Nelson Mandela's deteriorating health over the past year has spurred speculation about what impact his eventual death will have on South Africa. Both inside and outside the country, there is a (somewhat overblown) fear that his death will strike at the country's soul. Mandela certainly occupies a central place in the country's self-image, and his death will be an occasion for national mourning. But beyond that -- and the possible impact on approaching elections -- his passing will likely have little effect beyond accelerating somewhat the social and political trends already at play. The political dominance of the African National Congress (ANC) will continue to unravel, and South Africa will continue its rocky but ultimately stable transition to post-revolutionary politics.
Should Mandela die before the May 2014 elections, the ruling African National Congress (ANC) will exploit Mandela's golden reputation to remind voters of its liberation credentials and reinforce the message that voting for the ANC is a vote for Madiba (Mandela's Xhosa clan name). This propaganda will help shore up ANC support in the Eastern Cape, Limpopo, and North West and may even pry more votes from disenchanted urbanites and the so-called born-free generation, who are less tied to the ANC historically but who consider Mandela a national father figure. In this scenario, the ANC would garner about 60 to 64 percent of the vote, down from the 66 percent support seen in the 2009 election, but handily above the 57 to 61 percent range that would be likely without this Mandela-effect.
This electoral boost will not last long, though, and Mandela's death will ultimately hurt the ANC precisely where it may initially help: by further de-coupling the ANC from the liberation struggle and shining a spotlight on unmet economic promises and worsening corruption in the party. As a result, citizens will be even more inclined to step outside the party and its affiliated institutions -- including members of the ANC-linked Confederation of South African Trade Unions (COSATU) -- to press their demands. Popular discontent will continue to fuel and be fueled by the ANC's and COSATU's factionalism, and South Africa will see more violent strikes and "service delivery protests" in peri-urban communities. In the shorter term, the ANC's declining legitimacy will continue to dampen turnout rather than drive support for any opposition party. Over the longer-term, however -- probably by the 2024 election, but perhaps by 2019 -- it opens up space for the emergence of a viable opposition coalition.
A number of alternative political organizations will try to capitalize on the ANC's comparative decline. Middle class blacks will likely vote in greater numbers for the liberal Democratic Alliance (DA) or for the party that emerges from a potential merger between the ANC offshoot, the Congress of the People (COPE), and Mamphele Ramphele's new Agang party. Apart from the perception that the DA is still a "white party," there is little blocking a broader coalition between the DA, COPE, Agang, and perhaps the Eastern Cape/Xhosa-based United Democratic Movement, whose leader, Bantu Holomisa, has made political hay of last year's Marikana massacre. Some poorer blacks would also vote for this coalition, particularly given Ramphele's liberation credentials and Xhosa discontent with the growing Zulu influence in the ANC. This kind of formal coalition is likely by 2019. Before then, opposition parties will continue to increase legislative coordination, including ongoing efforts to secure a (sure-to-fail but symbolic) vote of no-confidence against President Jacob Zuma.
A viable challenger on the ANC's left flank remains unlikely -- particularly because the ANC will likely move left to try counter its decline and take a more populist line on land reform and mining (two fixed assets with strong symbolic ties to the struggle against white minority rule). Zuma has effectively sidelined former ANC Youth League leader Julius Malema, and he probably does not have enough mass support or funding to launch a revival campaign from the outside. COSATU's Secretary General Zwelinzima Vavi could organize a more radical party, and efforts by Zuma's allies in COSATU to purge Vavi for his criticisms deserve close attention. Still, while Vavi is respected both inside and outside COSATU, he is not a rabble rouser like Malema, and most unionists (particularly increasing influential public sector workers) would remain inside the ANC-linked COSATU following his ouster.
The ANC itself is more likely to fracture along provincial/ethnic lines than by ideology, especially if current ANC Deputy President Cyril Ramaphosa -- a former labor leader-turned-billionaire and one of the key architects of the country's negotiated transition to majority rule -- is not elected party president at the ANC's 2017 conference. Zuma's alliance with Ramaphosa at last year's ANC national conference in Manguang was driven by political expediency, and Zuma acolytes in Kwa-Zulu Natal are already plotting to replace Ramaphosa with a Zulu candidate at the 2017 conference. If so, party factions in the Gauteng, Eastern Cape, Gauteng, Free State, and Limpopo could lead a split in the party.
Such a split and the ANC's more populist orientation represent the clearest threats to South Africa's long-term stability. Nevertheless, South Africa's strong social and economic institutions -- including a widely respected constitution, independent judiciary, adversarial media, robust civil society, large tertiary sector, independent central bank, and a prudent treasury -- will impede more radical policy shifts and facilitate reforms in the face of sustained market pressure that will accompany the economy's slow leak under the ANC. In addition, by virtue of its declining share in parliament, the ANC now cannot amend the constitution on its own, and previous attempts to significantly weaken the judiciary, media, and civil society have generally been repelled. In the same vein, established electoral, legislative, and judicial institutions will likely contain political violence and help clear the way for a more competitive political environment.
Mark Rosenberg is a senior analyst with Eurasia Group's Sub Saharan Africa practice.
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Could Turkey be nearing a resolution of its Kurdish problem? The March 21 ceasefire announcement from Abdullah Ocalan, the jailed leader of the Kurdistan Workers' Party (PKK), has certainly raised hopes of a resolution. The optimism, however, masks significant obstacles, not least of which is the fact that Prime Minister Recep Tayyip Erdogan faces structural incentives that could undermine his motivation to pursue peace as strongly and urgently as might be wished. The process could easily breakdown amid recrimination and a return to violence.
Turkey's Justice and Development Party (AKP)-led government and the PKK have been negotiating for several months. The authorities have allowed some members of the pro-Kurdish Peace and Democracy Party (BDP) to visit Ocalan in jail and communicate his position to the rest of the PKK's leadership, and the broad outlines of a deal are slowly emerging. The PKK will gradually pull back its nearly 2,000 armed militants operating in Turkish territory. In the meantime, the AKP and the BDP will start negotiations on a new constitution and revisions to Turkey's legal framework needed to ensure equal treatment for Kurds. The final stage would be the normalization of relations. Both sides will continue to maintain momentum by making small-scale concessions, though significant steps will have to wait until the PKK has fully withdrawn from Turkish territory.
For both sides, a ceasefire offers significant potential benefits and little downside, at least in the near term. The Turkish population is more inclined to consider a peace deal than at any time in the past few decades. Erdogan would reap considerable electoral benefit from resolving the long-standing violence and tension (though there would be little fallout if the deal were to break down). The BDP would gain electorally for improving, even if only marginally, Turkey's legislative framework regarding the Kurdish minority. The PKK leadership would avoid fighting on two fronts simultaneously given developments in northern Syria-while also giving their militants time to recover from the effects of the violent 2012 campaign in south-eastern Turkey. And then there are more intangible factors: The PKK leaders are thought to be tired of life on the run, and Ocalan too is believed to be angling for house arrest rather than jail.
But despite the momentum and the benefits from a ceasefire, peace could founder on one of several issues. While the mood in the country is promising, there is a wide gap between Kurdish demands and what the government can realistically concede ahead of the upcoming elections. There is also a very real danger that some factions in the PKK and the broader Kurdish movement may feel betrayed by the final deal between the government and Ocalan. That disappointment could trigger a resumption of PKK insurgency.
The most immediate challenge, though, will be implementing the PKK's withdrawal without violence, particularly given that a law assuring their safety appears unlikely at this point. The Turkish military as well as nationalist groups will find it very difficult to allow armed PKK militants to simply leave for safety in northern Iraq. And the PKK will not consider giving up their weapons, especially given the situation in Syria.
