Posted By Ian Bremmer

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 by tweeting at us via @EurasiaGroup or @ianbremmer.

Must-reads

"Mexico Makes It: A Transformed Society, Economy, and Government"
Shannon K. O'Neil, Foreign Affairs

There are plenty of underappreciated bright spots in Mexico. This piece gives a compelling recent economic history of the country and spells out the risks and opportunities Mexico faces today.

"Is Kurdistan the Taiwan of the Middle East?"
Kevin Sullivan, RealClearWorld

Is Kurdistan a rare winner in an ever-turbulent Middle East?

"Life After Oil and Gas"
Elisabeth Rosenthal, New York Times

How does energy use differ around the world? A staggering fact: New York State's 19.5 million residents consume as much energy as the 800 million residents in sub-Saharan Africa (excluding South Africa).

"The Middle Kingdom's Problem with Religion"
Simon Scott Plummer, Standpoint

In 2011, there were an estimated 67 million Chinese Christians and rising. Some predict that in a few decades, Chinese Christians could outnumber those in the US (there are currently 170 million and falling). How will China's religion demographics affect its development?

China-Apple-Weibo reads:

"Did China Just Declare War on Apple? Sure Looks Like It"
Gordon Chang, Forbes

"Apple in China: Unparalleled arrogance, undisclosed agenda"
The Economist

"Weibo: The Real People's Daily"
Jonathan Dehart, The Diplomat

It seems like an anti-Apple campaign is brewing in China-but who is behind it? What's the motive? Apple CEO Tim Cook's January prediction that China will become the company's largest market looks inauspicious in hindsight. One thing is for sure: social media is exploding in China and Weibo is upending the calculus of information flow and control.

Posted By Ian Bremmer

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.

China has been all over the news this week, with the New York Times hacking episode dominating headlines. But recent stories related to China venture much further than cyberspace. This week's must-reads has a China theme.

Must-reads

1. "The resource race: China dips toes in Arctic waters"
Christoph Seidler, Spiegel Online

This piece outlines China's new ventures to the Arctic -- and how China's diplomatic tactics are shifting.

2. "China's love affair with cars chokes city air"
Louise Walt, Associated Press

Over the last decade, the automobile industry has skyrocketed in China. Last year, 13 million cars were sold. But what kind of environmental impact will such a rapid shift have?

3. "Making room
The Economist

In 2010, there were roughly 4,000 cities with populations of 100,000 or more. (China had about 400 of those). But between 2010 and 2050, the UN anticipates that the world's urban population will double. This piece reviews a new book by Shlomo Angel called Planet of Cities -- the book predicts how future urbanization will play out. Here's an interesting rule of thumb: usually, a country's biggest cities break down such that the largest city has twice the population of the second largest, three times that of the third largest...etc.

4. "Chinese labour pool begins to drain"
Jamil Anderlini and Ed Crooks, Financial Times

China's working age population unexpectedly shrank last year -- a trend that wasn't meant to begin until later this decade. What do China's shifting demographics mean for the economy?

5. "Mexico: the new China"
Chris Anderson, The New York Times

Is cheaper always better? This piece highlights some of the advantages of using Mexican manufacturing from an American business perspective. Anderson argues that it allows for more product evolution, innovation, and customization -- and Chinese labor is getting less and less cheap.

Posted By Ian Bremmer

By Aditya Bhattacharji, Daniil Davydoff, and Scott Rosenstein

Attacks on U.S. interests in the Middle East are not the only security threats to have emerged from the region in recent weeks. In epidemiological circles, concern has been mounting over the discovery of a novel coronavirus in Saudi Arabia, just as Muslims from all over the world begin the annual hajj pilgrimage to Mecca at the end of October.

In the coming weeks, much-needed surveillance and scientific analysis will likely yield important details regarding this virus's threat to human health. But healthcare system shortfalls in some of the countries that dispatch the most pilgrims present obstacles to disease monitoring. And regardless of the microbe's eventual health, economic, and political impact, these deficits are a vivid reminder of institutional challenges to global disease prevention and control.

Little is known about the novel pathogen, but it does belong to the same family as the virus behind the 2003 SARS outbreak, a previously unknown microbe that killed nearly 800 people and sickened more than 8,000. SARS revealed the political and economic  risks attendant to emerging infectious diseases. But attention to these dangers has increased considerably since SARS, and this novel virus has thus far been confirmed in only two patients, one of whom is under intensive care at a hospital in London.

Whether it's a heretofore unknown virus, polio, or a host of other pathogens, the upcoming Hajj presents significant public health risks. The annual event attracts millions of pilgrims every year and is therefore an "ideal environment for spreading infectious diseases," according to the U.S. CDC. Although the Saudi government has mandated several vaccinations and dedicated considerable resources to lower infectious disease risks, its personnel cannot track pilgrims once they have left the country. And while the WHO has already issued basic case definitions for identifying infected patients, healthcare system deficiencies abroad could allow potential cases to slip through the cracks and go underreported.

