Eurasia Group's weekly selection of essential reading for the political risk junkie -- presented in no particular order. As always, feel free to give us your feedback or selections @EurasiaGroup or @IanBremmer.
David Horowitz, The Times of Israel
Israel's quantity of natural water per capita is the lowest in its entire region. But it seems Israel's water crisis may be a thing of the past. Why? More than 80 percent of Israel's purified sewage is reused for agriculture. The next best in the OECD? Spain, at 18 percent.
Stephen Brown and Holger Hansen, Reuters
Yes, Spain's unemployment rate is over 26 percent. But elsewhere in the Eurozone, it's a different story. Germany's unemployment rate is at its lowest since reunification in 1990 -- and Berlin is actively recruiting certain skilled labor.
In Italian elections this week, voters set a post-war record ... for lowest turnout.
Simon Shuster, TIME
In a recent study, a group of academics analyzed a random sampling of 25 dissertations from the history department of Moscow Pedagogical State University. They found that all but one had been "at least 50 percent plagiarized." So how high up the ranks does plagiarism go? Perhaps more to the point, how high up the ranks will Medvedev's campaign to weed out plagiarism be permitted to go?
Kenneth G. Lieberthal, Brookings
This piece takes a realistic approach to highlighting potential common ground on cybersecurity between the United States and China.
Katherine Maher, Foreign Policy
Have you ever thought of the internet as unclaimed territory, awaiting a basic framework for division of sovereignty? You're not the only one -- a lot of nations have, too.
MENAHEM KAHANA/AFP/Getty Images
Note: Today is the eighth in a series of posts that detail Eurasia Group's Top Risks for 2013
The dangers emanating from the ongoing shadow war with Iran are greater than many observers believe. This struggle has consisted of several components, including a cycle of mutual killings and cyber attacks. While there is no hard proof, it is a reasonable assumption that Israel and Iran (or at least some officials in Iran) are responsible. The final theater is the ongoing proxy war in Syria.
In early 2013, the West will also become engaged in an effort to negotiate a solution to the standoff over Iran's nuclear program. Western countries, led by the U.S., would very much like a peaceful resolution, while Iran sorely needs relief from stiff economic sanctions. Talks will be intensive but on balance the talks will probably fail by late spring. The Iranian elite have an almost existential commitment to the nuclear program, while Supreme Leader Ali Khamenei possesses a deep seated enmity for the U.S.
As a result, the West and Iran will probably return to escalating sanctions and shadow war, with two drivers boosting the ferocity of that struggle. First, the Iranian regime will feel compelled to show resolve and retaliate in the face of new sanctions. Second, the regime faces a period of profound economic weakness, though it will not collapse. But weak governments are prone to lashing out, both to rally domestic support and to portray an image of strength.
These new drivers will likely intensify the shadow war and could lead to new fronts. The chance of miscalculation and overreaction on both sides would rise, especially in the face of provocations such as a successful assassination plot in the U.S. similar to the alleged attempt against the Saudi ambassador in October 2011 or an episode such as the 2008 swarming of U.S. Navy frigates by Revolutionary Guard boats.
Iran's nuclear program is the second area of concern in 2013. Israeli rhetoric will remain at a high pitch, but is intended to increase diplomatic leverage and economic sanctions. Still, the probability of an Israeli attack in 2013 is low because Iran's nuclear program is unlikely to pose an imminent threat this year. Also, Israel can inflict only limited damage on Iran's nuclear facilities and there will be a lack of consensus among its political leaders about the wisdom of a strike. Polling also shows the Israeli public firmly opposes unilateral action. Finally, the U.S. would likely attack only if Iran tries to acquire a nuclear weapon and that is unlikely.
There are, however, a number of worrying scenarios. Developments at the Fordo enrichment facility make up one. Iran will have enough medium-enriched uranium to make a bomb by early summer, but weekly IAEA inspections leave enough time for detection and action. The central question is whether the Israeli government will trust the U.S. or strike on its own. Israel is unlikely to attack, but this dilemma slightly boosts the chance of Israeli strikes during 2013 (to roughly 20 percent).
A scenario involving a detectable Iranian breakout would probably elicit a U.S. attack. Yet Tehran has been very cautious and slow. Iran probably wants to become a latent nuclear power; that is, the world knows it could develop a bomb quickly. But Iran's threat perception will become more dire this year, making an irrational dash to a bomb, and a U.S. attack, slightly more likely.
Next week, we'll profile Risk #9: India
IIPA via Getty Images
Today, The Call presents our top risks for 2013. Click HERE for Eurasia Group's complete report.
1. Emerging markets -- The era of emerging market abundance is
finished. As the United States and Europe slowly regain their economic footing, the
political risk focus will return to the emerging market world, where
differences among the largest players will become more obvious. Slower growth
and rising expectations from larger and more demanding middle classes will
create public pressure on governments, meaning that emerging markets -- including
the increasingly suspect BRICs -- should no longer be treated as an asset class
for outsized growth. Consideration instead should shift toward which
developing country governments have enough political capital to remain on track
to a more advanced stage of development.