Finally, there are concerns about the process. Neither the government nor the Kurdish nationalists have any real experience in handling peace talks and the compressed time frame of less than one year to withdraw troops and write a new constitution significantly increases the complexity. Similar developments in other parts of the world took many years to complete and there is no guarantee that either side will be able to manage any potential moments of tension.
Naz Masraff is an analyst with Eurasia Group's Europe practice.
The future of Myanmar's National League for Democracy (NLD) seemed preordained when the trammels of political repression were removed in 2012. The party would parlay the popularity of its leader Aung San Suu Kyi and coast to victory in the 2015 elections over a ruling party led by widely despised former generals. But democracy is messy, and even its most fervent adherents can slip once the real challenges of governance and politics surface.
The NLD has stumbled in the past few months and its trajectory is now less certain. The party faces a growing list of constituent demands and the ruling Union and Solidarity Development Party (USDP) has demonstrated a talent for political maneuvering that is improving its outlook.
The NLD's internal disorder is in part a natural consequence of having to shift its focus from opposing a hated military government to winning an election in a diverse country. Burma has 135 recognized ethnic groups, many of which live along the eastern, western, and northern borders. Some of them have never yielded to rule by an outside force, making the majority-ethnic Burman NLD's task of building an effective national party more difficult. But the party has also been accused of mishandling internal party elections, delaying the first party congress until the second week of March. Several hundred disgruntled members defected from the party in Pathein several months ago, and recently party members gathered in Mandalay to protest party election fraud. The aging party leaders are also rumored to be excluding party youth from the policymaking process, which could result in more defections that could bolster the NLD's competitors or provide the core of new parties ahead of the 2015 national elections.
Aung San Suu Kyi's new role has also forced her to make compromises that have alienated some would-be NLD supporters. She has exhibited greater pragmatism and less ideological conviction in her role as member of parliament than she did as an activist. Though her silence on the Rohingya humanitarian crisis is less problematic in Myanmar than it is among international donors, Aung San Suu Kyi has not won allies through her silence on the conflict in Kachin State. Her silence may cost the NLD dearly if it finds that it must rely on ethnic parties to form a ruling coalition after the 2015 elections, much as the NLD did in 1990 when it formed an alliance with ethnic coalition the United Nationalities League for Democracy.
Meanwhile, the USDP has improved its ability to govern, thanks in part to personnel changes that have promoted technocrats and its experience with the exercise of power. The USDP has been increasingly vocal about taking credit for the recent political liberalization, and as economic liberalization begins to improve the standard of living, the party's leaders will no doubt seek to burnish the USDP's reputation. From a policy perspective, this means that development will likely be steered toward areas that return the biggest, quickest, and most obvious improvements in living standards, which includes areas such as electrification, telecoms, and agriculture.
Finally, the USDP will use the familiar divide-and-rule tactic of the past, working to undermine their opponents by fostering personality-based rivalries and distrust across ethnic lines. The USDP and military have pursued an aggressive effort to broker ceasefire deals with 11 groups since November 2011, whom they will then encourage to register as political parties. If successful, this tactic will force the implicit acceptance of the 2008 Constitution by Myanmar's ethnic groups and will also present the NLD with new challenges in minority ethnic electoral districts. And if the NLD cannot improve its relationship with ethnically based parties -- either because of concerns about the selection of local party officials or because of its silence on the Kachin -- then it may find itself competing with them instead of building a coalition. That outcome would divide the opposition vote and cede the advantage to the USDP.
Similarly, in an effort to raise the stock of the breakaway NLD competitor, the National Democratic Force, President Thein Sein on Feb. 6 appointed one of its members of parliament as the first non-USDP cabinet minister. And if Thein Sein feels he can succeed, he may also encourage the pro-democracy group, 88 Generation Students (88 GS), to form a party. The organization's moral authority in Myanmar approaches that of Aung San Suu Kyi, and an 88 GS party would challenge NLD's pro-democracy bona fides.
The result is that the NLD is too weak to shape the reform agenda for the next three years, and perhaps longer. Aung San Suu Kyi is probably aware of this and as a result will be careful not to overreach and risk alienating international stakeholders. For the USDP's part, Thein Sein and his cabinet will continue with reforms that are intended in part to gradually legitimize both the military and the USDP while entrenching their privileged economic and political positions.
Christian Lewis is a researcher in Eurasia Group's Asia practice.
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Note: Today is the tenth in a series of posts that detail Eurasia Group's Top Risks for 2013.
Jacob Zuma's reelection as ANC president will hasten the decline of South Africa's dominant political party and increase social pressures on the continent's most advanced economy. As elections loom in 2014, critical reforms will fall victim to more populist policies.
On the surface, the ANC's December 2012 national conference at Mangaung struck a surprisingly market-friendly tone: Zuma and his allies defeated his most populist challengers, elected labor-leader-turned-tycoon Cyril Ramaphosa as deputy president, dropped any mention of nationalization from the party's platform, and rammed through an endorsement of the pragmatic National Development Plan (NDP). But beneath the surface, worrying trends have become apparent.
The ruling party's policy of strategic state ownership introduced further policy uncertainty to the mining sector (especially on taxes) and paved the way for a heavier state presence in industries like energy and steel. The government is now more likely to use the threat of new taxes to try to secure cheaper inputs for state-run energy and infrastructure projects.
The NDP will probably provide too little, too late. The plan's most critical reforms -- more flexible labor laws, education reform, and rationalizing local government -- will probably be scuttled by vested interests and weak governance, and its 20-year plan for expanding employment and reducing inequality is too broad and too long term to offer much-needed near-term help. As a result, the plan's more populist elements -- including boosting public-sector employment and social spending -- will be implemented first, further limiting government's ability to find longer-term, structural fixes. Ramaphosa's business experience and negotiating skills will help the NDP's cause. But the plan lost its primary champion when former finance minister Trevor Manuel resigned from the ANC's National Executive Committee.
Zuma's demonstrated ability to survive internal challenges will relieve some of the factional pressures within the ANC leadership: All top six party executives are now Zuma allies, and the president's most vocal challengers were uniformly eliminated from the 80-member NEC. Yet this winner-take-all outcome will also reduce the ANC's so-called broad church of leaders and supporters, further undermining the party's monopoly on political legitimacy among black South Africans and increasing the risk of social unrest.
Despite its electoral dominance -- the ANC won 65.9 percent of ballots cast in 2009 -- growing voter apathy and discontent with the pace of economic change has substantially reduced turnout, meaning the ANC now has the support of just 50 percent of registered voters. Anger over inequality has also driven a rise in violent protests, including frequent demonstrations against poor service delivery and last year's wildcat strikes in mining and farm communities. In general, these actions have been instigated by disgruntled or former ANC-affiliated leaders trying to exert influence from the outside.
These trends will continue in 2013. The new ANC leadership will alienate leaders and constituencies from the same areas where protests and strikes are most common, and government efforts to exert tighter control over provincial resources will exacerbate local tensions. Cutbacks and shutdowns by gold and platinum miners in the first half of 2013 -- as well as the June expiration of wage agreements in the gold and coal sectors -- will almost certainly spark another bout of labor unrest in the mining sector, especially given the weakened position of the government-aligned National Union of Mineworkers and the rise of more militant bodies such as the Association of Mineworkers and Construction Union. Combative stances are also likely from the Congress of South African Trade Unions.
