Middle East

By Ian Bremmer

When Yemen makes international headlines, it's usually because outsiders look at the unrest there as yet another proxy conflict between regional heavyweights Saudi Arabia and Iran. It's one more version of the Sunni vs. Shia Middle East story. The Saudis are supporting Yemen's government in a fight with Shia Houthi rebels financed and trained by Iran. The Saudi, Yemeni, and Iranian governments each have their motives for feeding this simplification.

The Houthis are a Shia rebel group in northern Yemen, centered in the city of Saada. They've warned for years that they've been politically and economically marginalized by Yemen's government, and Houthi rebels launched a rebellion in 2004. There have been six rounds of fighting since. In August of this year, the Yemeni government, with Saudi support, launched another battle against the Houthis, and the conflict has spilled across the border into Saudi Arabia, where Houthis have fought pitched firefights with Saudi forces. In response, the Saudis have launched bombing raids on Houthi positions inside northern Yemen. Tens of thousands of people have fled the expanding conflict zone.

The spike in violence is now getting the regional attention it deserves-but for the wrong reasons. Yemen's weak government already has its hands full with a growing threat from al Qaeda in the Arabian Peninsula (AQAP) and increasing secessionist pressures in the south, adding to the risk that Yemen will become a failed state. The refugee problem is creating a risk of social unrest inside Saudi Arabia. These are serious issues. Less serious is the fear, fanned by both Saudi and Iranian officials, that Iran wants to use the Houthis to create an Arabian version of Hizbullah, a direct Shia threat to Saudi territory. The Saudis are playing up this threat to justify cross-border attacks into Yemen. Yemen's government is using the threat to justify its willingness to accept Saudi attacks on Yemeni soil and to gain Western military support and financial help. Iran feeds the story to pose as increasingly influential within the region.

The Houthis, though, have no reason to play along. They follow the Zaidi form of Islam. They're technically Shia, but theologically and historically distinct from Iran's Twelver Shia majority, which has cultural connections in Lebanon and (to a lesser extent) in Iraq -- but not in Yemen. The Houthi rebels need guns and cash and can't be picky about where they get them. If Iran is willing to sell, they're willing to buy. That doesn't mean they will use them to advance Iranian interests in Saudi Arabia's backyard.

In Yemen, at least, all militancy is local. Few outside al Qaeda relish the idea of the world's largest oil-producer sharing a border with a failed state. That's a risk worth worrying about, but it's not a good reason to over-simplify a complex political, economic, ethnic, religious, and social problem into some sort of regional proxy war between Sunni and Shia.

KHALED FAZAA/AFP/Getty Images

By Ian Bremmer

As President Obama works toward finalizing a new plan for Afghanistan, here are five reasons why the challenges U.S. forces face in building stability there are more formidable than those in Iraq:

1) Political legitimacy. Parliamentary elections in Iraq scheduled for January will spark violence, the results will create controversy, and the eventual leaders will take their places within a system that pits lawmakers and cabinet ministers against one another in a more-or-less direct struggle for power. But voters will turn out in large numbers, and Iraq's new political institutions are slowly developing a broad popular legitimacy. That's not true in Afghanistan, which might have been better off without elections earlier this year. Virtually no one believes President Hamid Karzai won the August vote; few will embrace him when he claims victory following the November 7 run-off. He may hold the office, but he has virtually no natural political base in the country. Karzai is not exactly a reliable partner in efforts to build lasting stability.

2) Training of local forces. U.S. forces have had real success in helping the Iraqi government build its police and security forces. The large-scale drawdown of U.S. troops beginning next year will create a power vacuum that encourages battles over political turf and control of oil revenues. We've seen an uptick in violence in recent weeks, and we'll see more in months to come. Corruption remains a serious problem. But the Iraqi government has shown considerable progress over the past year in asserting control over territory and in beating back challenges from insurgents. In Afghanistan, there's almost no local support for a national professionalized military. Because Karzai's government has so little legitimacy, and few local leaders believe he can offer protection against Taliban attacks, very few people are lining up to don a uniform and pick up a rifle.

3) International coordination. In the battle against insurgents in Iraq, the United States has called most of the shots -- with significant (though now more modest) help from Great Britain. American and British forces have been well coordinated from the start, both operationally and strategically. Afghanistan's International Security Assistance Force has included troops from 43 countries with widely varying degrees of professionalism, morale and operational capability. Short of the U.S. military accepting responsibility for the entire mission, there's no short-term fix here.

