing new for the Philippines. Since 1986 the country has produced at least half a dozen coup attempts. Claims of election fraud and shady deal-making have been common and destabilizing.
In Indonesia, President Susilo Bambang Yudhoyono's reform efforts are stymied by fierce battles with Suharto-era politicians such as Aburizal Bakrie, one of the country's richest men and the leader of the opposition Golkar party. Yudhoyono lost his credible finance minister, Sri Mulyani Indrawati, after Golkar wrongly accused her of complicity in a supposedly mishandled bank bailout.
Both countries are better off than they were under despots. There is more freedom, and economic growth has enlarged their middle classes. But the sense of lost opportunity is palpable. The revolts that shook the Filipino and Indonesian political systems sidestepped and maybe even reinvigorated powerful economic and bureaucratic interests. After Marcos was forced out, new president Corazon Aquino simply gave the businesses that Marcos had seized back to her allies. And anyone attending the country's first senate session in 1987 might have done a double-take: The old but now wrinkled pre-Marcos oligarchy had returned. In Indonesia, the dynamics were essentially the same, although of the more recent Golkar vintage.
Growth and reform have come painfully slowly as a result. Investors complain of all types of corruption, from petty payoffs to interference in major deals, and citizens sometimes question whether the fight was worth it. In 2003, I met with Jose Almonte, a retired Filipino general who had participated in the revolt against Marcos and staunchly believed that the country should have a more level playing field. I asked him what unfinished reforms kept the country unstable, the military politicized, and economic growth uneven. He replied, "Too many to count."
Many Filipinos are frustrated with their country's incomplete transformation, but maybe there is hope. Computerized elections in 2010 significantly reduced questions about legitimacy. While President Benigno Aquino III is unlikely to target vested interests directly, his aim of improving regulation and tackling corruption could ultimately lead to stronger democratic institutions. In Indonesia, meanwhile, the battle between Yudhoyono and Golkar will intensify before the 2014 elections, limiting the scope for substantive policymaking. The real promise is after the elections, if Golkar's power diminishes and Yudhoyono's anti-corruption and reform programs take root. Then the last vestiges of Suharto's reign might finally take their bow.
Roberto Herrera-Lim is a Director in the Eurasia Group's Asia practice.
JOEL NITO/AFP/Getty Images
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.
Salah Malkawi/Getty Images
By Hani Sabra and Willis Sparks
Saudi Arabia's King Abdullah continues his recovery from surgery in New York's Presbyterian Hospital -- though he's probably resting a bit less comfortably following revelations from Wikileaks that he urged the U.S. government to attack Iran's nuclear facilities. There's no reason to doubt that the monarch can head home soon. But given his age -- he's believed to be 86 -- it's inevitable that members of his (very large) family will spend a bit more time in coming weeks thinking about the future. Outsiders are thinking about it too, given the kingdom's role as a regional powerbroker and the world's leading producer of crude oil.
There's plenty to think about, because Saudi succession politics will soon become much more complicated. In most monarchies, including states like Morocco and Jordan, power is passed from king to son. In Saudi Arabia, it's passed from king to brother. The crown moves from one generation to the next only when no viable same-generation brothers remain. As the current generation of Saudi leadership ages, the kingdom will likely soon undergo just such a generational change.
The current generation has a few remaining contenders. First in line, Crown Prince Sultan, 84, spent most of 2009 recovering from surgery in Morocco -- and he returned there for an "extended vacation" in August, before heading home as a precaution when King Abdullah went into surgery.
Next is the conservative Interior Minister Prince Nayef, 77, who was named second deputy Prime Minister in 2009, a position that makes him Crown Prince in waiting. But Nayef has also had health problems. Then there is Riyadh's powerful governor, Prince Salman, who acts as a kind of royal mediator, helping to settle high-level disputes safely behind closed doors. He's well-liked, but he's also in his seventies and had back surgery earlier this year.
Not surprisingly, the third generation of al Sauds are already jockeying for position. King Abdullah's sons hold prominent positions. Prince Meteb is director of the Saudi Arabian National Guard. Prince Abdelaziz is an advisor to the King and has lately taken on some high-level diplomatic missions. Crown Prince Sultan's son, Prince Khaled, serves as deputy defense minister and has raised his profile by leading Saudi Arabia's military engagement with Yemen. Interior Minister Prince Nayef's son, Prince Mohamed, is deputy interior minister and has survived an al Qaeda assassination attempt, burnishing his image as a battler against militants bent on sowing destruction in the kingdom.
Each of these men has developed his own power base. And while the current generation of Saudi princes has generally favored stability over infighting, the process of succession for the next generation is not so clear. Soon after becoming king in 2006, Abdullah established a body called the Allegiance Council to ensure consensus in the royal succession process and to balance the competing branches of the royal family. But the council's powers remain informal at best and vague at worst. And there's no guarantee that a future king won't simply ignore or even disband it.
A third generation king will not likely bring dramatic change to Saudi Arabia. After all, the status quo has been very good to the Saudi royals. But the fight over succession could allow private feuds to spill into the open, an ugly side of Saudi politics that those outside the elite almost never see.
That might one day throw the stability of the ruling family itself into question.
Hani Sabra is an analyst in Eurasia Group's Middle East practice. Willis Sparks is an analyst in the firm's Global Macro practice.
JOSEPH EID/AFP/Getty Images
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.
MOHAMMAD HUWAIS/AFP/Getty Images
By David Bender
Remember when Iraq was all about the oil?
Bush administration officials predicted that a post-war spike in Iraq's oil production would pay for both the conflict and ease the country's transition to democracy. Anti-war protesters countered that the war itself was little more than an oil grab. Now that the American combat mission is officially over, where is all that oil, and how will it change Iraq and the world?
It seemed for years that violent chaos inside Iraq made a big increase in oil production entirely unrealistic; but now there are growing signs that oil project work could begin on several fields in the south over the next six months. If these projects move ahead, over the next decade, Iraq could begin to contribute enough production to significantly influence the global oil market, providing enough supply to undermine assumptions that energy demand from emerging Asia and increasing production costs will squeeze energy markets and add serious upward pressure on prices in the mid 2010s.
Iraq is now producing about 2.4 million barrels per day. The 12 contracts signed with some of the world's largest oil companies fuel hopes that Iraq can increase production nearly fivefold by 2020. That target is unrealistic, but even the likelier tripling of production levels will have important implications for the global economy and raise interesting questions about regional political dynamics. For the moment, Saudi Arabia is the only producer with enough spare capacity to single-handedly move prices. How will the Saudis respond if Iraq can produce enough oil to usurp some of that market power? How will Iran react if a surge in Iraqi production drives down oil prices, depriving Tehran of badly needed revenue? Globally, will Iraqi oil power Chinese and Indian growth? Will it kill the electric car? Iraqi oil production increases will have widespread effects-if they happen.
But Iraq will be a politically volatile and potentially unstable place to do business for the foreseeable future, and a spike in the country's oil production is anything but a sure thing. Nearly six months after parliamentary elections, U.S. combat troops leave behind a country without a government. Vote winner Iyad Allawi, incumbent Prime Minister Nouri al Maliki, an array of Shia sectarian leaders (including firebrand cleric Muqtada al Sadr), and the Kurds remain locked in a seemingly endless battle of diplomatic nerves, holding fruitless rounds of negotiations, forming and breaking alliances, and making declarations of principle with little bearing on political realities.
ALI YUSSEF/AFP/Getty Images
The Call, from Ian Bremmer, uses cutting-edge political science to predict the political future -- and how it will shape the global economy.