The bottom up pressures will weigh on the ANC in advance of the 2014 elections, as will the scandal-plagued leadership of Zuma himself. Though Ramaphosa's respectability provides the party with badly needed cover, the ANC government will still have to focus on short-term spending and patronage to shore up support. Looser monetary policy is also a real possibility, as is a more aggressive (though still tempered) approach to land reform. Without these steps, continued bouts of social unrest may well shake investor confidence more than unwelcome policies.
Bottom line: Zuma is not Nelson Mandela, and the ANC no longer has enough credibility with poor South Africans to (once again) ask for patience in achieving a better life.
Next, we'll profile our "red herring" risks for 2013.
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Note: Today is the second in a series of posts that detail Eurasia Group's Top Risks for 2013.
As their people grow bolder in their quest for information, China's leaders will only tighten the restrictions they place on cyberspace. China is, in fact, embarking on a worrying experiment: It is the only major power that is attempting to preserve an authoritarian system in the information age. This gigantic task will demand a great deal of leaders' attention, raise tensions among the Chinese people, and reverberate outside of China's borders through the country's foreign policy.
China's Great Firewall and unpredictable censorship regime have more or less enabled its leaders to manipulate the information accessible to its citizens. But these tools are fast becoming insufficient, a fact made clear by strikes at a major Chinese newspaper this week. China's internet users stand at more than half a billion and counting. Growing demands for transparency and information leaks that embarrass the government are inevitable, as evidenced by the public's growing awareness of high-level corruption scandals.
The Communist Party appears poised to implement a new phase of information control that is part reactive and part proactive. On the reactive side, the government has begun to disrupt virtual private networks used by many foreigners, and even some Chinese, to circumvent the country's firewall. The government will proactively attempt to capitalize on technological tools by using the internet and social media such as Weibo (China's version of Twitter) to convey its own messaging.
The friction between the government's attempts at self-preservation and the population's desire for more transparency will be the greatest political challenge for China in 2013. While the stability of the government is unlikely to be shaken in 2013, this internal conflict will distract leaders and encourage them to deflect public anger outward. Finding foreign scapegoats is a time-honored tactic that the Communist Party is likely to repeat this year.
There are plenty of foreign targets to turn to. Territorial tensions are high and are only exacerbated by the U.S. pivot to Asia, which has emboldened countries such as the Philippines to more aggressively push their interests. The largest risk is an increase in nationalism from China toward Japan, especially given the growing tension surrounding outstanding territorial disputes between the two countries.
Ultimately, though, China's attempts to limit information run counter to its stated desire to develop an innovative economy. How can China's handful of vibrant IT firms and internet giants become global competitors while operating under a regime that restricts online information? How can China become a dominant player in the global economy if it is disconnected from the global information society? These are inherent contradictions that the new Communist Party leadership will have to resolve.
On Monday, we'll profile Risk #3: Arab Summer.
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 Stephanie Haffner
Since the start of Europe's sovereign debt crisis, tension has risen in the eurozone as a result of the growing economic divide between the group's northern and southern members. The response to the debt crisis was an ugly trade: Northern countries financed southern debts, but in turn imposed harsh austerity and economic reforms. The policies, however, have triggered ongoing protests that could morph into rising resentment from populations in southern EU member states, and extremism.
The belief in Berlin, Helsinki, and other northern European capitals is that austerity will eventually lead to competitiveness, fiscal sustainability, and growth for southern economies as well as the EU as a whole. So far these hopes remain unfulfilled. In fact, continued austerity will spur increasing resentment and a growing divide that could boost the popularity of extremist parties and threaten the European project. This dynamic will be helped along by a looming identity crisis for mainstream political parties in Europe's southern states, where distinctions between the left and right have begun to blur as sovereignty is further undermined and spending cuts drive domestic policies.
Assuming responsibility for southern debt has allowed Europe's northern countries to essentially take control of fiscal policy throughout the EU. This result has eroded the sovereignty of southern European countries, and that process will be further exacerbated by increased policy centralization at the EU level and the move toward fiscal mutualization. As the eurozone's monetary union is strengthened, fiscal instruments (such as Eurobonds/bills) that rely on pooling fiscal risk with greater burden-sharing could end up being exchanged for even more centralized control of economic policy. And new EU legislation, such as the so called two-pack and six-pack, which give national budgetary oversight power to the European Commission, will permanently lock in austerity
Centralized policymaking at the EU level will further exacerbate the political imbalances between the EU's northern and southern members. The northern states' growing role as the policymakers of the EU means that the south will lose the ability to significantly influence EU-level policies. The traditional democratic deficit that exists between the European Parliament and European citizens is thereby transformed into a deficit between southern European citizens and northern European governments, which is arguably a far more critical divide.
But there is a way to avoid such a mess. Economic integration is clearly necessary to resolve the crisis, but politicians are lagging in their efforts to present a long-term vision for Europe's political and economic future as a union. Policymakers should consider shifting their narrative from one that emphasizes oppressive austerity to one that highlights the importance of solidarity and political integration. This goal may require a new treaty to address the lack of political representation and democratic accountability that has come to characterize much of the current response to the crisis. But the failure to address these important issues will not only diminish the voice of southern Europe and its citizens, but could also heighten the risk of a breakdown in the European experiment.
Stephanie Haffner is a researcher with Eurasia Group's Europe practice.
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By Damien Ma
Though the curious case of blind Chinese dissident Chen Guangcheng has badly embarrassed China's leaders, it has provided them one important benefit -- it has diverted attention from the far more dangerous story of Bo Xilai. Regardless of the outcome in either case, the Communist Party's image has been badly tarnished. For a Chinese government that seems bent on investing in soft power, these last few months have offered clear reminders that soft power cannot be bought. It must be earned.
For a Chinese government that prefers to keep its differences behind closed doors, the Bo Xilai episode is a nightmare, in part because the involvement of the U.S. and British governments in the case has brought an unusual degree of international media scrutiny. (One of Bo's deputies briefly took refuge in the U.S. embassy, and Bo's wife has been implicated in the murder of a British businessman.) China's familiar tools of propaganda have been overwhelmed by frenzied speculation about the case in the Western press and China's social media echo chamber -- yet another reminder that Beijing can no longer afford to ignore Sina Weibo, China's version of Twitter.
The party leadership has dismissed the Bo Xilai saga as a sideshow and Bo himself as an aberration within the country's otherwise upstanding roster of senior officials. But little of China's blogosphere appears to be buying it. Instead, Bo's story signals for many that China remains a corrupt and opaque place, that the unbridled capitalism practiced in China has mainly benefited politically-connected VIPs, and that greed has infected the leadership right to the top.
And though the drama surrounding Chen Guangcheng has given the public something new to speculate about, in some ways, the story reinforces the cynicism that Bo Xilai has exposed. Chen and Bo -- a powerless and once illiterate legal activist and a powerful political scion who long stood above the law -- seem polar opposites. But they have something important in common; both were left without a place to hide when the leadership decided they should be punished.
Few within the country believe that Bo or his wife will have their day in court, reinforcing public fear that average citizens have no real protection within a system manipulated for the benefit of the party. That Chen, like Bo Xilai's deputy, first sought sanctuary in the U.S. embassy underscores a point not lost on the Chinese public: The United States, not China's own government, offers protection of last resort in times of political turmoil.
These stories are engendering a growing trust deficit between the government and the informed public -- the very elites that the party counts as its crucial constituency. A perception of systemic "rot from within" and the lack of legitimacy it implies undermine the regime's monopoly hold on domestic political power.
