Elections

By Eurasia Group senior adviser Jun Okumura and analyst Ross Schaap

The Democratic Party of Japan's (DPJ) huge victory last Sunday will bring considerable domestic policy change. That's where the DPJ's focus will remain for the foreseeable future. Ironically, though, the first policy crunch on a specific issue may come on national security, an area where the Liberal Democratic Party's (LDP) efforts to brand itself as the party most capable of protecting Japan from North Korea, terrorists and pirates fell mostly on deaf ears.

Yukio Hatoyama, the DPJ prime minister to be, has vacillated on the continuation of the refueling operations in the Indian Ocean in support of the NATO effort in Afghanistan. His current position is that Japan will terminate the operation when the current authorizing law expires in January but that he will offer President Obama something better on Afghanistan.

Logic tells us that there are three options: put a substantial number of non-combat personnel on the ground; pay a lot of money; or opt for some combination of the first two. Some DPJ members -- most prominently Ichiro Ozawa -- have long wanted to take the first road and assist the Afghan effort with people on the ground. But that's a risky proposition given the risk-averse Japanese public and the poor conditions there that, moreover, show few signs of improvement any time soon.

Besides, Japan put up a lot of money ($13 billion) for the Gulf War and was widely disparaged for its "checkbook diplomacy"; nobody wants to repeat that painful experience. The refueling operations are a highly effective way for Japan to maintain its seat at the table with minimal financial cost and physical risk. In fact, there have been indications in the recent past that Hatoyama wouldn't mind seeking an extension on his own. The LDP will, of course, be happy to oblige him; which is precisely why this will be such a politically painful course of action for the new administration. Whichever course Hatoyama decides to take, he must make up his mind and take action during the autumn Diet session. Current refueling operations are authorized through January but renewed authorization needs to come in well before that deadline for the Maritime Self-Defense Force to manage deployments.

And besides the refueling operations, it appears the issue of US troop redeployment within Japan will also hit the new government early on. As much as it might prefer to focus on domestic political change, foreign policy matters that have to be addressed will remain a draw on the new cabinet's time.

TORU YAMANAKA/AFP/Getty Images

By Eurasia Group analyst Maria Kuusisto

On August 20, Afghanistan held its second presidential elections since the 2001 ousting of the Taliban. Unfortunately, that's where the good news ends.

From the outset, the elections faced two major challenges. First, the election commission struggled to organize them, and completing the voter registration process proved particularly difficult. Second, the Taliban threatened to sabotage the elections through a campaign of violence and intimidation. In fact, the government was forced to postpone the elections from May to August, raising fears of a more indefinite postponement. But the elections went ahead as planned, which is extremely important because it keeps the post-2001 state-building process alive. A further postponement could have suggested a victory for the resurgent Taliban, suggesting that the group could control the country's political process and badly undermining confidence in the government.

While the fact that the elections were held is a positive development, the end result is likely to lack legitimacy. President Hamid Karzai probably gained more than 50 percent of the vote in the first round of the elections, which means that a second round is not needed, but there is a perception that he overcompensated for his declining popularity by engaging in wide-scale rigging and manipulation. He allegedly used government institutions, such as the election commission, and his supporters to inflate the voter turnout and the pro-Karzai vote in the southern and eastern provinces, which are his main constituencies. While observers are suggesting that the voter turnout was only around 10 percent in these provinces, the government suggests that it was a staggering 50 percent to 70 percent. The election commission is investigating some 800 complaints of rigging and manipulation. Although the runner-up, former foreign minister Abdullah Abdullah, is unlikely to be able to challenge the result, he has emerged as an increasingly powerful opposition leader and credible alternative to Karzai.

Karzai's reelection as president is unlikely to improve the Afghan government's effectiveness. Since 2004, Karzai has appointed a set of controversial politicians and warlords to influential federal and provincial positions, and given them a free hand to run their respective ministries and areas. This situation has prevented the implementation of urgently needed reforms and development programs, while fuelling mismanagement and corruption. Karzai is unlikely to be able to break free of this cycle -- of bad appointments and bad governance -- because he owes his reelection to the support of another set of political thugs. Meanwhile, the United States' ability to maneuver the situation is limited. Washington is trying to improve effectiveness by installing a powerful chief executive in the government, possibly former finance minister Ashraf Ghani, and by appointing civilian advisers to key ministries and departments. But Karzai and his supporters are dragging their feet against institutional and policy reforms.

