Note: Today is the ninth in a series of posts that detail Eurasia Group's Top Risks for 2013

With slow growth, persistent inflation, and large fiscal and current account deficits, India desperately needs to implement a range of economic reforms. But due to its own shortcomings and a constraining political environment, the ability of the Congress party-led United Progressive Alliance to tackle structural problems is limited -- and will wane further in the run-up to national elections.

Elections are due by May 2014, and the Congress party is scrambling to shore up its popularity in the wake of high-profile corruption scandals. Other coalition members and issue-based supporters, sensing weakness, will try their hardest to extract political concessions from the Congress while the opposition Bharatiya Janata Party (BJP) will likely remain relentlessly obstructionist in its quest to regain power.

Consequently, parliamentary gridlock will persist, with only minor administrative reforms politically feasible in 2013. P. Chimdambaram's return as finance minister in July 2012 has buoyed foreign investor confidence and market sentiment, but he needs to make deep, politically difficult spending cuts to improve India's chance of averting a sovereign credit downgrade to junk status.

And parliamentary elections are not likely to lead to an improved policymaking environment. Like the Congress party, the BJP is in the throes of a prolonged leadership transition and has been largely unable to capitalize on the decline in public support for Congress. This leadership vacuum has enhanced the influence of swing regional and state parties. Elections will likely result in a hung parliament and an even more unstable coalition that will be capable of approving only lowest-common-denominator policies.

Growth will improve in 2013 but India will likely miss its fiscal deficit targets of 5.3 percent of GDP for fiscal year 2012-2013, and 4.8 percent for fiscal year 2013-2014, without substantial subsidy cuts unprecedented in an election year budget.

Expectations for India's performance in 2013 are limited. While it can hope to accomplish just enough on fiscal policy and economic reforms to avoid a sovereign downgrade, India will make negligible progress on structural problems that have long vexed its economy.

On Wednesday, we'll profile Risk #10: South Africa.

Today, The Call presents our top risks for 2013. Click HERE for Eurasia Group's complete report.

1. Emerging markets -- The era of emerging market abundance is finished. As the United States and Europe slowly regain their economic footing, the political risk focus will return to the emerging market world, where differences among the largest players will become more obvious. Slower growth and rising expectations from larger and more demanding middle classes will create public pressure on governments, meaning that emerging markets -- including the increasingly suspect BRICs -- should no longer be treated as an asset class for outsized growth. Consideration instead should shift toward which developing country governments have enough political capital to remain on track to a more advanced stage of development.

2. China vs. information -- China's new leadership faces many challenges in 2013, most importantly the state's growing inability to control the flow of ideas and information across borders and within the country. Until now Beijing has been largely effective in isolating online discourse to focus on discrete issues without culminating in real challenges to the government's decision-making or policy. But every corruption scandal and example of official malfeasance makes the next event more difficult to navigate, and the risk is that a broad-based social movement for change will gain momentum in China in 2013, distracting the government from its domestic and foreign policy priorities and potentially weakening investor confidence in the stability of the mainland market.

3. Arab Summer -- We are far beyond the Arab Spring, and an Arab Winter, where dictators rebound and consolidate power, has not materialized. Instead we are approaching an Arab Summer, whereby the region will witness radicalized movements -- both sectarian and Islamist -- playing a much more important role. As outside powers look to avoid direct involvement in the region's risks, local powers -- Iran, Turkey, Saudi Arabia and others -- will compete for influence and play out their rivalries. At the center of this lies Syria, whose civil war now has implications that extend far beyond the humanitarian. Syria has become a proxy conflict for Shiite and Sunni powers, as well as a magnet for jihadists, increasing the geopolitical risk overall and sparking further insecurity throughout the region, most notably in Iraq, Jordan, and Turkey.

4. United States -- Every silver lining has a dark cloud. While the fiscal cliff was averted, the process by which the deal was reached casts a large shadow over hopes that the election might create a more conducive environment for cooperation, and dysfunctional American politics will weigh on both the U.S. economic recovery and President Obama's legislative agenda. This is not about a politically induced new recession, let alone a major financial crisis. But political uncertainty over corporate taxes and a series of noisy brinkmanship episodes will generate a modest but real drag on growth.