Despite Premier Wen Jiabao's constant talk of political reform, the last decade of the Hu Jintao/Wen Jiabao administration saw an economy that raced ahead and a political system that changed very little. But to repair this latest damage to its "brand," the party may feel it has to produce some real change. Some within the leadership are already using this opportunity to push for political liberalization. In his closing arguments as premier, an increasingly legacy-conscious Wen Jiabao is making a final pitch for real political reform. But Wen is a lame duck.
Over the course of the next few months, China will introduce a new generation of top leaders. Any political changes they might produce are unlikely to fundamentally recast Chinese politics or to appear soon. But they may soon find that delivering go-go growth is no longer enough. They may find that, particularly in the online public square provided by social media, a growing segment of China's people will expect a new degree of accountability -- and a new kind of change.
Damien Ma is an analyst in Eurasia Group's Asia practice.
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By Alexander Kliment
Vladimir Putin thinks that Russia's elections are over, and that it's time to move on with business as usual. The trouble for him -- and the system of "managed democracy" he has built -- is that Russia's season of elections is just beginning.
In his final address as Prime Minister to Russia's State Duma (the lower house of parliament) on Wednesday, Putin, who will return to the presidency on May 7, explained that in a "mature democracy, after elections are concluded there begins a more important phase of work." He called for unity and an end to the "heightened emotions" that have recently taken hold of Russia's politics.
So much for that. A few minutes later, the entire faction of the left-leaning Kremlin-created opposition party A Just Russia walked out of the hall in response to Putin's defiantly tin-eared response to a question about the disputed mayoral election in Astrakhan. In that city, the largest administrative center in Russia's Caspian littoral, A Just Russia member Oleg Shein has now entered the third week of a widely-publicized hunger strike to protest well-documented fraud in a mayoral vote that he lost on March 4, the very day that Putin was returned to the Kremlin.
The battle in Astrakhan, which anti-corruption crusader Alexey Navalny and other opposition figures have joined, follows a mayoral election in the northern city of Yaroslavl, where a former member of Putin's United Russia (UR) party ran as an independent, built unified support from several opposition groups, shrugged off scathing coverage from local media, and trounced the government's preferred candidate. More than a thousand election observers, mainly from Moscow, arrived to monitor the vote.
The controversies in Astrakhan and Yaroslavl have mainly to do with local issues, and Putin still has pre-eminent control of the country. United Russia, however tarnished by its new sobriquet as the "party of crooks and thieves," maintains its chokehold on the legislative and executive branches at all levels of Russian politics. But these local episodes underscore an emerging national reality: Opposition politics is taking root in Russia, and the regions will be the most fertile ground.
Despite Putin's wishful thinking, election season is far from finished. Later this year, regional legislative elections will be held in a half dozen localities. A similar number will vote in 2013 and 2014. By then, Russia's opposition forces may well have coalesced into a coherent national force, and voters will choose a new city council for Moscow, a city that Putin actually lost in last month's election.
Moreover, the Duma is expected to approve a bill in coming weeks that will reintroduce direct election of regional governors, though the president can still "filter" the candidates. Several regions could elect new leaders as early as this fall.
These elections will take place at a moment of unprecedented civil society activism, a trend that will cast a bright light on Russia's brand of democracy. Candidates for posts ultimately beholden to the Kremlin for their authority and resources must court an electorate increasingly skeptical of the prevailing power elite. Putin's "vertical of power," the system he has used to maintain political control across the country, already brittle thanks to the weakness of Russia's governing institutions, could begin to show real signs of stress as an increasingly restive public watches election results with new interest.
If so, the country's nascent opposition will have to begin to build a much broader infrastructure to help its leaders speak to a national audience about local problems. Change won't come quickly. Putin's approval rating stands at 68 percent, and Russia's economy is performing reasonably well. Moreover, few key regions face legislative or possible gubernatorial elections in coming months. But at the regional level, increased activism and attention from civil society and opposition groups, coupled with a threatening crisis of legitimacy for United Russia, could introduce a new element of unpredictability into local politics and, by extension, into center-regional relations.
Russia's opposition has a lot of building to do, but at least it now knows that a growing number of Russians are paying attention.
Alexander Kliment is an analyst in Eurasia Group's Eurasia practice.
ALEXEY DRUZHININ/AFP/Getty Images
By Jiakun Jack Zhang
In an attempt to reorient its economy toward consumption and allow its masses to share more of its record growth, China is quietly undertaking the largest social welfare project in human history.
Decades of rapid economic growth have created vast inequalities, and populism is consequently on the rise. China's 99 percent feel left out of their country's rapid development and are increasingly lodging their complaints online. A recent study of Chinese internet trends in 2011 reveals a shift away from nationalism toward issues of public welfare. The government is paying greater attention to social media and taking notice of this trend. In 2011, mentions of Weibo (Chinese twitter) in The People's Daily (the Party mouthpiece newspaper) increased by an astonishing 83,900 percent.
In its battle to retain political legitimacy, the Chinese Communist Party has announced that it will sacrifice growth for development quality. It realizes that raising the GDP growth bar is no longer adequate and has launched its own version of the New Deal by introducing ambitious reforms and hiking spending on affordable housing, social security, healthcare, and education. If China's leaders bungle this massive undertaking, it will spell trouble for the country's state capitalist system.
If they get it right, the next five years, covered by the 12th Five Year Plan (FYP), could prove to be the most transformative in modern Chinese history. As Beijing attempts to extend the social safety net to cover all of its 1.3 billion people, it could reshape China's economic landscape by furthering urbanization, bolstering domestic consumption, creating a better-educated workforce, and improving social stability. There are two simultaneous goals: preserve the legitimacy of the political system and contribute to the country's economic re-balancing.
For a nominally communist country, China's lack of a social safety net is somewhat ironic. When Beijing dismantled the country's communes and privatized state-owned enterprises in the 1980s and 1990s, China's ‘iron rice bowl' welfare system collapsed. The national savings rate rose during the 2000s as Chinese households struggled to pay for increasingly expensive housing, healthcare, and education while putting away enough for retirement. Ordinary citizens had little choice but to deposit their savings into state-owned banks, earning negative real returns. The savings glut fueled the country's export- and investment-driven model, but household consumption lagged.
This model seemed to work until the global financial crisis shook Beijing out of its complacency. After several abortive attempts at reform over the past decade, China's leaders finally seem committed to mending the country's broken social safety net. The government plans to construct seven million affordable housing units in 2012 alone-the project is estimated to cost 1.3 trillion yuan ($198 billion) and aims to make 20 percent of the housing market "affordable" by 2015. Last year it implemented regulations that will provide basic pension and insurance coverage for all citizens and ramp up spending by 21.9 percent to 575 billion yuan ($91 billion). A new set of health care reform goals were set in the 12th FYP: universal health care, drug pricing reform, and public hospital reform. The 2012 appropriation for healthcare is 203 billion yuan ($32 billion), an increase of 16.4 percent from 2011. Education spending is slated to expand by 16.4 percent to 378 billion yuan ($60 billion). For more details, refer to the Ministry of Finance Budget Report for 2012.
Yet pushing through reforms will prove a significant challenge for China's fifth generation of leaders. The window for reform is rapidly closing and implementation will be hindered by entrenched interests and bureaucratic inefficiencies at the local level. China's economic growth is slowing and its demographic advantage is fading. The government acknowledges that while its revenues are projected to shrink, its expenditures will expand in order to finance these new entitlement projects. The Communist Party risks losing political legitimacy and will confront growing social unrest if these efforts stall or fail. Political reforms may be the only way to create a civil service capable of administering these programs effectively (and without corruption). Having recognized that headline-grabbing GDP growth isn't enough, China's political system will have little to fall back on if it can't make this New Deal work.