2. China vs. information -- China's new leadership faces many challenges in 2013, most importantly the state's growing inability to control the flow of ideas and information across borders and within the country. Until now Beijing has been largely effective in isolating online discourse to focus on discrete issues without culminating in real challenges to the government's decision-making or policy. But every corruption scandal and example of official malfeasance makes the next event more difficult to navigate, and the risk is that a broad-based social movement for change will gain momentum in China in 2013, distracting the government from its domestic and foreign policy priorities and potentially weakening investor confidence in the stability of the mainland market.
3. Arab Summer -- We are far beyond the Arab Spring, and an Arab Winter, where dictators rebound and consolidate power, has not materialized. Instead we are approaching an Arab Summer, whereby the region will witness radicalized movements -- both sectarian and Islamist -- playing a much more important role. As outside powers look to avoid direct involvement in the region's risks, local powers -- Iran, Turkey, Saudi Arabia and others -- will compete for influence and play out their rivalries. At the center of this lies Syria, whose civil war now has implications that extend far beyond the humanitarian. Syria has become a proxy conflict for Shiite and Sunni powers, as well as a magnet for jihadists, increasing the geopolitical risk overall and sparking further insecurity throughout the region, most notably in Iraq, Jordan, and Turkey.
4. United States -- Every silver lining has a dark cloud. While the fiscal cliff was averted, the process by which the deal was reached casts a large shadow over hopes that the election might create a more conducive environment for cooperation, and dysfunctional American politics will weigh on both the U.S. economic recovery and President Obama's legislative agenda. This is not about a politically induced new recession, let alone a major financial crisis. But political uncertainty over corporate taxes and a series of noisy brinkmanship episodes will generate a modest but real drag on growth.
5. JIBs (Japan, Israel, Britain) -- These are the three current global trends that matter most: China is rising, the Middle East is exploding, and Europe is muddling through. Set against a G-zero backdrop, the structural losers of these trends are the JIBs (Japan, Israel and Britain): countries influenced most directly and problematically by changes now underway in the geopolitical order. All three countries are now in a similar position for three reasons: their special relationships with the United States are no longer quite as important; they sit just outside the major geopolitical changes underway, without the means to play a constructive role; and key domestic constraints in all three countries (political, social, historic, and otherwise) make it particularly difficult for them to respond effectively to the challenges posed by a shifting global order.
6. Europe -- There will be no grand implosion, but the muddle-through approach to crisis management carries risks of its own. The eurozone is headed for neither breakup nor resolution, and in 2013 the risks shift from a threat of financial crisis to a loss of momentum in creating the institutional and policy frameworks for a redesigned union. The weak economic outlook and the politics of crisis-fighting will also remain sources of uncertainty. Simultaneously, euro-skepticism is on the rise and resistance to reforms is increasing in the face of protracted austerity and few prospects for an economic turnaround.
7. Asian geopolitics -- In 2013, geopolitical risk will continue growing in East Asia in a new and potentially more dangerous way. Facing increased nationalism in China and Japan, the United States will look to play a larger role, giving oxygen to the hedging strategies of many regional states seeking closer American ties. Territorial disputes over the East China and South China Seas will also create new friction, and at risk overall is East Asia's decades-long distinction as a zone where positive-sum commerce and economics trumps zero-sum geopolitical tension.
8. Iran -- The significant risk in Iran this year is not the one everyone's thinking about. A strike on the country's nuclear program is unlikely, but biting sanctions, other forms of international pressure, and leadership tensions make Iran less predictable and heighten the stakes of an ongoing shadow conflict with Israel and the United States -- one with the potential to rattle markets and put upward pressure on oil prices.
9. India -- India in 2013 will be one of the prime examples of the intrusion of political factors into what had until recently been seen as a long-term economic success story. The country's dysfunctional politics and looming elections feed the risk of an economic shock, and in 2013 the ability of the government to implement robust economic policies will decline even further, perpetuating India's "stalling or falling" outlook.
10. South Africa -- In aggregate growth terms, Africa as a whole looks to be on a trajectory to continue its recent position of positive performance. But in South Africa -- one of the continent's largest and most sophisticated economies -- the outlook is far less rosy. Populism, spearheaded by the ruling ANC party, is on the rise, and it is hard to see any real movement on labor, education, and budgetary reforms. Coming retrenchments in mining will almost certainly spur another bout of labor unrest, which has the potential to spread into other sectors as well. Taken together, all these factors increase the risk of further credit downgrades.
In addition to these, Eurasia Group's red herrings for 2013 include:
The geopolitics of energy -- 2013 isn't the year to get overly concerned about geopolitical risk spiking energy prices. For one thing, most of the Middle East risk in the coming year isn't about energy -- it's about everything else -- and the energy revolution happening in the Western Hemisphere will be a boon for consumers across the globe.
Global protectionism -- The G-20 can afford to agree on protectionism because there's less of a threat here than meets the eye. The trend in fact is toward hints of competitive trade liberalization, especially within the European Union, which is generating a strong internal consensus on the need for a new major transatlantic economic cooperation package.