5. JIBs (Japan, Israel, Britain) -- These are the three current global trends that matter most: China is rising, the Middle East is exploding, and Europe is muddling through. Set against a G-zero backdrop, the structural losers of these trends are the JIBs (Japan, Israel and Britain): countries influenced most directly and problematically by changes now underway in the geopolitical order. All three countries are now in a similar position for three reasons: their special relationships with the United States are no longer quite as important; they sit just outside the major geopolitical changes underway, without the means to play a constructive role; and key domestic constraints in all three countries (political, social, historic, and otherwise) make it particularly difficult for them to respond effectively to the challenges posed by a shifting global order.

6. Europe -- There will be no grand implosion, but the muddle-through approach to crisis management carries risks of its own. The eurozone is headed for neither breakup nor resolution, and in 2013 the risks shift from a threat of financial crisis to a loss of momentum in creating the institutional and policy frameworks for a redesigned union. The weak economic outlook and the politics of crisis-fighting will also remain sources of uncertainty. Simultaneously, euro-skepticism is on the rise and resistance to reforms is increasing in the face of protracted austerity and few prospects for an economic turnaround.

7. Asian geopolitics -- In 2013, geopolitical risk will continue growing in East Asia in a new and potentially more dangerous way. Facing increased nationalism in China and Japan, the United States will look to play a larger role, giving oxygen to the hedging strategies of many regional states seeking closer American ties. Territorial disputes over the East China and South China Seas will also create new friction, and at risk overall is East Asia's decades-long distinction as a zone where positive-sum commerce and economics trumps zero-sum geopolitical tension.

8. Iran -- The significant risk in Iran this year is not the one everyone's thinking about. A strike on the country's nuclear program is unlikely, but biting sanctions, other forms of international pressure, and leadership tensions make Iran less predictable and heighten the stakes of an ongoing shadow conflict with Israel and the United States -- one with the potential to rattle markets and put upward pressure on oil prices.

9. India -- India in 2013 will be one of the prime examples of the intrusion of political factors into what had until recently been seen as a long-term economic success story. The country's dysfunctional politics and looming elections feed the risk of an economic shock, and in 2013 the ability of the government to implement robust economic policies will decline even further, perpetuating India's "stalling or falling" outlook.

10. South Africa -- In aggregate growth terms, Africa as a whole looks to be on a trajectory to continue its recent position of positive performance. But in South Africa -- one of the continent's largest and most sophisticated economies -- the outlook is far less rosy. Populism, spearheaded by the ruling ANC party, is on the rise, and it is hard to see any real movement on labor, education, and budgetary reforms. Coming retrenchments in mining will almost certainly spur another bout of labor unrest, which has the potential to spread into other sectors as well. Taken together, all these factors increase the risk of further credit downgrades.

In addition to these, Eurasia Group's red herrings for 2013 include:

The geopolitics of energy -- 2013 isn't the year to get overly concerned about geopolitical risk spiking energy prices. For one thing, most of the Middle East risk in the coming year isn't about energy -- it's about everything else -- and the energy revolution happening in the Western Hemisphere will be a boon for consumers across the globe. 

Global protectionism -- The G-20 can afford to agree on protectionism because there's less of a threat here than meets the eye. The trend in fact is toward hints of competitive trade liberalization, especially within the European Union, which is generating a strong internal consensus on the need for a new major transatlantic economic cooperation package.

Radicalism in the developed world -- Many fear the growing gap between rich and poor will instigate class warfare and cause significant instability across the developed world. We think not. For much the same reason that emerging markets are the top risk this year, it's the underlying stability of advanced industrialized democracies that will come through in 2013.

European separatism -- There is no doubt that there are very real separatist pressures building in Catalonia and in Scotland, and national unity remains fragile in Belgium. However -- as much as we all would love to watch Barca field its own team in the World Cup -- there is almost no chance that any of these issues will grow into an actual crisis leading to separation in 2013.