4) Tribal/warlord patronage networks. More than any other factor, the willingness of Sunni tribal leaders to partner with U.S. forces against a common external enemy has been central to improvements in Iraq's security over the past two and a half years. In Afghanistan, tribal leaders and local warlords face US requests for help against a domestic foe, the Taliban, with whom they may find themselves negotiating long after NATO forces have left the country.

5) Resource base. Iraq has enormously underdeveloped oil reserves, a relatively well-educated urban elite, a population with some limited but real sense of national identity, and a favorable geographical position for development of trade and investment ties with other countries in the region and beyond. For the foreseeable future, the bulk of Afghanistan's cash will come from foreign aid and opium production. Neither offers much hope as a source of long-term stability.

Iraq's government has a long way to go before it can function as a set of independent, secure and self-confident institutions and as guarantor of Iraq's long-term stability. But in Afghanistan, it will be years before local leaders can move from coping with serious problems to solving them. 

Ian Bremmer is president of Eurasia Group.

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By Ian Bremmer

The most obvious long-term effect of the financial crisis is a shift in economic decision-making power from capitals of finance to capitals of politics. We see this trend in the United States, where decisions on how best to value assets and allocate capital are now made in Washington on a scale unthinkable until about this time last year. Outside the United States, nowhere is this development more obvious than in the United Arab Emirates, where power and wealth have shifted at startling speed from Dubai (until recently a financial powerhouse) to Abu Dhabi (the seat of political power). But the American trend is temporary; the UAE's might not be.

Remember when newspapers, magazines, and TV business reports produced feature after feature on lavish investment in Dubai's newest architectural marvel and the corporatist management style of its ruler, Sheikh Mohammed al Maktoum? As foreign investment stopped flowing into Dubai, large-scale infrastructure projects ground to a halt. Thousands of foreigners lost work permits in the construction sector. Thousands more saddled with loans they could no longer repay simply abandoned their property and left the country. By January 2009, local police complained that about 3000 cars had been abandoned at the airport. Dubai found itself buried beneath a mountain of IOUs, and for a few days in February 2009, the financial world lost faith. The emirate's credit rating tanked, and foreign investors began to plan for the once unimaginable risk that Dubai would default on its sovereign debt.

Faced with that, Dubai announced a $20 billion bond program to raise the needed cash. In February 2009, Abu Dhabi moved in with $10 billion bailout, underwritten by the UAE's central bank. So far, Dubai has yet to find the other $10 billion, and Abu Dhabi may have to step in again. But the bursting of Dubai's real estate bubble and the sudden collapse of its economy have already allowed Abu Dhabi's ruling al Nahayan family to buy a big share of the al Maktoum's assets.

On a recent visit, I saw the evidence for myself. Abu Dhabi is bustling as the city state prepares for its first Formula One championship this Sunday.  In Dubai, the traffic jams are gone, the hotels are struggling, and everyone's waiting for something to change. What a difference a year makes.

There's plenty of reason to fear that things won't get better soon. Real estate prices are now at about half their peak, but overbuilding on many projects continues because the state controls many of the emirate's largest construction companies. Many of Dubai's biggest construction projects are still underway, because the government wants to minimize further job losses. That's likely to continue through 2010, leaving the emirate with large amounts of unused commercial space.

In many cases, local firms haven't paid their employees in weeks, and there have been some moderately violent protests. The government appears aware of the seriousness of the problem and is working to improve healthcare and living facilities for the laborers. Dangerous levels of unrest are unlikely given that most guest workers can't afford to risk deportation.  

But there's another cloud on the horizon. If the United States moves to intensify sanctions on Iran next year (a good bet given the low likelihood that the current diplomatic optimism will last), Dubai will be vulnerable. Much of Iran's financial flows move through Dubai, and sanctions would hit the emirate especially hard.

Ian Bremmer is president of Eurasia Group.

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By Greg Priddy

Saudi Arabia faces a complex set of challenges in its role as leading member of OPEC amid ongoing economic and financial market volatility. After achieving an unprecedented level of compliance with OPEC production cuts from other members earlier this year, the kingdom now confronts a problem: compliance is beginning to fray, even as a weakening of the U.S. dollar and a surge in global equities markets push the oil market surging ahead.