Jiakun Jack Zhang is a researcher in Eurasia Group’s Asia practice.
PETER PARKS/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 Roberto Herrera-Lim
Secretary of State Hillary Clinton's visit to Myanmar this week was a public relations coup for that regime and for Western advocates of engagement. The New York Times featured a photo of Clinton smiling with freed opposition leader Aung San Suu Kyi, both clad in white. But while the visit and Myanmar's incremental reforms have ignited hopes that relations between that nation and the West could thaw considerably in the near term, some skepticism is appropriate regarding how quickly things will change. The regime will continue balancing reform with control, suggesting that progress will be slow and gradual. That will not stop the U.S. from offering diplomatic and administrative concessions to the new Burmese government, but in the absence of major reforms in the near term, Washington will be too consumed by other issues to take up what would be a contentious congressional debate on sanctions.
Myanmar's reform process began sometime in 2007 or 2008, possibly in the wake of the 2007 Saffron Revolution of Buddhist monks. Barack Obama's presidential win in late 2008 secured buy-in for that process within the military junta; the expectation was that the Obama administration would be more open to dialogue and engagement than previous U.S. administrations had been. Since then, President Thein Sein's government has begun implementing some of the country's most serious political reforms in a decade. It has allowed more open discussion of political and economic reform, suspended construction of a Chinese-funded dam due to the population's concerns about its environmental side effects, and -- most prominently -- freed Suu Kyi.
But only guarded optimism is warranted. First, the reforms being implemented are calculated moves, rather than signs of any wholesale embrace of democracy. The government -- which includes proxies of the former junta -- is unlikely to adopt reform for reform's sake, but instead as a means of soothing internal tensions and reducing external threats to the military. As such, the carefully planned changes can be read as a way for the government to maintain control and protect the aging, retired members of the former junta.
Second, Myanmar has a history of stalling or reversing reforms. In 2004, political infighting led to the ousting of the relatively reformist prime minister Khin Nyunt and stalled the "roadmap to democracy" with which Myanmar had hoped to establish credibility with Washington. (This setback followed the 2003 attack on Aung San Suu Kyi's convoy by armed groups suspected of acting on behalf of hardline military factions.) And several times -- in 1992, 2004, and 2005 -- former junta leader Than Shwe released political prisoners but followed up with nothing else. Similarly halting reform won't be enough for Washington, which will likely insist on major moves such as the release of most political prisoners, an end to the persecution of minorities, and free and fair elections in 2015 before lifting sanctions. While this may happen, it will take some time.
In the meantime, incremental reforms could keep improving the West's informal engagement, which might in turn reinforce the regime's good behavior. Suu Kyi, who was the most visible sign of the country's slide into authoritarian rule, will be a critical determinant of this diplomatic trajectory. Indeed, there will be no more important signals for Washington than those coming from her about the pace of Burmese reform and whether or not the time is right to lift sanctions.
Roberto Herrera-Lim is a director in Eurasia Group's Asia practice.
Paula Bronstein/Getty Images
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 Bob Herrera-Lim
The strong win by Pheu Thai (PT) Party representing the allies of former prime minister Thaksin Shinawatra at the July 3 parliamentary elections will allow the country to avoid any serious near-term instability. The incoming PT-led coalition government will have about 300 seats out of 500, which makes it much harder for anti-Thaksin groups to reduce the new government's majority, either through disqualifications or defections, and engineer a legal takeover as they did in 2008.
In the meantime, the military and the crown will pragmatically avoid any outright provocation or direct confrontation, a strategy the PT will also pursue. Army chief Prayuth Chan-ocha is strongly anti-Thaksin, but he cannot move without justification, such as a popular or political movement similar to large anti-Thaksin rallies in 2006. Prayuth will likely negotiate some near-term deal that avoids a major shuffle of military commanders and secures Thaksin's agreement not return to the country without proper legal proceedings.
The monarchy will be similarly constrained. The king appears disinterested in current politics, so it is the queen and Privy Council President Prem Tinsulanonda who will guide the monarchy's strategy. They too can only be effective if there is some "popular" movement that has effectively mobilized against the government. In the past, the Yellow Shirts (organized and financed by media mogul Sondhi Limthongkul) provided this momentum. But Sondhi's relationship with the military and the Bangkok elites has eroded significantly since 2008 when the Yellow Shirts blockaded the airport and precipitated a political crisis.
There has been some speculation that the PT's political agenda could provoke the military or the monarchy, but this risk remains relatively low. All signals indicate that the PT is aware of how any early and public attempt to secure Thaksin's return, or ban party dissolution could lead to an early and distracting political battle. Prime Minister-elect Yingluck Shinawatra was quick to emphasize national unity and deemphasize an immediate return by her brother. Laying the legal groundwork for his return, managing the political dynamics around it, and negotiating with the other elite factions will likely be done over the next few months behind the scenes. Constitutional change will also be pursued carefully to avoid triggering a similar fight.
Whether this temporary peace will lead to longer-term stability remains uncertain. The anti-Thaksin factions among the elites may now recognize that elections will sometimes deliver results they disagree with, but which they must respect. But they may instead maintain their belief that the popular vote is unreliable, that the electorate is susceptible to promises of economic largesse and populist rhetoric, and that when necessary the results must be overturned. The future of Thai democracy will be decided by the outcome of that decision.
Bob Herrera-Lim is a director with Eurasia Group's Asia practice.
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By Wolfango Piccoli
British voters are set to reject electoral reform in the May 5 referendum and deal a blow to the incumbent Conservatives and Liberal Democrat Party (LDP) in local and regional elections held concurrently. The fight over the electoral reform will damage the relationship between the coalition partners, but the government will survive and early elections are unlikely.
The referendum lies at the heart of the power-sharing deal struck between the Conservatives and the LDP. The LDP demanded the vote as a key condition for joining the coalition after the Tories, who want to retain the existing first-past-the-post system, failed to win a clear victory in last year's general election. The Labour party is split on the issue, but its leader Ed Miliband supports a system in which voters rank candidates in order of preference.
Local government elections will also be held in Scotland, Wales, and much of England, providing the first comprehensive indication of how the main parties have fared since last year's general election. Labour is expected to make the most gains, with some pollsters suggesting the party could gain more than 1,000 council seats. Prime Minister David Cameron's Conservative Party is expected to suffer big losses, possibly as many as 900 seats. The LDP meanwhile could lose control of around half of the 22 councils it is defending, possibly including prized possessions such as Bristol, Hull, Newcastle, and even Sheffield, where party leader Nick Clegg's seat is located.
In such a scenario, Nick Clegg will have to contend with disgruntled party members (mainly from the left of the party), who may step up their criticism of the coalition and he may even have to fight a leadership challenge. But there is no viable replacement and he will continue as party leader. To recover, Clegg is likely to champion (with the prime minister's consent) an accelerated reform for the House of Lords, push ahead with his social mobility agenda for higher education, and fight for changes to the National Health Service.
The Liberal Democrats will not, however, leave the coalition. The party would cede all credibility if it were to walk away. Also, the LDP is down in the polls, which provides no incentive to provoke an early election. Neither will the Tories be tempted to end the relationship. They are unlikely to win a parliamentary majority in a snap election. But it will not be business as usual after 5 May. Clegg's party will strike a more independent tone, reminding the Conservative Party that it owes the LDP for its ability to govern.