Radicalism in the developed world -- Many fear the growing gap between rich and poor will instigate class warfare and cause significant instability across the developed world. We think not. For much the same reason that emerging markets are the top risk this year, it's the underlying stability of advanced industrialized democracies that will come through in 2013.
European separatism -- There is no doubt that there are very real separatist pressures building in Catalonia and in Scotland, and national unity remains fragile in Belgium. However -- as much as we all would love to watch Barca field its own team in the World Cup -- there is almost no chance that any of these issues will grow into an actual crisis leading to separation in 2013.
? - North Korea -- Sometimes, you just can't know what's happening, and with North Korea in 2013 that's really the case. In the face of a sudden leadership transition in the world's most totalitarian state -- now run by an untested 28-year-old -- it's almost impossible to assess whether North Korea is becoming more stable. All signs point to the country remaining a perilous bet, but what causes trouble and when? It's hard not to lose sleep over it, but at the same time working harder to assess what exactly is going bump in the night doesn't feel very purposeful. Sorry.
Over the next three weeks, we'll be posting more ideas and information on each of these risks.
SAJJAD HUSSAIN/AFP/Getty Images
By Cliff Kupchan
On Sept. 16 and again on Sept. 19, the Palestinian Authority's President Mahmoud Abbas stated that his government would apply to the U.N. Security Council for full membership at the UN this week, a move which will further stoke already significant strains. The United States will almost certainly veto the application, however, amplifying ill-will among all interested parties.
Security Council approval requires at least nine votes and no vetoes; some international diplomats believe there is a chance that the Palestinian Authority (PA) will fail to secure the nine "yes" votes, obviating a U.S. veto. In any case, a membership application to the Security Council takes time, ranging from weeks to months. This would provide an interlude for other diplomatic actions, including a shift of focus to the U.N. General Assembly and efforts to return to the peace process, though that outcome is not likely.
Despite Abbas' statements, there is still a small chance that the Palestinians will go straight to the General Assembly and avoid the provocative Security Council option. Significant debate is ongoing within the PA, with Abbas and his senior advisor Nabeel Shaath favoring the Security Council route. Prime Minister Salam Fayyad favors a less inflammatory path. At the General Assembly, the PA would apply for non-member state status. Most observers believe the PA would need a two-thirds majority to attain that status, which appears to be within easy reach. The weight of that majority would be enhanced by affirmative votes from France and, probably, Britain. Again, the United States would vote against the proposal.
The Palestinians are taking the U.N. path because the PA has given up on the peace process in its current form. A high-level Palestinian recently visited Washington, delivering the message that leverage between Israel and Palestine had to be equalized and that U.N. membership or de facto recognition (non-member state status) was the only peaceful option. The PA leadership appears genuinely committed to a two-state solution, and does not believe its gambit will lead the Israelis to abandon further negotiations.
The biggest, and most likely, risk is of Palestinian unrest and violence directed against Israel, though casualties will likely be limited. The mood among the population in the West Bank is a mix of apathy and anticipation over the U.N. vote. PA officials have stated that they will prevent any violent reaction, though celebratory marches have already been planned. The population is likely to be emboldened, angry at the United States, and frustrated by lack of actual change on the ground following the vote, a factor that will grow stronger over time.
The combustible mix will probably lead to actions, peaceful or otherwise, against Israeli soldiers or settlers. In any case, a Palestinian mobilization will probably push Israel into a defensive crouch that could lead to preemptive actions. Israeli forces would probably curb movement by Palestinians and enter refugee camps and cities, settlers may commit hostile acts, and the government could withhold tax remittances. Palestinian security forces will likely seek to curb unrest, but at the risk of the PA's legitimacy. Fear of uncontrolled escalation on both sides will probably limit violence, but the West Bank could well remain unstable for a protracted period.
Any unrest would likely come in waves. Abbas is scheduled to address the United Nations and submit the Security Council application on Sept. 23, shortly after Israeli Prime Minister Netanyahu's speech; unrest could well occur on Friday. After that, disorder is most likely following Security Council or General Assembly action.
Cliff Kupchan is a director in Eurasia Group’s Middle East Practice
SAID KHATIB/AFP/Getty Images
By David Gordon and Cliff Kupchan
"You don't want a messianic apocalyptic cult controlling atomic bombs," Israeli Prime Minister Benjamin Netanyahu told a journalist in 2009, in reference to Iran's nuclear program. He wasn't the first or last Israeli official to use such inflammatory rhetoric. References to Iran as an existential threat or to the country's nuclear program as raising the specter of another Holocaust have been typical among Israeli officials. But on a recent research trip to Israel, we heard surprisingly little anxiety. No official spoke about a threshold beyond which Iran's program would be unstoppable -- a deadline that in the past was always one year off. And elites across the political spectrum for now favor sanctions and covert action, rather than military force, to deter Iran. As a result, the chance of Israeli strikes in the next eighteen months is very low.