If the breakout above $75 per barrel for West Texas Intermediate (WTI) crude oil is sustained and the momentum continues, it's entirely possible that Saudi Arabia will intervene to try to tamp down prices. If that happens, it wouldn't be as part of any understanding with the United States -- a relationship now under serious strain -- but from pure self-interest. With the global economic recovery still fragile, a rapid momentum-driven escalation in oil prices could weigh on consumer confidence and economic growth. That could produce a drop in oil prices. Saudi Oil Minister Ali al Naimi has spoken in recent months of a "goldilocks" range for crude oil at around $75 per barrel, and hinted at action to blunt any sustained push past $80 per barrel.

The Saudis also need to manage price increases to maintain pressure on Iran. Iran's nuclear progress has Gulf Arab governments on edge -- and the Saudis, in particular, would like to avoid taking any action that provides Iran's government with extra revenue. The Saudi government can balance its budget with WTI crude oil in the vicinity of the high $50s. That means they are now replenishing reserves at a rapid pace after running a deficit for the first half of this year. Despite spending cuts, Iran is still under financial pressure, and the Saudis would like to keep it that way.

Managing output levels and prices will be difficult, given that global inventories of crude oil and petroleum products remain well above their normal ranges. Any move by the Saudis to tamp down a surge in prices would likely involve a modest amount of increased exports -- say 500,000 bpd -- and could be pulled back once it has its intended effect of breaking the market's momentum. To bring inventories down, however, the leading Gulf Arab members of OPEC (Saudi Arabia, Abu Dhabi, Qatar, and Kuwait) will need to keep their own output well below pre-September 2008 levels through at least the end of 2010. Right now, compliance outside the Gulf Arab members has receded, particularly in Iran and Angola. Nigeria remains at its target, but that's a result of the continuing violence in the Niger Delta, not a policy decision to keep its promises.  

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

JOE KLAMAR/AFP/Getty Images

By Ian Bremmer

On Friday, Saudis will celebrate the 85th birthday of Abdullah bin Abd Al-Aziz. On Sunday, they'll mark the fourth anniversary of the day he became king. For those inside and outside the kingdom hoping for deeper and broader political and social liberalization, Abdullah's reign has always been a good news/bad news story. The good news: reform has made progress. He has actively promoted "brotherly dialogue" with Christian, Jewish, Buddhist, Confucian, and other religious leaders. Media criticism of government and of the kingdom's religious conservatism has become much more commonplace. Several hardliners have been pushed from positions of power within the establishment. Abdullah's reign has encouraged female members of the royal family to campaign openly for greater rights for women, and we've seen the first appointment of a female deputy minister. These achievements haven't come easily and shouldn't be dismissed.

The bad news: reform has moved very, very slowly. The inter-faith dialogue has not created anything approaching religious freedom within the kingdom. Women are still denied rights considered fundamental in other Arab countries. Efforts to rein in the so-called Commission for the Promotion of Virtue and the Prevention of Vice, a religious militia that uses physical violence to enforce Wahhabi rules of dress and behavior, have produced little progress.

But a pair of recent setbacks suggests the opening of Saudi society may actually be moving from slow speed into reverse. First, despite direct early support from King Abdullah, plans to reopen public movie theaters, banned across the kingdom for the past three decades, have recently been reversed-and a Saudi film festival in Jeddah was abruptly cancelled two weeks ago. Second, the editor of a leading Saudi newspaper was fired in June after a reporter at the paper offended Interior Minister Prince Nayef bin Abd Al-Aziz by appearing to criticize the Committee for the Promotion of Virtue and Prevention of Vice.

In addition, though there's nothing new about Internet censorship in the kingdom, credible rumors suggest the Saudi government may soon mandate installation of a state-owned computer chip in every Saudi computer, one that would allow authorities to track all Internet activity within the country. As with the controversial Green Dam project in China, the stated purpose would be to crack down on pornography. But, also as in China, the state officials who monitor all this traffic would be unlikely to ignore online content that poses political or social challenges for the House of Saud.

Prince Nayef, Abdullah's half-brother, is the embodiment of the conservative backlash. His clout appears to have grown with his appointment earlier this spring as second deputy prime minister, an innocuous sounding position that some fear may position him to become king following Abdullah's death. This speculation has intensified with doubts over the health of 84-year-old Crown Prince Sultan, the man most likely to replace Abdullah -- if he lives long enough.