Wolfango Piccoli is a director in Eurasia Group's Europe practice.
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By Eurasia Group's Africa practice
Over the next couple of weeks, The Call will be detailing our political and economic expectations for regions around the world. First up: Africa.
The big story in Africa next year will be elections. In total, Africa will hold 17 presidential contests; a range of local, regional, and parliamentary votes; and a referendum on independence in southern Sudan. Not all political actors will seek legitimacy via the ballot box or play by the rules, but this high number of elections highlights the continent's momentum toward democratization.
Elections in Africa often generate uncertainty -- by intensifying power struggles among elite factions, between reformist and hard-line elements, and between incumbents and the opposition. Nigeria's election in April 2011 is likely to be the continent's most hard-fought. A bid by current President Goodluck Jonathan, a southerner, to secure the ruling party's nomination for another term threatens to upset the delicate power balance between the country's north and south and to derail crucial oil and power-sector legislation.
Zimbabwe is at a crossroads. Political reforms -- including a constitutional referendum -- are stalled. The landmark power-sharing agreement between President Robert Mugabe's party, ZANU-PF, and the opposition Movement for Democratic Change (MDC) expires in February 2011, but the timing of elections is still uncertain. ZANU-PF will go all out to avoid another power-sharing pact, but a disputed election is possible. If Mugabe can hold elections in early 2011, ZANU-PF has a good chance of retaking sole power, which would kill Zimbabwe's tentative rapprochement with Western nations and seriously dampen its prospects for economic recovery. A postponement (perhaps until 2012) would ensure a more credible process and give the MDC a decent chance. In the meantime, the election battle will heighten economic policy risks.
In the Democratic Republic of the Congo (DRC), the administration of President Joseph Kabila will likely rig the voting in late 2011 to ensure his reelection. But one challenger, Vital Kamerhe, could pose a limited threat if the government allows him to run. On the economic side, management of resources is expected to improve incrementally, especially at the central bank, the finance ministry, and donor coordination bodies.
Although Uganda's President Yoweri Museveni is likely to win reelection outright in February (perhaps thanks to his newly displayed musical talents), challenger Kizza Besigye may force a runoff. Uganda's imminent oil wealth has ratcheted up the political stakes and could darken prospects for a peaceful election. But despite complaints from the opposition about election rigging, the international community will likely accept the results, and the status quo will prevail. This will reassure investors in East Africa's next oil-producing state. But the combination of a relatively competitive election, the potential for violence, and looming oil windfalls could each make Uganda harder to govern.
A different type of vote, southern Sudan's referendum on independence, is likely to generate the most media attention in early 2011. Despite logistical challenges, the referendum is almost certain to take place -- though with minor delays -- and a vote in favor of independence is a foregone conclusion. But the separation may be difficult to effect. During the six-month transition period before statehood and a final agreement on oil revenue sharing, borders and citizenship rights must be negotiated. The contested region of Abyei, which has its own referendum, could become an early flash point.
This post was written by analysts in Eurasia Group's Africa practice.
PETER MARTELL/AFP/Getty Images
By Roberto Herrera-Lim
Western governments recently cheered Aung San Suu Kyi's release, but don't expect any major changes to their Myanmar (formerly known as Burma) policies in the near term. By contrast, Asian countries will probably increase their level of engagement, no matter what the country's politics, because they want access to its natural resources. So what does this all mean for Myanmar's relations with the East and West?
Divining the intentions of Myanmar's generals is never easy, especially their calculations around the release of the country's most famous dissident. It could be an act of economic desperation, the result of a power play between the old guard and relatively more moderate factions within the military, or simply the regime's efforts to achieve some form of normalization. Regardless of the motives, however, the effects are clear: While the West remains distrustful of recent moves, other Asian countries will increase their dealings and investments with Pyinmana, giving these governments greater leverage with the generals who effectively run the country (albeit in civilian clothes). In other words, there will a widening gap between how the West and Asia deals with the Burmese regime, for the next year at least.
The current U.S. administration, whose priorities in Asia lie elsewhere, will not expend much political capital on the country. Influential pro-democracy constituencies in Washington can easily find arguments for continued sanctions and against engaging with the country's nominally "civilian" leadership. While the country held its first general election in 20 years on Nov. 7, it was not free, fair, nor credible. Furthermore, most Myanmar watchers are mindful of May 2003 when, barely a year after Suu Kyi's first release from detention, an armed group apparently recruited by the regime's front, the Union Solidarity and Development Association (USDA), attacked her convoy, killing about 100 people. Senior generals seen as responsible for the attack are now in the new parliament as part of the government-sponsored majority belonging to the Union Solidarity and Development Party (USDP), the successor of the USDA. ??
Meanwhile, many countries in Asia (including China, India, and Thailand) will continue to pursue policies toward Myanmar based on their economic interests and a sense that the country is an arena for strategic competition with rivals. China is already Myanmar's de-facto regional patron. Other countries are now pursuing postures more similar to Beijing's than to Washington's, which, in turn, eases the environment in Asia for further Chinese pursuit of Burmese resources such as natural gas. This year, for instance, CNPC started construction for its oil and gas pipeline projects from Arakan (Rakhine) state off the Andaman Sea to the southern Chinese province of Yunnan. The gas pipeline will draw its supply from the Shwe fields off the Arakan coast in the Bay of Bengal and transport it to Kunming and Nanning in China. The oil pipeline, meanwhile, will transport oil offloaded by tankers from the Middle East at Ramree (Maday) Island in Kyaukphyu to Ruili in China's Yunnan province; it will be able to carry roughly 10 percent of China's imports from the Gulf. For Thailand, meanwhile, Myanmar supplies about a fourth of Thai gas needs, and the amount is expected to increase by 2013, based on new agreements by Thai state energy company PTT.
The next few months will be critical for Myanmar's political and economic trajectory. In the days after her release, Suu Kyi was understandably vague about her plans. She did, however, emphasize "national reconciliation" and flirted with the line that Western sanctions might need to be rethought. Increasingly, Suu Kyi will likely test the limits of the government's tolerance and willingness to pursue political reform. But she'll have to be careful, as the generals will probably be assessing whether their experiment of releasing Suu Kyi succeeds -- and they'll recalibrate as necessary. If they sense that increased instability is the likely outcome of her freedom, the leadership will likely revert to old practices, including increasing the military's role in maintaining order and possibly finding an excuse to again arrest Suu Kyi. On the other hand, if Myanmar's leaders believe their gamble has paid off -- and that the economic and diplomatic gains from her release outweigh the risks to their control over the country -- the pro-democracy movement could be given some breathing room. In this case, if the regime can claim it has fulfilled former prime minister Khin Nyunt's seven-step roadmap (announced in 2003), then a more significant, though slow, thawing of ties with the West becomes more likely. This process will, of course, take time. But if the momentum generated by Suu Kyi's release is sustained, some change might become a more realistic expectation within a couple of years.
Roberto Herrera-Lim is a director in Eurasia Group's Asia practice.
By David Bender
What exactly did Iraq wait 8 months for?
It's been seven weeks since Iraq smashed the record for the longest period of time between an election and the formation of a government. But last week there was finally a breakthrough of sorts between the country's squabbling political factions. It's not yet a done deal, but it's now finally possible to speculate about what the next Iraqi government will look like -- and time to ask the question of whether it was all worth the wait.