So what accounts for the sea-change in the Israeli approach? Success, essentially. Iranian officials have claimed that successive rounds of international sanctions have benefitted the country by forcing it to adopt necessary economic reforms. But top Israeli officials stressed to us that sanctions are crippling Iran's economy and sparking debate about nuclear policy among the ruling elite. Likewise, the triumph of the Stuxnet computer worm -- credited with destroying 1,000 Iranian centrifuges and widely believed (though not confirmed) to be an American-Israeli creation -- and possibly other covert measures have encouraged Israeli policymakers. While officials wouldn't talk in detail, they said that Iran's nuclear program has been slowed.
Buying time is an important reason to stick with sanctions and covert action. For one, as the repercussions of ever harsher sanctions sink in, Tehran may be forced to make concessions at the negotiating table. Second, in the wake of Stuxnet, Israel is probably more optimistic about its ability to impair Iran's nuclear program over the long term. Third, an extended time horizon opens the door for domestically induced regime change in Iran -- a remote but real possibility that bears monitoring as disaffected crowds again take to the streets of Tehran.
There's probably also a public relations angle to Israel's transformed rhetoric. As some sources noted, breathless statements about existential threats and points of no return likely strengthened Iran's hand, both diplomatically and publicly. Moreover, Israeli public opinion has turned its gaze elsewhere, to what it considers the more imminent threats of Gaza, Lebanon, and Egypt.
It would be wrong to read the shift in the Israeli approach as a rejection of military action, though. While no sitting politician said so, there is a widespread belief among the country's elite that the government still considers force a viable option: Netanyahu would not stomach a nuclear Iran. But unless sanctions and covert action lose their credibility in the eyes of this (or a similarly inclined) Israeli government, strikes in the next year and a half will remain unlikely.
David Gordon is head of research at Eurasia Group. Cliff Kupchan is director of the firm's Eurasia practice.
By Ian Bremmer
Some of the information from those WikiLeaked U.S. diplomatic cables is interesting, or at least entertaining. But will the revelations actually have an impact on the conduct of international politics? Looking around the world, I've seen one policy so far that looks to be changed as a consequence of WikiLeaks.
On Dec. 6, Uruguay and Argentina joined Brazil in announcing they would formally recognize a Palestinian state, following the failure of Obama administration efforts to jumpstart talks between Israeli and Palestinian leaders.
Brazil's decision is interesting only in that it provides more evidence that major emerging market countries are carving out their own approaches to the world's big diplomatic conflicts, including in the Middle East, which is not a place where Latin American countries have many vital interests at stake. Remember when Brazil joined Turkey in direct engagement with Iran on its nuclear program? Or when outgoing President Lula invited Iranian President Mahmoud Ahmadinejad to visit Brazil? That was a pretty clear statement that Brazil would not simply follow Washington's lead on every issue.
Argentina is more of an eyebrow raiser. After all, for reasons historical and cultural, Argentina is traditionally more sympathetic toward Israel than any of its Latin American neighbors. So why this shot across Israel's bow? Or was it the Obama administration's bow?
Argentine President Cristina Fernandez de Kirchner can't have been pleased to read that one of the cables exposed by WikiLeaks revealed that U.S. Secretary of State Hillary Clinton had questioned her "mental state" and how she was "managing her nerves and anxiety." Making matters worse, the cables were written a year ago, but they went public one month after Kirchner lost her husband, former president Nestor Kirchner.
The leaks also revealed that a U.S. embassy official in Buenos Aires found her government to be "to be extremely thin-skinned and intolerant of perceived criticism." Maybe he had it right. Maybe the leaks explain, at least in part, why Argentina has decided to recognize a Palestinian state.
Ian Bremmer is president of Eurasia Group and author of The End of the Free Market: Who Wins the War Between States and Corporations?
JUAN MABROMATA/AFP/Getty Images
For more than half a century, relations between Israel and Turkey have provided a degree of stability in the turbulent politics of the Middle East. Turkey was among the first majority-Muslim states to recognize Israel in 1948, and the two countries have profited from bilateral trade and military cooperation ever since. Unfortunately for Israel, things are changing.
It's not that current tensions between them will destroy their commercial relationship. Turkey remains Israel's top trade partner in the region. Nor is it that Turkish Prime Minister Recep Tayyip Erdogan's Justice and Development Party (AKP)-led government will move Turkey into some sort of anti-Israeli alliance with Iran and Syria. Turkey remains a member of NATO. And though accession talks on European Union membership are going nowhere, neither side wants to abandon efforts to bring Turkey and Europe closer together.
Yet, there's a change underway in Turkey's regional role, a shift rooted in the country's bitter internal politics, and it's not one that Israel will like. Erdogan and the AKP have seen their popularity eroded over time as the party's battle with Turkey's secularist establishment in the military, business community, and media has polarized the political class and dominated the country's agenda. But like so many leaders over time and around the world, Erdogan has discovered that foreign-policy accomplishments that raise a country's international profile can bolster a government's standing at home.