Home to roughly 200 million Muslims, Indonesia is sending the world's largest contingent of hajj pilgrims (approximately 200,000). At home, the vast majority relies upon a decentralized healthcare system that suffers from poor information sharing and one of the most inadequately staffed healthcare workforces of any ASEAN nation. Those with means increasingly seek medical treatment abroad. The trend has become pronounced enough for Indonesian president Susilo Bambang Yudhoyono to implore the public, in August 2012, to utilize domestic medical facilities, despite having availed of foreign medical care himself. Indonesia is ill-equipped to track diseases over a territory that spans 17,500 islands even under normal circumstances. There's been speculation that an individual returning home from the Hajj was responsible for the reintroduction of polio into Indonesia in 2004 (via a strain of the disease traceable back to northern Nigeria).

As the second-largest Muslim majority country, Pakistan's quota for pilgrims is more than 179,000, though only about 95,000 Pakistani Muslims plan to take part in the hajj. Even so, recent developments in the country's healthcare sector could impede epidemiological surveillance of returning pilgrims. In 2011, Pakistan devolved its health ministry, relegating previously centralized functions to a variety of provincial and federal-level institutions. Responsibilities for disease surveillance are now fragmented between multiple government agencies and power struggles are reportedly common. While Pakistan may eventually develop a more cohesive public health system, the current state of surveillance is worrisome in the run-up to the hajj.

Some smaller contributors of pilgrims, such as Syria, may also be ill-prepared to catch cases of infection. Current unrest in that country, which has produced considerable strain on the healthcare system, could severely slow down the detection of unusual disease symptoms.

Should pilgrims come home with an infection acquired during the pilgrimage, there may be little to stop the disease from going undetected and infecting others. Whether the newly discovered coronavirus turns into a significant public health threat or not, its emergence reveals the danger that exists when health services are compromised, but the evolution and spread of disease are not.

Scott Rosenstein is director and Aditya Bhattacharji and Daniil Davydoff are analysts in Eurasia Group's Global Health practice.

KHALED DESOUKI/AFP/Getty Images

Posted By Ian Bremmer

By Ian Bremmer and David Gordon

Individual hackers and organized crime organizations have targeted businesses for years, but cyberattacks have rarely created political risk. They do now. The centralization of data networks -- both in energy distribution (the move to the smart grid) and information technology more broadly (the shift to cloud computing) -- is increasing the vulnerability of states to potentially debilitating cyberattacks. As governments become more directly and actively involved in cyberspace, geopolitics and cybersecurity will collide in three major ways.

First, new cyber capacity allows governments to project power in a world where direct military strikes are much more costly and dangerous. There have been plenty of stories about well-funded efforts from inside China to manipulate access to the Internet, but it's the almost-certainly state-sponsored Stuxnet attacks on Iran's industrial infrastructure that provide the clearest early glimpse of what tomorrow's carefully targeted state-sponsored attack might look like. When a missile is launched, everyone knows where it came from. Cyberattacks are a very different story.

Second, we'll see more cyber conflicts between state-owned companies and multinational corporations, providing state capitalists with tools that give them a competitive commercial advantage. China and Chinese companies are by far the biggest concern here. Throw in Beijing's indigenous innovation plans, which are designed to ensure that China develops its own advanced technology, and this is probably the world's most important source of direct conflict between states and corporations.

Third, there is the increasing fallout from the WikiLeaks problem, as those sympathetic to Julian Assange unleash attacks on governments and the corporations that support them in targeting WikiLeaks and its founder. In fact, the principal cybersecurity concern of governments has shifted from potential attacks by al Qaeda or Chinese security forces to radicalized info -- anarchists undertaking a debilitating attack against critical infrastructure, a key government agency, or a pillar of the financial system. Whether attacks are waged for power (state versus state), profit (particularly among state capitalists), or for 'the people,' (as in the WikiLeaks case), this will be a wildcard to watch in 2011.

On Friday, we'll talk about Top Risk no. 4: China -- and why its policymakers will frustrate much of the international community this year.

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

JIM WATSON/AFP/Getty Images

Posted By Ian Bremmer

By Hani Sabra and Willis Sparks

The friction between the United Arab Emirates and Research in Motion (RIM), isn't new. Since at least 2007, security officials in the UAE have complained that the Canada-based company that makes BlackBerry devices uses encryption technology that makes it impossible to monitor the content of BlackBerry-generated messages within the country -- creating opportunities for spies, terrorists, and other anti-government militants to communicate within the emirates without fear of detection. RIM exports its data offshore, denying authorities access to its systems.