The deal struck last week between the Shia-dominated National Alliance, Sunni-backed Iraqiya, and the Kurdish alliance provides the basis for the next government. But it isn't a basis for a stable government. The agreement was an attempt to satisfy everyone in the short term, while delaying decisions on important political issues further into the future. The next government is likely to have little policy coherence, much infighting, and numerous contradictory agendas. That's a troublesome dynamic given that Iraq faces an impending onslaught of tough technical and political questions in 2011. The Kurds will press hard for progress on their territorial issues and their right to sign their own oil contracts, provincial governments will call for greater shares of the profits from Iraq's oil and gas, al Qaeda is attempting to reassert itself going after soft targets, and someone competent will need to direct and oversee the upcoming massive infrastructure expansion needed for the growing Iraqi oil industry.
The outlook for a government capable of managing all these challenges is not good, and the process that got us here was chaotic. Nouri al Maliki will remain prime minister after he skillfully navigated the long political limbo by using his incumbency to project a sense of inevitability that he would retain the premiership. This occurred despite the fact that nearly every other political bloc in the country despises him. Maliki's hold on the job was finally sealed when Iran brokered a deal in Qom, the Iranian city home to many of that's country's senior religious leaders, between Maliki and followers of firebrand Iraqi cleric Moqtada al-Sadr, who had previously declared they would sooner support the devil as prime minister. It's not clear what the Sadrists have been promised in exchange for their support, but they are likely to be a meaningful player in the next government. That's bad news for virtually everyone, because the Sadrists' hard-line nationalism, religious extremism, capacity for violence, and generally uncompromising attitude will make them a disruptive force in Iraqi politics.
But Maliki needed more than just Sadrist support to gain majority backing in parliament. He also looked to the Kurds, who had enough seats to give him a comfortable majority. The Kurds responded with a long list of demands, but ultimately were likely to support him. The United States, which had been keeping its distance from talks, feared that Iraq was heading toward a narrow Shia-Kurdish government that would exclude Sunnis from any meaningful political participation, increasing the risk of a spike in sectarian violence. Washington began working feverishly behind the scenes to push Iraqi politicians to find a compromise that would bring Iyad Allawi's largely Sunni Iraqiya into the next government. So the United States succeeded, sort of.
The White House and other leaders hailed the "power-sharing" agreement that would permit a national unity government to be formed when Parliament convened on Nov. 11. How much power will be shared remains unclear. In the deal, Iraqiya was offered the position of Speaker of Parliament, while Jalal Talabani, a Kurd, would remain president. For Iraqiya, which actually won two more seats than Maliki's State of Law, being given what is perceived as the third best position in the government was an insult. This despite the fact that the speaker, who has control over legislation in the parliament, is arguably more influential than the president, whose powers are largely symbolic. Under the deal, Allawi is to be named head of a newly created national security policy council, which in theory will check Maliki's control over the security forces.
But formally changing the chain of command in Iraq would require a highly unlikely constitutional change, and it seems unlikely that Maliki will ultimately agree to a significant reduction in his powers. He has argued that the new council will function as an advisory panel with no independent authority. If Allawi decides he is powerless in his new position, he could resign and become a forceful leader of the opposition.
Between an unclear Iraqiya role, an uncomfortably large Sadrist contingent, rising Kurdish demands, and no unity of purpose among any of the political groups, the prospects for the next government are not great. But the overall situation in Iraq will probably improve anyway. The next government isn't going to resolve much of Iraq's deep social and political dysfunction, but having it in place will finally allow the oil sector, budget, and infrastructure projects to begin to move ahead.
Was it worth the eight (soon to be nine) month wait? No.
But is it a good thing that there's likely to be a government by the new year? Absolutely.
David Bender is an analyst in Eurasia Group's Middle East practice.
SAFIN HAMED/AFP/Getty Images
By Maria Kuusisto
While Barack Obama's travels are focusing international media attention on India this week, rival Pakistan is on the brink of major political change. Increased violence, this summer's flooding, and the aftermath of the global recession has left most Pakistanis feeling increasingly insecure, and President Asif Ali Zardari's government has done little to ameliorate these anxieties.
Now it seems that just two years after the fall of former president (and general) Pervez Musharraf, the military may once more intervene. Only don't expect a coup like the one that brought Musharraf to power in 1999. Despite a long history of meddling in Pakistan's politics, the army is likely to stay behind the scenes this time and force the government to improve governance or face significant reshuffling.
The evidence pointing to intervention is unusually strong at the moment. Pakistan is beset by problems-political, economic, social, and security-related. Zardari's ruling Pakistan Peoples Party (PPP) is distracted by its battle with a hostile supreme court and largely disinterested in governing. The government has been unwilling and unable to introduce urgently needed financial reforms, which are necessary to bring the country's runaway fiscal deficit under control. Zardari has also failed to increase revenue collection by introducing a value-added tax. Instead, Islamabad has been resorting to a variety of quick-fixes, such as borrowing from the state bank, to finance its growing spending commitments. These moves are undermining the economy, hindering recovery, and fuelling inflation.
Meanwhile, social tensions-always a threat in this fractious, multiethnic country-are running high. People feel abandoned by the government: They're struggling to support themselves economically and afford basic food stables and services. These frustrations are manifesting themselves in protests, violence, crime, and terrorism. The law-and-order situation is particularly volatile in Karachi, the largest city and commercial capital. More than 1,200 people have been killed in the city's recurring waves of politically motivated clashes between rival groups and targeted killings this year. Hence, more and more of the public feels that the PPP's lassitude is leading to anarchy and undermining Pakistan's national interests.
The country's elites are looking for someone -- anyone -- to get them out of their current fix. Neither the PPP nor the opposition Pakistan Muslim League-Nawaz (PML-N) are up to the job of challenging and replacing Zardari. The president is highly skillful in intimidating his enemies and incentivizing his allies within the PPP, making it hard to form a united front inside the party against him. Moreover, the PML-N is more comfortable in being an opposition force and remains reluctant to take over the responsibility of running the country. That leaves the army as the only viable challenger. Pakistan's elites have begun calling on the military to intervene for the sake of national interest, before it's too late.
In the old days, everyone in Pakistan knew what this meant: a coup and a military government. After all, a military government has run Pakistan for more than half of its history. This time, however, Chief of Army Staff Ashfaq Pervez Kayani knows that stepping in directly would damage the military's domestic and international reputation, which he has carefully rebuilt since Musharraf's resignation in 2008, and could trigger a backlash. More importantly, Kayani knows that the military can't afford to jeopardize the aid it gets from Washington -- money (to the tune of $7.5 billion over five years in civilian assistance and $2 billion in military assistance) that the United States has linked to Pakistan's ongoing democratic process. The military's resources are already strained by its counterterrorism operations and flood relief efforts and it desperately needs those dollars from Washington.
Yet Kayani also knows he can't just sit and watch Pakistan's deepening crisis from the sidelines. He's under increasing pressure from others in the military and the country's influential elites -- who comprise his political power base -- to do something. In Pakistan, it is often said, only half-jokingly, that the country doesn't have a military, the military has a country. Now, the army's leadership is becoming worried that it may not have a country for long if it lets the political, economic, and security situation further deteriorate. As a result, expect Kayani to begin putting pressure on the PPP to improve governance, but from behind the scenes. The general, unlike his predecessor, will carefully evaluate the political mood (both domestically and internationally) and follow constitutional processes in challenging the current political set-up.
So change is coming to Pakistan, and the military may soon be sitting in the director's seat. But expect less drama than in its past performances; most of the action will stay behind the scenes for now.Maria Kuusisto is an analyst in Eurasia Group's Asia practice.