Recent international developments have added to Turkey regional clout. The U.S. regional presence is waning as U.S. troops are rapidly withdrawn from Iraq. Europe is too fully occupied with problems within the Eurozone to take up the slack as Washington redeploys. Regional players like Egypt and Saudi Arabia are distracted to some degree by questions of political succession. It will be years before Iraq's government has the self-confidence to play its traditional regional role. Though Iran's government has forced the opposition off the streets, the turmoil of the past year has done lasting damage.
This leaves Turkey in a
strong position. It's one of very few countries with influence in both Washington and Tehran.
Expectations for robust economic growth -- the Organization for Economic Cooperation and
Development (OECD) forecasts an average of 6.7 percent per year between 2011
and 2017 -- bolster the government's self-confidence and the country's
reputation as a rising regional powerbroker.
This is bad news for Israel. At Davos in January 2009, Erdogan won widespread praise among critics of Israel by storming off stage following a heated exchange over Gaza with Israeli President Shimon Peres. This spring, Turkey burnished its geopolitical credentials by joining Brazil in a plan to end the international standoff over Iran's nuclear program -- and in voting no on U.S. and European-sponsored U.N. sanctions on Tehran. When an Israeli raid on a flotilla of ships trying to break a blockade of supplies to Gaza killed nine Turkish activists last month, Erdogan again won international applause by denouncing the attack as a "bloody massacre."
The risk is real that Erdogan will make good on threats to cut off diplomatic relations with Israel. There's not much Israel can do about it, and officials in Tel Aviv are mainly downplaying the problem to avoid making matters worse for economic relations. But they know well that Erdogan is looking to play a higher-profile, more independent role in Middle East politic -- and that Turkey is a friend that Israel can ill afford to lose.
Ian Bremmer is president of Eurasia Group and author of The End of the Free Market: Who Wins the War Between States and Corporations?
ADEM ALTAN/AFP/Getty Images
If this past week is any indication of what's to come, Israel could be in for some serious heat this summer. Iran is well on its way to developing a nuclear program, the international community is taking aim at Israel's ambiguous approach to its own nuclear weapons, and Israel promptly lost what was, in all fairness, a no-win situation when it confronted a humanitarian flotilla steaming toward the blockaded Gaza. On top of these issues, the most worrying near-term risk is on the Lebanon and Syria front.
Since April, the Israeli government has been saying that Syria is supplying Hezbollah with scud missiles provided by Iran. The rhetoric flared last week, when Prime Minister Benjamin Netanyahu said that Hezbollah is now operating the scuds out of Syrian territory. If true, this situation would be a real game changer for Hezbollah -- given that the scuds could reach Tel Aviv and Jerusalem, creating a very different threat level than the group has ever posed before.
The Israelis have responded by ramping up the diplomatic pressure, publicly castigating Lebanon and Syria, and launching overflights of Lebanon. In the past week, the Israelis also launched a 5-day nationwide military-readiness exercise, publicly insisting it had nothing to do with the crisis (but predictably causing hysterics among Israel's neighbors). Lebanese Prime Minister Saad Hariri was sufficiently worried that he hopped a plane to meet with President Obama for urgent discussions. Obama's reaction wasn't quite what Hariri expected, though, as the U.S. president used the meeting to scold him for weapons transfers, which violate U.N. Security Council resolutions passed after the 2006 Israel-Hezbollah war.
MENAHEM KAHANA/AFP/Getty Images
To the long list of Israel's vulnerabilities, add the risk that the country won't be able to attract as much foreign investment in coming years and that the most talented Israelis will leave the country.
ago, Western companies looked at the rest of the Middle
East as an oil play. Israel's world-class education
standards, its durable political institutions, its capable bureaucrats, and its
strong rule of law earned the confidence of those looking to set up shop in
Today, other countries in the region offer attractive opportunities for retail, tourism, health care, light-medium manufacture, and a host of other investments, and Israel's small size and political isolation are becoming real weaknesses. Persian Gulf and other Middle Eastern governments are letting would-be investors know that companies with a large-scale presence in Israel aren't going to fare as well inside their borders. Over time, this subtle (in some cases, not-so-subtle) pressure could have an impact.
Israel has outlasted many such threats in the
past. The country's comparative excellence in advanced technology -- an area
requiring limited long-term capital exposure and where the Israelis have little
competition in the region -- will offer lasting advantages. Second, Iran's nuclear program provides a seriously
destabilizing element to the politics of the region, but it doesn't pose much
direct threat to Israel's
economic development. Israel's
military capabilities, including its own nuclear weapons program, make direct
conflict with Iran
Other threats are more serious. One day soon, Hezbollah will have access to missiles with the range and accuracy to effectively target Tel Aviv from anywhere inside Lebanon. That will be a game-changer for Israel's security, its economy, and its politics. More than half of Israel's population and the heart of its economy are centered in and around Tel Aviv. As the city becomes more vulnerable to the threat of precision-guided missile attacks, those Israelis most directly involved in the country's economic and financial life will be the most vulnerable to attack -- and some may well leave the country.