? - North Korea -- Sometimes, you just can't know what's happening, and with North Korea in 2013 that's really the case. In the face of a sudden leadership transition in the world's most totalitarian state -- now run by an untested 28-year-old -- it's almost impossible to assess whether North Korea is becoming more stable. All signs point to the country remaining a perilous bet, but what causes trouble and when? It's hard not to lose sleep over it, but at the same time working harder to assess what exactly is going bump in the night doesn't feel very purposeful. Sorry.

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

By Anjalika Bardalai

On the face of it, India and the US have more differences than similarities: They diverge markedly in terms of income and a host of other qualitative and quantitative indicators. They seem like political opposites as well-one is a two-party presidential system, the other a parliamentary system comprising no fewer than 70 recognized parties (the newest was launched just this week). But Mitt Romney's defeat in the recent US presidential campaign has highlighted several weaknesses of the Republican Party that are mirrored in India's center-right national party, the Bharatiya Janata Party (BJP), which has been the main national opposition party since its spectacular loss in India's 2004 general election.

Most critically, both parties exhibit a split between a conventionally center-right, business-friendly faction and an overtly religious faction that tries to politicize social issues. In the US, the extremely conservative stance of a few Republicans on issues such as rape and abortion periodically overshadowed the presidential campaign and arguably alienated potential voters who favor the right's economic policies, but who found its social policies abhorrent. The BJP, too, exhibits a fault-line between one faction that is secular, pro-business, pro-economic reform, and (relatively) fiscally conservative, and another wing-the hardline "Hindu-nationalists."

The GOP's hardline stance and rhetoric on immigration reform in the US contributed to an extremely poor showing for the party among Hispanics, the fastest-growing minority group in the US.  Similarly, the consequences for the BJP of the Hindutva influence are grave, and will become ever more so as rising incomes inevitably weaken the bonds of religious, ethnic- and caste-based identity in India. For one thing, the BJP's perceived pro-Hindu stance means that it will be all but impossible to make serious electoral inroads among the roughly 15% of India's population that is Muslim.

In addition, the BJP's position is a serious liability in terms of its ability to form alliances with India's myriad regional parties. In an increasingly fractured political system, this could be an utterly debilitating political handicap. As a debate raged this week about whether or not a symbolic parliamentary confidence vote would be held on a the government's recent move to liberalize FDI in the retail sector, the BJP was unable to persuade key parties that are stridently opposed to the reform that they should side with it in a vote against the government. As much as they may fear the recent liberalization, the other parties may fear what they have termed the "communal forces" represented by the BJP even more.

The broader consequences of the BJP's schizophrenic identity are no better. In the absence of a strong, coherent policy platform, the party has relied on sheer obstinacy and obstructionism, preventing the legislature from attending to important legislation (some would argue echoing the behavior of the Republicans in Congress for much of the recent past). The Indian government certainly cannot be absolved of responsibility for the current disastrous policymaking environment, but the main opposition party is behaving irresponsibly.

Finally, the division between the secular and religious right complicates the choice of party leadership. Some analysts argued that with public approval of Obama relatively low and, crucially, the US economy still relatively weak, the presidency was the Republicans' to lose if only the party had been able to muster a stronger candidate than Romney. In India, the BJP has yet to anoint a prime ministerial candidate for the next general election, which is due by May 2014. The man widely hailed as the front-runner is the chief minister of the state of Gujarat, Narendra Modi. Having presided since 2001 over one of India's fastest-growing and most industrialized states, he has developed a sterling reputation for economic management and as such is well-placed to campaign on the main issue of the day: economic revival.

Unfortunately for him, however, he is also one of the country's most divisive figures, with a shadow still hanging over him from communal riots in the state in 2002 in which around 1,000 people-75% of them Muslims-were killed. Even if he prevails in the BJP's internal leadership struggle, this potentially bodes ill for the party's electability in 2014. The BJP urgently needs to reflect on finding a leader who could bring to the table both economic management and political cohesion. Both the Indian BJP and the US GOP have similar lessons to learn from recent history as they attempt to stake out a brighter political future.