By Nicholas Consonery
We all know that Beijing is dedicated to managing the flow of sensitive information in China. Whole websites are dedicated to discerning the government's propaganda strategies and to uncovering the specific stories that Beijing is trying to control.
But it isn't often that China's own leaders are censored these days--which is exactly what happened to Premier Wen Jiabao last week.
On Oct. 3, Premier Wen granted an extensive interview to CNN's Fareed Zakaria. During the dialogue (well-worth the half-hour), Wen raised eyebrows by arguing that the Chinese people's "wishes for and needs for democracy and freedom are irresistible." Wen promised that, in pursuing these wishes, "I will not fall in spite of a strong wind and harsh rain, and I will not yield till the last day of my life."
Wen's comments were covered widely in the Western press. But in China, such coverage was stifled in the days following his remarks. On Oct. 7, the Wall Street Journal reported that there had been "an official news blackout" of the interview.
Since then, abbreviated versions of it have been popping up in sanctioned Chinese media. The coverage captures the gist of Wen's comments, especially focusing on his four uncontroversial tenets of political reform: "To let everyone lead a happy life with dignity. To let everyone feel safe and secure. To let the society be one with equity and justice. And to let everyone have confidence in the future."
Contrary to popular perceptions, China's leaders are not outright opposed to political change. Small-scale local elections were initiated in the early 1980s and still happen today, anti-corruption campaigns are unending, and in recent years, party elders have talked publicly and at great length about the importance of intra-party democracy. In other words, more transparent, responsive policymaking and career mobility within the existing Communist party structure are already on the table. In the past year alone, the government has been working to convey a greater responsiveness in handling long-standing grievances like forced housing relocations and is moving toward mandatory public disclosure of the salaries and assets of government officials.
Wen's comments don't look so controversial in this light. So why would the Party's propaganda mechanism instinctively suppress them?
One argument I've heard recently is that Chinese government officials are deft at conveying different messages to domestic and foreign audiences. In other words, maybe Wen was telling us just what we wanted to hear. "If Wen wanted his comments covered," a good friend in the U.S. government argued yesterday, "I think it's safe to say they would have been." This seems plausible. All politicians try to tailor their words to fit their respective audiences. But that does not explain why Wen has already spoken publicly, in China, about continued political reforms several times this year.
Another popular theory is that there is an elite power struggle going on in Beijing, and that Premier Wen is personally working to drive political reform in the face of mighty opposition as he approaches the end of his term in 2012. By this line of thinking, Wen's opponents would have stifled his comments so that the Chinese public wouldn't expect any rapid changes. "Fire's real beauty," as Ray Bradbury wrote in Fahrenheit 451, "is that it destroys responsibility and consequences."
Perhaps. But it seems more plausible that the immediate stifling and subsequent careful management of Wen's comments simply reflect the transitory political environment in China right now. Keep in mind that Beijing is moving toward an unprecedented leadership transition in 2012. Seven of the top nine members of the Chinese Communist Party will be replaced along with hundreds of lower level Party and government officials.
We assume that the top leadership beyond 2012 has been generally agreed on (with some exceptions). But there's no question that most officials have strong incentives to avoid controversy in the lead-up to this transition. Any black mark could undermine their chances to get top spots in the next administration, and any perceived weakness could be exploited by rival factions for their own gain. Meanwhile, it will be getting gradually more difficult for the current leadership to mobilize support as different groups in the Party, government, and military coalesce behind their preferred candidates for the top spots in 2012.
In this tenuous environment, it's no wonder that Beijing's innate response to any talk of difficult political reform is to freeze up. Many in the Chinese government, perhaps including Premier Wen himself, likely do support the idea of political reform in spirit. But many others do not. And the Chinese policy environment does not seem conducive to much compromise between these groups right now. I wouldn't expect much boldness on political reform until we're well past this transitory period.
Nicholas Consonery is a China analyst at Eurasia Group.
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
By Ana Jelenkovic and Willis Sparks
You may not have heard much about the growing violence in Kyrgyzstan, an impoverished and corruption-plagued former Soviet republic that's home to 5.5 million people and a delicate ethnic balance that has now completely broken down. But the deteriorating security situation and growing ethnic conflict there matters-for the people who live there, for the region, for Russia, and for the United States.
Kyrgyzstan has been in turmoil since April, when a bloody confrontation between an increasingly unpopular government and opposition activists ousted President Kurmanbek Bakiev, who is now in exile in Belarus. A government led by interim president Roza Otunbaeva took power, but it hasn't been able to establish full control in the south of the country, home to most of Bakiyev's supporters and much of the country's Uzbek minority.
There's a long history of ethnic tension in the region -- the current unrest is reminiscent of a 1990 bloody conflict which was resolved with Soviet troops -- and the power vacuum that emerged in the region in the wake of Bakiyev's ouster in April has helped reignite ethnic resentment.
Last weekend, Kyrgyz gangs, began attacking ethnic Uzbeks in house-to-house raids. The interim government was unable to contain the violence, which quickly spiraled out of control. Reports of large-scale rape and murder have drawn the attention of neighboring governments, international institutions, Washington, and Moscow.
Why should the world be watching more closely?
First, what began as thuggery reached ethnic cleansing levels of violence. While the situation appears to have calmed down somewhat after a nasty weekend, violence is likely to continue. Under attack, huge numbers of the country's Uzbeks have fled in fear for their lives. U.N. officials have called on Kyrgyzstan's interim government to provide refugees with safe passage. It remains unclear if state officials can or will do that.
Second, the current violence is starting to look a bit like the oil spill in the Gulf of Mexico: It won't stop until someone stops it. The new Kyrgyz government appears to believe that only Russian soldiers can accomplish that and has called on the Kremlin for help. Though interim leader Otunbaeva today says that international peacekeepers are no longer needed, it is clear that international support is necessary to ensure the safe passage of refugees and the delivery of humanitarian aid to all communities in need.
Third, Russia remains reluctant to wade into a conflict that might turn into a quagmire. But the risks generated by violence so close to Russia's borders and the fear that the country could become a safe haven for anti-Russian militants/terrorists will probably compel Moscow to move forward.
Fourth, to persuade a reluctant Russia, the Kyrgyz foreign minister has now suggested that his government might be willing to revisit a decision to extend the lease on an airbase used by U.S. forces as a vital line of supply for NATO forces in Afghanistan. Moscow holds the cards and could insist that the Americans leave. In what has become typical for the provisional government, individual leaders are sending mixed signals. Otunbaeva, for instance, insists that the lease will be extended, and Russia and the U.S. share an interest in the stability of Afghanistan.
Finally, the governments of the largest of the Central Asia republics-Uzbekistan and energy-rich Kazakhstan and Turkmenistan have done well for themselves politically and economically by playing Russia, America and China off one another. If Russian troops enter Kyrgyz territory in large numbers, that delicate balance could be overthrown in Russia's favor. At the very least, the leaders of countries neighboring Kyrgyzstan will have to weigh Russia's capacity for mischief with each decision of regional importance.
Things are looking up for those in Moscow who would like to rebuild Russian influence across former Soviet territory. A brief war with Georgia in August 2008 proved that Russia could assert itself with a minimum of lasting international outcry. The most recent presidential election in Ukraine produced a more Moscow-friendly government in Kiev. Now a Central Asian government is offering the Kremlin concessions in return for an armed intervention in its territory.
Obscure though the players may be, this conflict is one to watch.
Ana Jelenkovic is an analyst in Eurasia Group's Europe and Eurasia practice. Willis Sparks is a global macro analyst.
VIKTOR DRACHEV/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.