Tel Aviv's vulnerabilities to ballistic missile attack will strike at the heart of Israel's technology and pharmaceutical industries. Consider the recent history of Armenia. Once the best educated of Soviet republics, a steadily deteriorating security environment, better opportunities elsewhere, and a strong Armenian diaspora presence in Russia, France, the United States and other countries made it easy and attractive for the best educated Armenians to leave. And leave they did -- about a third of the population emigrated within 15 years of the Soviet collapse. The exodus hollowed Armenia out, and the country has yet to recover its economic dynamism. With an almost certain-to-deteriorate security environment, Israel's greatest long-term risk may be a serious brain drain, just as its Arab neighbors are opening for business in so many non-energy-related sectors.
That's a lot more dangerous for Israel's future than a surprise attack from Tehran.
Ian Bremmer is president of Eurasia Group and author of The End of the Free Market: Who Wins the War Between States and Corporations? (Portfolio, May 2010)
JACK GUEZ/AFP/Getty Images
I just spoke at an interesting lunch panel on fragile states, which was surprisingly substantive given that all of the panelists got roughly four minutes for their interventions.
My basic point -- political stability and electoral openness frequently work at cross-purposes in times of state crisis. The West tends to fetishize early democratization, even when it leads to Hamas in Gaza ... or uncontested fraud-ridden polls in Afghanistan. (Quick thought experiment: If we had free and open elections in China, how would the resultant government handle, say, Google?)
A more interesting and nuanced point: Even when elections are the right way to go, what kind of elections/institutions/legal system/government structure is worth a great deal more consideration and tailoring to on the ground conditions than generally appreciated? The Indian political structure's durability comes in part from being vastly more decentralized than the United States. I'd suspect that's exponentially more true in Afghanistan.
Former Haitian Prime Minister Michele Pierre Louis was impressive and almost shockingly thoughtful given everything her country has been through. She offered her thoughts on the distractions of elections and governance in "normal times" in Haiti and what that would mean in the context of reconstruction. As a complete outsider, it sounded like she'd like to get back into politics...
Ian Bremmer will be blogging from Davos this week sending reports and commentary from inside the World Economic Forum.
By Willis Sparks and Geoff Porter
As the world focuses on the diplomatic tug of war over Iran's nuclear program, Israel lives with the worrying hum of all those centrifuges spinning just a thousand miles to the east. Yet, Benjamin Netanyahu's government knows that if Israel launches airstrikes, there's a limit to how much damage can be done and how long Iran's progress can be delayed. It therefore has to persuade the Obama administration -- and anyone else who might help slow Iran's march -- to see the risks from Iran as Israel sees them.
It helped that Iran recently revealed the existence of an undeclared nuclear site near the city of Qom. At the very least, that revelation of Iranian dishonesty might have made it a little more difficult for Beijing and Moscow to justify continued resistance to sanctions. Yet, Israel remained quiet. Suddenly it appeared Netanyahu, Defense Minister Ehud Barak, and National Security Advisor Uzi Arad might have a wind at their backs. Though they'd like the wind to blow a bit more steadily and to get them to their destination quicker, they can't risk the rhetoric that might label them as blowhards.
But now there's talk of a diplomatic breakthrough. Following talks in Geneva with negotiators from the United States, China, Russia, Britain, France, and Germany, Iran has signed on to a tentative "interim agreement" to accept a U.S.-Russian proposal (that has been on the table for more than a year) to ship much of its low enriched uranium outside the country for reprocessing. Ensuring that this uranium is processed outside the country would help verify that it's used for civilian, not military, purposes. And then over the weekend, Iran ostensibly agreed to allow IAEA inspectors into the Qom facility on Oct. 25.
This leaves the Israeli government in a bind. First, because the details have yet to be worked out and Iran could renounce a completed agreement at any time, Israel can't take much comfort from it. Second, the fact that others treat it as a potential diplomatic breakthrough makes it even less likely than before that Israel could justify military strikes or that the US can persuade Russia and (especially) China to support sanctions tough enough to make any difference in Iran's strategic planning.
Israel has no faith that the potential for diplomatic détente between Iran and the US and EU is anything more than an Iranian stalling tactic, buying Tehran more time to speed toward the nuclear finish line. Likewise, Israel doesn't believe that sanctions -- no matter how tough they are -- will back Iran down. For Israel, diplomacy and sanctions are merely different forms of delay, but Netanyahu has little choice but to wait them out.
He'll be waiting for some time. First, diplomacy has to run its course. Following the tentative agreement in Geneva and the announcement that Iran will allow inspection of its Qom facility, the diplomatic track seems to be gaining momentum. Once that momentum slows and stalemate resumes, sanctions will be debated and some of them will be implemented. That won't happen before spring 2010 at the earliest.
In the meantime, Israel has little choice but to sit on its hands. Netanyahu knows that strikes on Iran's nuclear sites during delicate negotiations would inflict much more damage to Israel's international reputation -- and its relations with Washington, in particular -- than to Iran's nuclear program. Nothing brings this home more clearly than the U.N. Human Rights Council's report investigating Israel's military campaign in the Gaza Strip in 2008-09, which came very close to launching a legal process within the UN that could have produced a referral to the U.N. Security Council -- and possibly a war crimes tribunal. That's not going to happen, but it underscored already shifting international attitudes toward Israel.