These defeats for reform provide an early warning sign of rising levels of dissension within the Saudi elite -- and possibly of anxiety among senior members of the royal family as they begin to think more seriously about the eventual succession process.

In the near term, infighting could undermine the ongoing effort to diversify the Saudi economy -- as well as the political and social reform process. Longer-term, if Sultan dies before Abdullah, champions of reform inside and outside the kingdom will worry more openly that Nayef might one day become Saudi Arabia's king.

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By Eurasia Group analyst Willis Sparks

The Iraqi government draws 95 percent of its revenue from oil production. Every plan its political leaders can imagine will depend on reliable access to oil profits, and every political faction knows that the country can't achieve lasting political stability until a durable agreement is reached on who owns the estimated 115 billion barrels of reserves and who holds the right to sell them. As tens of thousands of US troops withdraw from the country over the first eight months of 2010, competition for control of that oil will intensify.
 
After years of haggling, Iraq's political leaders have yet to reach agreement on a hydrocarbon law that determines how oil profits will be divided among the country's competing factions -- a plan that is necessary to revive an energy sector that has suffered from years of under-investment -- and a steep drop in oil prices from $147 per barrel last July to less than $65 today.
 
Plans to attract badly needed investment and technical expertise from international oil companies face serious political obstacles. Many Iraqis continue to believe that the United States invaded Iraq to grab control of its oil. As Iraq fell under foreign military occupation, its would-be political leaders discovered that pledges to protect Iraqi oil for Iraqis boosted their personal popularity. Support for opening the country's oil sector to Western companies won't win many votes in upcoming parliamentary elections, now scheduled for January.
 
Political competition for control of the country's oil will sharply intensify next year. The post-Saddam constitution stipulates that Iraq's natural resources belong to the Iraqi people. But different political factions read this idea in different ways. The document also provides that "the federal government, with the producing governorates and regional governments, shall undertake the management of oil and gas extracted from present fields." Some interpret this clause to mean that the central government in Baghdad has the right to manage Iraq's oil. Provincial leaders argue that this stipulation gives local governments the right to exploit resources located on their territory, especially in newly discovered fields.
 
This is the dispute that generates constant tensions between Baghdad and the Kurdistan Regional Government (KRG). Kurdish leaders, ever ready to assert the KRG's political and economic autonomy and much less resistant to doing business with Western companies, claim the right to formulate their own energy strategy and to award contracts to international oil firms. Baghdad insists these contracts are invalid and has "blacklisted" companies that invest in the Kurdish region. This multilevel game of chicken stokes political instability and fuels mutual suspicion.
 
And though the two sides managed to agree on an improvised revenue-sharing scheme that gives the KRG 17 percent of the profits from the oil exploited on its territory, the lack of an established energy law limits the inflows of investment that Iraq's rusting energy sector badly needs if it's going to maintain current levels of production -- let alone expand output.        
 
The Iraqi government has now received its wake-up call. On June 30, Baghdad launched an international bid round to offer service contracts for field development. Iraqi officials calculated that access to some of the country's vast reserves would persuade reluctant firms to ignore the considerable political and security risks and jump into Iraq's oil sector. They gambled that the bid round would make for good television, broadcasting it across the country. They were wrong. Oil Minister Hussein al Shahristani now faces an uncertain political future.
 
As Iraq moves toward the next parliamentary elections scheduled for January 2010, oil will remain at the heart of every political debate. And as US troops begin to leave the country in large numbers, the Iraqi government will need steady flows of oil revenue to finance reconstruction of the country, further development of Iraq's army and police forces, and the social spending needed to provide Iraqis with basic services. Until Iraq's various political factions forge the political compromises necessary for equitable sharing of oil profits, and until large-scale outside investment in oil infrastructure expands production and export capacity, there will be plenty to fight over and no guarantee that Iraq can be rebuilt.  

MARWAN IBRAHIM/AFP/Getty Images

By Ian Bremmer

Most of us don't think much about Somalia, Yemen, or Tajikistan -- not with more colorful problems like Iran, North Korea, and a global recession to worry about. But growing threats to civil order in these less familiar countries could have serious implications for international politics and the global economy.