Anjalika Bardalai is an analyst in Eurasia Group's Asia practice.

By Seema Desai

In early December, India's Minister of Finance Pranab Mukherjee confirmed to parliament that the government would halt current efforts to open up FDI for foreign companies such as Wal-Mart in multi-brand retail. The government is likely to revisit the subject in 2012, perhaps with a reduced FDI limit, but the decision does not signal that the government's limited ability to push economic reforms has eroded any further, or that its survival is in doubt. No major political party, within the ruling coalition or the opposition, is prepared to bring down the government and force a snap election. The current Congress government will continue in power, though there is a possibility that Prime Minister Manmohan Singh may be replaced midway through 2012. Though unlikely, if Singh suddenly resigns in protest against his eroding authority and the cabinet is replaced, it is difficult to visualize the party pushing ahead with any controversial reform.

The same constituency that brought retail reform to near-completion after years of consultation with stakeholders will likely revive the push in 2012. The measure's backers include Minister of Commerce Anand Sharma, senior cabinet members, and various sections of industry. The Congress Party built its case for in support of FDI in multi-brand retail over the past five years but rushed the final announcement, angering party and coalition members.

The bungled announcement has, however, put a fresh political dynamic into play within the Congress Party and its alliance members. The party's senior leadership is not against the retail FDI policy, but the government is also acutely aware of the political dangers posed by the faltering Indian economy. The party will have to address dissenters' concerns and work extra hard to secure support from coalition members. Neither the Dravida Munnetra Kazhagam nor the Trinamool Congress is willing to exit the coalition or face fresh elections, but they felt slighted by not being informed properly about the Nov. 24 policy announcement.

Despite the overblown media commentary, this policy reversal does not materially change the progress of internal economic reforms. Next year, the government is likely to secure legislative approval for some reform legislation, including mining, land acquisition, and direct tax bills. The retail FDI fiasco has not altered the outlook for these internal reform measures, and the political dynamics and probability of these reforms being enacted are unaltered.

There have been structural obstacles for reform since mid-2009, including a lack of real drive from the Congress party leadership. In addition, the likely internal leadership transition and the risks it poses to reformist policymaking will accelerate and grow over 2012. The exceptionally antagonistic relationship between the two main national parties, the Bharatiya Janata Party and Congress, has also made reform even more difficult over the past five years. This dynamic will continue to cast a shadow over reforms in the future unless relations improve.

Still, there continues to be movement on policy announcements that are not contentious (such as infrastructure policy), do not require parliamentary approval (the National Manufacturing Policy), or have been making their way slowly through the system over the past decade (the Goods and Services Tax).

Seema Desai is an analyst with Eurasia Group's Asia practice.

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 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.

By Ian Bremmer and David Gordon

South Asia is still a morass in 2010, but the U.S. troop surge has given Obama some time. Afghanistan will produce bigger and bigger domestic headlines, but not much will actually change until the United States reaches (or, more likely, is forced to reach) a decision point. For now, that's 2011 at the earliest.

Having said that, there's a broader South Asia risk developing this year. The decision by Pakistan to go after terrorists domestically provides Islamic extremists with powerful reasons to expand asymmetric attacks on Pakistan's urban centers and to try to reignite Indian-Pakistani conflict. That's easy enough to do. Pakistan's extremist groups have increased in sophistication and consolidated their capacity, both by joining together and by forging closer links to al Qaeda in the region. In Pakistan, a significant proportion of the population continues to believe that terrorist attacks against the population originate in India. Pakistani networks operating in India haven't gotten much attention, however, and represent a weak link on the counterterrorist front.

This means that the likelihood of attacks in India and against Indian targets in the region is increasing, a particular worry given the nature of the potential targets (government facilities and densely populated urban areas). The Indian government is aware of the threat and has sought to improve its counterterrorist response -- including via increased ground-level coordination in Delhi and Mumbai with American and British counterterrorist organizations. But progress has been slow, and India's counterterrorism capacity remains underdeveloped, badly coordinated, and vulnerable.