Former Defense Minister Shaul Mofaz has said 2010 would be the year of sanctions. His government was hoping for a year of action. Instead, Israel will wait.
Willis Sparks is Global Macro Analyst and Geoff Porter is Middle East & Africa Director at Eurasia Group.
Alex Wong/Getty Images
By Eurasia Group analyst Geoff Porter
Even as President Obama tries to open diplomatic channels with Tehran, Israel will likely try to address real and potential threats from Hamas and Hezbollah, Iran's regional proxies. Israel has already waged war on Hamas in recent months, and military confrontation with Hezbollah is becoming more likely.
Iran's nuclear progress and Obama administration efforts at engaging Iran's leaders have generated high anxiety in official circles within Israel, where the Iranian nuclear program is widely considered an existential threat to the Jewish state. Israelis from across the political spectrum doubt that a new diplomatic track will persuade Iran to halt its nuclear program. Many believe that Iran will simply exploit the diplomatic process and warming relations with Washington to play for time, advancing its nuclear program beyond a point at which neither diplomacy nor military strikes can compromise Iran's nuclear future.
For the moment, Israel seems to be giving the US diplomatic track time to produce results. But in the meantime, Israel will focus on Iran-related problems that it can address directly, like the threats posed by Hezbollah and Hamas, before these groups benefit from the added political leverage their ties with a nuclear Iran would generate. In short, Israel fears that once Iran has achieved nuclear status, Hamas and Hezbollah will feel emboldened to take a more aggressive approach toward Israel. Better to deal with those groups' offensive capabilities now, some Israeli officials reason, than to wait until US/European diplomatic efforts fail and Iran crosses the nuclear threshold.
Because Israel officially considers Hezbollah and Hamas terrorist organizations, Israel will not open negotiations with either of them. As a consequence, Israeli policymakers may determine that further militarily action is a necessary risk. Israel severely weakened Hamas in December and January, and government officials continue to publicly underline threats from Hezbollah that continue following their six-week conflict in 2006.
A wrong step from Hezbollah in coming months would provide Prime Minister Benjamin Netanyahu's government with the pretext to strike at Hezbollah's capabilities. Rocket fire across the Lebanese-Israeli border could provoke Israeli retaliation, just as it did in 2006 when a Hezbollah campaign unexpectedly drew a massive Israeli response. And the current Israeli government is much more hawkish than the Ehud Olmert-led government of 2006.
How might this confrontation develop? Following this weekend's Lebanese legislative elections, Hezbollah might make good on threats to avenge the killing of member Imad Mughniyeh, which the group blames on Israel. For the moment, Hezbollah is concentrating its time and resources on its performance at the ballot box, but its leadership is unlikely to let his death go without a response. Any provocative action from Hezbollah is highly likely to draw a forceful Israeli response.
There is also a potential domestic political rationale underlying a future Israeli attack on Hezbollah. While the 2006 Israeli campaign against Hezbollah was politically damaging for Olmert's administration (and ultimately cost defense minister Amir Peretz his job), the recent offensive against Hamas was domestically popular and bolstered support for Ehud Barak, Peretz's replacement.
A successful strike on Hezbollah would be significantly more difficult to achieve than the recent attacks on Hamas. But if the Netanyahu government sets clear, attainable goals and successfully manages the Israeli public's expectations, it could improve its standing. Some good news might come in handy, given the economic challenges the government now faces, problems which have undermined its popularity in recent weeks.
Netanyahu is struggling to maintain an awkward hard-right coalition despite falling tax receipts, rising unemployment, and increasing fiscal demands for social services. In a recent Knesset speech, Netanyahu emphasized that the economic challenges that Israel faces are compounded by security threats. While the global economic downturn may prevent Netanyahu from unilaterally turning Israel's economy around, he may reckon that Israel can deal with security risks on its own.
By Eurasia Group analysts Geoff Porter and Willis Sparks
The new Israeli government has wasted no time in confirming its hawkish reputation on both Iran's nuclear program and the Israeli-Palestinian conflict. Blunt comments from Prime Minister Benjamin Netanyahu and Foreign Minister Avigdor Lieberman signal a risky road ahead -- and an increasingly uneasy relationship between the U.S. and Israeli governments.
Netanyahu entered office with a warning: If the U.S. administration does not lead the charge in halting Iran's nuclear ambitions, Israel may decide that it has no choice but to attack Iran's nuclear facilities. And his new foreign minister, Avigdor Lieberman, leader of the hard-line Yisrael Beiteinu party, has argued that Israel is not bound to abide by understandings reached between the previous Israeli government and the Palestinian Authority. He added that Israelis should perhaps prepare for war rather than peace.