Finally, the elections themselves, without more robust governance, do not change the ground realities in most parts of the country. Large areas are slipping away from the control of Karzai's government. On the one hand, many places are effectively governed by local strongmen, who are often more interested in poppy cultivation than governance, and their private militias. On the other hand, the Taliban is spreading its influence. The group is using high-profile terrorist attacks -- such as the two pre-election attacks in Kabul -- to create fear among the population. Moreover, they are using bomb and suicide attacks against NATO forces and the Afghan National Army. These violent tactics have two main aims: 1) to disable the vital reconstruction and development process; and 2) to create political pressure in the United States and the West to withdraw troops and engage in peace talks with the Taliban. This situation could undermine popular confidence in the Western-sponsored state-building process, and dangerously play into the hands of the Taliban.

Paula Bronstein/Getty Images

By Eurasia Group analyst Daniel Kerner

Argentina has seen better days.

Following a dramatic political and economic crisis in late 2001 and the largest sovereign default in recent economic history, Argentina enjoyed a remarkable economic recovery over the next several years. Under President Nestor Kirchner (2003-2007), a favorable international environment helped boost the country's economy at a record pace, enabling him to consolidate power and to become one of the most popular and successful presidents in Argentine history. His popularity (approval ratings of close to 70 percent for most of his mandate) allowed him to transfer political power to his wife, Cristina Fernandez de Kirchner, who was elected president by a comfortable margin in October 2007.

But the trouble began even before Nestor Kirchner stepped aside. Despite his political success, his government's reluctance to address rising inflation, unpaid external debt and energy shortages began to raise doubts over the sustainability of Argentina's growth. Inflation began to climb in 2005. The government responded with expansionary fiscal and monetary policies, manipulated inflation statistics, and heavy and sustained pressure on the private sector to keep prices low. Hopes that the Fernandez de Kirchner administration would more openly address these problems were quickly dashed.

But it was last year's four-month conflict with the farming sector over export taxes that delivered the heaviest blow to the Kirchners' popularity. The conflict began after the government sharply raised taxes on soybean exports and refused to reduce them despite massive protests. The taxes were repealed only after the senate voted against the government's proposal. The government's decision to shore up its fiscal position by nationalizing local pension funds further undermined confidence in both the government and in Argentina's economic prospects.

But it was last weekend's election results that finally closed the door on the Kirchner era in Argentine politics. Months ago, the Kirchners knew they had a fight on their hands. Afraid a bad economy would only get worse, the government surprised many observers by pushing forward the date of mid-term elections from October to June. Aware that even the earlier elections would leave them at a disadvantage in key electoral districts, the Kirchners upped the stakes. Nestor Kirchner himself announced that he would seek a lower house seat representing the province of Buenos Aires.

He lost. And the government lost its majority in both houses of congress. In fact, government candidates fell in most of the country's largest electoral districts, including the Capital, Buenos Aires, Cordoba, Entre Rios, Mendoza and Santa Fe.

The Kirchners were hoping to maintain what was left of their grip on the Peronist Party and to dominate the political agenda heading into the next presidential election in 2011. Instead, the sun rose Monday morning on a new set of opposition leaders, like Vice President Julio Cobos, Senator Carlos Reutemann, and Buenos Aires mayor Mauricio Macri, who are well positioned to challenge for the presidency in two years. The country's most powerful politician, Nestor Kirchner, resigned Monday as leader of the Peronist Party. Though two years remain in her presidency, Cristina Fernandez de Kirchner has become a lame duck.

The key economic policy question is whether the Kirchners, who have refused to negotiate or compromise with rivals both inside and outside the Peronist Party can navigate the newly treacherous political waters.

If so, they'll have to fundamentally shift the way they've done business for the past six years. That's why it probably won't happen -- and why Argentina's political and economic forecast will remain mostly cloudy until a new president is elected in 2011.

CLAUDIO SANTANA/AFP/Getty Images