On the one hand, the term "failed state" is used way too freely these days. Pakistan's civilian government might well implode, but the country's military is the final guarantor of the country's stability. Ukraine's governing institutions have survived years of political disputes among its president, prime minister, and main opposition leader -- and they're likely to withstand a bitterly contested upcoming election. Mexico has endured swine flu, an earthquake, and an intensified drug war this year, but anyone who believes the country is at serious risk of state failure wasn't paying attention this weekend as legislative elections went off without a hitch.

But other states are at genuine risk of total meltdown -- with potentially serious international consequences.

Africa has no shortage of political and social turmoil, but Somalia, which hasn't had a functioning government in nearly two decades, is in a league of its own. Criminal networks control key ports, stoking the surge of piracy off Somali waters and in the neighboring Gulf of Aden, where more than 10 percent of global oil traffic passes. More than 60 ships, including a Saudi supertanker, have been hijacked in the last 18 months.

Onshore, well-armed Islamic militants, with local roots and al Qaeda connections, have filled a political vacuum across the south and center of the country, attracting foreign fighters to join them. A western-backed transitional government and African Union peacekeepers are virtually powerless to stop their advance.

Somalis who want the militants out lack the weapons and the friends to evict them. We can expect more lawlessness, radicalization, suicide bombings (previously unheard of in Somalia), attacks on western targets inside and outside the country, and more piracy. If the government loses control of Mogadishu's port and airport, the country will slip beneath the waves, with serious consequences for the entire region.

Across the Gulf of Aden lies Yemen, where 20 million people live atop very little land and almost no natural resources. They also live next door to Saudi Arabia, which has plenty of both. Yemen isn't yet a failed state, but in recent months, Islamic militants have pushed it much closer to the edge.

Years ago, al Qaeda made a major tactical mistake: It targeted a Saudi government that has more than enough muscle to fight back. Learning from its mistake, the group now appears to be thriving across the southern border in Yemen, which is fast becoming an ideological incubator and a logistical center of operations for Islamic militancy. This plays into a dangerous domestic dynamic. For the past four years, the Yemeni Islamist movement has split between older generation militants who oppose operations inside Yemen (which they consider a needed sanctuary) and a new generation operating via a looser, less formal network of cells in pursuit of domestic jihad. Killing Americans in Iraq remains as attractive as ever, but it's a lot easier to carry out attacks inside Yemen.

The Yemeni government can maintain security in the capital city of Sanaa, but it can't control rural and tribal areas, where an Afghanistan-style dynamic has unfolded: Local tribes are cutting separate security deals with local extremists. Any yet, the Yemeni government's real vulnerability comes from its deep dependence on energy production for revenue, creating a growing risk of militant attack on oil and gas infrastructure. Yemen's natural resource outlook was already bleak. At current levels of exploitation, flows of oil (and water) will slow to a trickle in the next 10-15 years.

Why should the world care about Yemen's stability? Because state collapse would quickly become Saudi Arabia's security problem -- and Saudi security problems matter for every country in the world that imports crude oil. Beyond cross-border terrorist activities, Saudi authorities face a surge in militancy in northern Yemen, which is pushing Yemeni migrants across the border. And if extremist groups can use Yemen as a base for maritime terrorism the way pirates use Somalia, the global shipping industry would suffer serious consequences.

The situation in Tajikistan doesn't look much better. About half its labor force works outside the country, supporting families via remittances and exposing the country to economic volatility elsewhere. In fact, remittances and foreign aid account for about half the country's GDP. More than 60 percent of the population lives in poverty. Nearly 80 percent lack reliable supplies of electricity. Health care and education infrastructure are abysmal.

President Emomali Rakhmon has centralized power by buying off some rivals and throwing others in jail. His government runs largely on political patronage, ensuring that an economic slowdown risks political, as well as economic, consequences. The country's small elite benefits from control of the hard currency produced from aluminum and cotton exports, but the global recession ensures that regular customers are spending less on these products. Tajikistan's aluminum output fell by nearly 17% in the first quarter of 2009. The government tends to ignore economic sectors and geographic areas that have few to exploit. Memories of civil war (1992-1997) have reduced the public's appetite for political protest, but things are getting bad enough that this might change.