Whether he is truly prepared to give the order to target Iran's nuclear facilities any time soon, Netanyahu's comments on Iran represent an effort to influence the Obama administration's approach to Iran, one that has begun with a call from Washington for a more constructive relationship with Tehran. The new Israeli prime minister wants to ensure that the Obama administration keeps its pledges to block Iran's nuclear program at the top of its agenda -- that it understands Israel can't afford to allow negotiations with Iran to drag on indefinitely. Israel will deliver that message again in June with a civil defense exercise that simulates multiple missile strikes on Israeli territory. Israel will also probably try to weaken Iran's regional proxies, Hamas and Hezbollah -- particularly if a U.S.-led diplomatic track makes airstrikes on Iran less feasible.
The next three months will represent a period of heightened risk ahead of Iran's presidential elections on June 12. In addition to the Israeli warnings, Iranian President Mahmoud Ahmadinejad could face a tough challenge from Mir Hossein Mousavi, a popular former prime minister who has criticized Ahmadinejad's mismanagement of an economy plagued by high inflation and gasoline rationing. Aggressive Israeli rhetoric could provide Ahmadinejad an opportunity to provoke an international crisis to rally Iranians to his government -- and to boost his position in the polls.
If Netanyahu's comments were predictable, Lieberman's were much stronger than expected. Though consistent with his previous positions on the Palestinians, Lieberman's statements offered a sharp contrast with Netanyahu's recent pledge that his government would work to ensure continuity on the Palestinian issue from the previous government to his own.
It's no surprise that the choice of Avigdor Lieberman will add an element of friction in US-Israeli relations, but his assertion that Israel is not bound by commitments made during the U.S.-brokered Annapolis negotiations will cause some serious heartburn in Washington. The Obama administration believes that a visible commitment to resolve the Israeli-Palestinian conflict will restore U.S. credibility across the Middle East and help it advance its diplomatic agenda in other countries. Lieberman's comments will make the Obama administration's goal that much harder to achieve for as long as this new Israeli government remains in power.
by Ian Bremmer
As President Shimon Peres begins consultations with Benjamin Netanyahu, Tzipi Livni, and others over formation of the next Israeli government, let's take a step back and a longer-term view of the Israeli-Palestinian conflict.
Over the course of the next few years, the problem will likely get worse, not so much because of who will lead the Israeli government, Hamas, Fatah or Hezbollah, but because inevitable technological changes will tilt the balance toward intensified conflict.
Israelis have proven many times that they're tough and creative enough to face down new threats to their security. But in the not-too-distant future, militants will have weaponry that is technologically sophisticated enough to effectively target Tel Aviv from outside Israel -- from outside even the "buffer zone" established in southern Lebanon by international peacekeepers to keep Israeli Defense Forces and Hezbollah further apart following their war in 2006. Once Hezbollah can hit Tel Aviv with a rocket equipped with a relatively sophisticated guidance system from anywhere inside Lebanon, life will be much tougher for Israelis.
Everyone knows that Israel is a small country. But many outsiders don't realize that more than half its population -- and the core of its economy -- are based in and around Tel Aviv. That makes the country and its security especially vulnerable to longer-range, increasingly accurate ballistic missiles.
I'm not talking about a threat to Israel's very existence. This is a country that's been in plenty of tougher fights over the past six decades. But as Tel Aviv becomes directly vulnerable, Israel's extremely mobile and globalized population -- and its strong activist diaspora -- will become a weakness, because they will be the most vulnerable to attack and the first to leave. We've seen this problem in other countries with strong diasporas -- like Armenia and Lebanon -- both of which hollowed out economically as a result.
At that point, there's a risk of a sharp shift to the right in Israeli politics, much sharper and further to the right than the one we've seen in recent months. Under this circumstance, we'd likely see the most democratic government in the region in much more direct conflict with Israeli Arabs. We'd also see a spike in violence in Gaza, the West Bank, and within Israel's borders.
Once this point is reached, Israelis, Palestinians, the United States, and the governments of neighboring Arab states will find themselves at a fork in the road. The more optimistic view is that the potential for regional conflagration will force the United States and Arab governments to step in with pressure (and promises of funding), to create their own security and economic solutions for the Israeli-Palestinian conflict. For example, the Jordanians could take on the burden of the West Bank with Egyptians doing the same in Gaza. That requires a high degree of political stability and self-confidence in Egypt and Jordan, and it could only work if the Israeli-Palestinian conflict already threatened them far more directly than it does now. There are other possible solutions, but the principle problem, as with so many other "intractable conflicts" around the world, is that no consensus in favor of a solution can be reached within the international community until the conflict reaches a hard boil and threatens to spill across borders.
The second scenario, wholly possible, is that Arab states can't agree on a way forward and instead make demands on Israel that its increasingly embattled population won't allow its government to accept. Under this scenario, there is a much higher likelihood that Israel would become economically unviable and an isolated political pariah -- one that cannot count on support even from the United States. That's a very bad scenario for the broader Middle East.
Which scenario is more likely? I'm an optimist, and the Arab countries in question are probably moderate enough to agree on a way forward that averts worst-case scenarios for the region. But we can't discount the problem of Arab infighting and indecision, even in the face of potential disaster. I'll go with the first scenario as the more likely, but not with much confidence.
MENAHEM KAHANA/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.