Meanwhile, any new attacks would put serious pressure on India to take a tougher line on Pakistan. India's Congress Party leadership is loath to escalate military tensions with Pakistan. But following a quieter line after the Mumbai attacks in late 2008, it made strong demands on Pakistan to take decisive steps against extremist networks with ties to India. Successful large-scale attacks would undermine the Congress Party's credibility on the issue, leading the Indian government to take outsized steps in raising the military posture toward Pakistan. That, in turn, means Pakistan shifting its focus away from the tribal areas and, as importantly, changing its strategic view on taking on further operations -- a shift that would sit comfortably with much of Pakistan's senior military command, who still see rising India as Pakistan's main strategic challenge.

Indian-Pakistani relations, which had been quietly improving during the final years of the Musharraf regime, have already deteriorated somewhat under President Asif Ali Zardari, and it will prove harder for both sides to back away from any high-level military alert. Meanwhile, in both Delhi and Islamabad, Obama's pledge during his Afghan speech to begin U.S. troop withdrawals in 2011 is being read as a signal that the United States is minimizing its long-term commitment to the region. This feeds the already powerful views in both capitals that they should plan for continuation of their long-term strategic rivalry. Worst case, should there be a series of terror attacks in India, we could see Indian efforts to secure international sanctions against Pakistan -- and potentially surgical strikes by India against military training camps inside Pakistan. In short, for the first time in nearly a decade, there are serious factors pushing the Indian and Pakistani governments back toward confrontation.

Next stop: Eastern Europe.

Ian Bremmer is president of Eurasia Group, and David Gordon is the firm's head of research.

By Eurasia Group analyst Sean West

Earlier this month, the G8+5, the world's leading industrial states plus some other important developing states, committed to finishing the Doha Round of trade talks by the end of 2010. U.S. and Chinese officials paid lip service to finishing Doha this week during the inaugural bilateral "Strategic and Economic Dialogue." World Trade Organization chief Pascal Lamy will likely cite both announcements as cause for celebration. Healthy skepticism is in order.

Overblown fears of oncoming protectionism were all the rage just weeks ago. But as Ian Bremmer wrote in this space back in March, the financial crisis need not trigger as many new trade barriers as some feared. Still, the global liberalization envisioned by a completed Doha Round by the end of next year is likely a bridge too far.

Pledges aside, there's not much reason to be optimistic that a deal can be concluded in the near future. Personality conflicts may have receded, as both Susan Schwab and Kamal Nath -- who banged heads last year -- no longer represent the United States and India respectively. But domestic conditions in the wake of the financial crisis won't help much with trade liberalization. While there's ample reason to be skeptical that neither China nor the EU are any more ready conclude an agreement than in the past, all other countries can play wait-and-see unless and until the United States shows serious leadership.

Obama has yet to lay out a clear strategy for the Doha Round. U.S. Trade Representative Ron Kirk has said several times that the United States considers Doha completion as critical, but there's no evidence yet that he'll have the political support he needs to set policy and to bargain. Comments from Obama himself on Doha have been ambiguous at best, warning of an "imbalance" in potential trade-offs on the table in current negotiations. It's also not yet clear how much political capital Obama will put at risk at a moment when he needs the support of organized labor for a host of other domestic priorities. And in a nod to agricultural interests, he allowed his budget proposal to cut farm subsidies -- a critical sticking point in the Doha negotiations -- to die on arrival.

Real movement on trade policy remains on hold until the president explains publicly how trade policy fits into his administration's broader agenda -- a speech he might give in advance of the September G20 meeting in Pittsburgh. But he'll have to use that speech to persuade an anxious American public -- and many trade skeptical US lawmakers -- that trade deals can spur growth without killing jobs. Obama has an advantage. His history suggests that he believes in the benefits of trade, and in a Nixon-goes-to-China way, he can spend political capital earned on the campaign trail to bring trade-wary Democrats along with his initiatives. But he has so far provided no indication that he's ready to accept the political risks that come with the push needed to get Doha done within 18 months.

RABIH MOGHRABI/AFP/Getty Images