Tajikistan matters because it serves as a transit point (and in some cases a source) of flows of drugs and weapons into several more internationally influential countries. It shares a porous 1200 km-long border with Afghanistan that cannot be secured, which could help reinforce militants fighting against US and NATO troops. Drugs and weapons already cross the border into Russia and China and flow across South Asia. State collapse in Tajikistan would destabilize the broader Fergana Valley, with impact on neighboring Uzbekistan and the Kyrgyz Republic.

Finally, there might well be spillover effects inside China's Xinjiang province, where about 45 percent of the population is Muslim and where unrest over the weekend reportedly killed at least 140 people. According to the Chinese government, Xinjiang produces 30 percent of China's oil reserves, 34 percent of its natural gas reserves, and 40 percent of its coal reserves- in a country that still draws 70 percent of its energy from coal.

Countries like Somalia, Yemen, and Tajikistan don't often make international headlines. But they have an increasingly dangerous impact on plenty of states that do.

By Eurasia Group analyst Geoff Porter

Even as President Obama tries to open diplomatic channels with Tehran, Israel will likely try to address real and potential threats from Hamas and Hezbollah, Iran's regional proxies. Israel has already waged war on Hamas in recent months, and military confrontation with Hezbollah is becoming more likely.

Iran's nuclear progress and Obama administration efforts at engaging Iran's leaders have generated high anxiety in official circles within Israel, where the Iranian nuclear program is widely considered an existential threat to the Jewish state. Israelis from across the political spectrum doubt that a new diplomatic track will persuade Iran to halt its nuclear program. Many believe that Iran will simply exploit the diplomatic process and warming relations with Washington to play for time, advancing its nuclear program beyond a point at which neither diplomacy nor military strikes can compromise Iran's nuclear future.

For the moment, Israel seems to be giving the US diplomatic track time to produce results. But in the meantime, Israel will focus on Iran-related problems that it can address directly, like the threats posed by Hezbollah and Hamas, before these groups benefit from the added political leverage their ties with a nuclear Iran would generate. In short, Israel fears that once Iran has achieved nuclear status, Hamas and Hezbollah will feel emboldened to take a more aggressive approach toward Israel. Better to deal with those groups' offensive capabilities now, some Israeli officials reason, than to wait until US/European diplomatic efforts fail and Iran crosses the nuclear threshold.

Because Israel officially considers Hezbollah and Hamas terrorist organizations, Israel will not open negotiations with either of them. As a consequence, Israeli policymakers may determine that further militarily action is a necessary risk. Israel severely weakened Hamas in December and January, and government officials continue to publicly underline threats from Hezbollah that continue following their six-week conflict in 2006.

A wrong step from Hezbollah in coming months would provide Prime Minister Benjamin Netanyahu's government with the pretext to strike at Hezbollah's capabilities. Rocket fire across the Lebanese-Israeli border could provoke Israeli retaliation, just as it did in 2006 when a Hezbollah campaign unexpectedly drew a massive Israeli response. And the current Israeli government is much more hawkish than the Ehud Olmert-led government of 2006.

How might this confrontation develop? Following this weekend's Lebanese legislative elections, Hezbollah might make good on threats to avenge the killing of member Imad Mughniyeh, which the group blames on Israel. For the moment, Hezbollah is concentrating its time and resources on its performance at the ballot box, but its leadership is unlikely to let his death go without a response. Any provocative action from Hezbollah is highly likely to draw a forceful Israeli response.

There is also a potential domestic political rationale underlying a future Israeli attack on Hezbollah. While the 2006 Israeli campaign against Hezbollah was politically damaging for Olmert's administration (and ultimately cost defense minister Amir Peretz his job), the recent offensive against Hamas was domestically popular and bolstered support for Ehud Barak, Peretz's replacement.

A successful strike on Hezbollah would be significantly more difficult to achieve than the recent attacks on Hamas. But if the Netanyahu government sets clear, attainable goals and successfully manages the Israeli public's expectations, it could improve its standing. Some good news might come in handy, given the economic challenges the government now faces, problems which have undermined its popularity in recent weeks.

Netanyahu is struggling to maintain an awkward hard-right coalition despite falling tax receipts, rising unemployment, and increasing fiscal demands for social services. In a recent Knesset speech, Netanyahu emphasized that the economic challenges that Israel faces are compounded by security threats. While the global economic downturn may prevent Netanyahu from unilaterally turning Israel's economy around, he may reckon that Israel can deal with security risks on its own.