Last weekend, the UAE announced that on October 11 it would suspend BlackBerry services to the country's subscribers and visitors. A few hours later, Saudi officials followed suit. Emirati authorities say that unless RIM lifts the veil on its messaging encryption, allowing security officials to track threats to national security, there will be no service inside the country. Beyond perceived threats from Iran, al Qaeda-related groups, or other militants, Abu Dhabi would like to avoid any repeat of the embarrassment that followed the assassination of a Hamas leader in Dubai in January, an attack that Emirati officials blame on Israel.

But the UAE will probably compromise with RIM before the deadline. The emirates have real security concerns, but they also want to build on their role as the Arab world's primary commercial and tourism hub. There are half a million BlackBerry users in the UAE, about ten percent of the total population, and blocking BlackBerry is bad for business. The UAE announced the ban to signal RIM that it's serious about security, but it gave a ten-week heads-up to allow time for a workable compromise.

The UAE will probably do most of the compromising, since RIM, which operates in more than 170 countries, won't live or die based on access to the Emirates. The UAE simply doesn't represent a large enough piece of RIM's business to persuade the company to set a precedent which other governments will insist on following. RIM can make modest concessions without altering the company's security model, and that's probably what it will do.

It's also possible, though much less likely, that several other countries will follow the UAE's lead, forcing RIM to either fundamentally alter its security model or surrender access to some especially lucrative markets.

The Saudis, who say they will flip the switch later this month, will face much less pressure to compromise. Saudi Arabia remains an oil-based economy, and its leaders have no ambition to compete with the UAE for the chance to host more corporate or financial leaders -- or foreign tourists. And though its population is four times larger than the UAE's, Saudi Arabia has fewer BlackBerry users. Closing the door on RIM will have little impact on the country's business and generate little if any domestic opposition.

But this is not simply a story of authoritarian governments and their drive for control. The world's leading democracies have their own communications-related security concerns. In July, India threatened to ban Blackberry use unless RIM provided Indian security officials with access to data transferred by its secured messaging system. RIM reportedly promised to work toward compromise, and talks continue.

And what would happen if militants coordinated a successful terrorist attack inside the United States using BlackBerry's encrypted technology? Remember the phrase "warrantless wiretapping?" If American media reported that the U.S. government had no access to the communications that terrorists use to kill Americans on U.S. soil, how fast would lawmakers of both parties rush to force open BlackBerry's coded communications?

There are many forms of government, but fear is universal. This is a conflict that political officials and technology companies will be fighting on many fronts and for many years to come.

Hani Sabra is an analyst in Eurasia Group’s Middle East practice.  Willis Sparks is an analyst in the firm’s Global Macro practice.

AFP/Getty Images

Posted By Ian Bremmer

The 11 people arrested and accused of spying for Russia have titillated the tabloids and reminded Cold War veterans of the good old days. But they won't do much damage to U.S.-Russian relations. In fact, the two governments are getting along much better at the moment. There are three major reasons for this, and all of them have to do with the view from the Kremlin.

First, Russia's recently ailing economy is now feeling much better. The financial crisis inflicted more damage on Russia than on most other emerging markets, in part because of a steep drop in oil prices. When Obama first proposed a "reset" in U.S.-Russian relations, Moscow was hemorrhaging reserves, and Kremlin officials hadn't arrived at any clear idea on what to do about it. Prime Minister Vladimir Putin was traveling the country assuring local workers that complacent oligarchs, not state officials, were to blame for the volatility, and that their government would ensure that all would again be well. President Dmitry Medvedev and his more western-oriented advisors were beginning to look like convenient scapegoats should the public become restive and Putin run out of businessmen to punish.

Things have changed. The economy has picked up thanks to some skillful economic management and a rise in oil prices out of the danger zone.

Second, Russia is feeling much better about its neighborhood. The Orange Revolution is now a distant memory. In 2004, a presidential election in Ukraine lifted the Putin-endorsed Viktor Yanukovych over Viktor Yushchenko. But Ukrainian nationalists and several Western governments charged fraud, and the race was re-run. Yushchenko won the do-over, fueling suspicion and hostility in Moscow. But his leadership earned little public confidence during his five-year tenure, and Ukraine's latest election elevated Yanukovych, who has now taken his country's bid to join NATO off the table for the foreseeable future.

Read on

Alex Wong/Getty Images

Posted By Ian Bremmer

I attended a dinner on alternative energy, hosted by Liz Claman over at Fox (previously CNBC), with a couple of heavy energy hitters and the ever-present Tom Friedman on the panel. 

It was a pretty bleak couple of hours, given the aftermath of Copenhagen. Most surprising to me was a snap poll of the room, which had about 100 in attendance -- I'd say 60 Americans - asking who thought some form of climate change/energy bill would pass in congress by June. Zero folks raised their hand. (Problematic methodology warning -- it's harder to raise your hand than to keep it down, but still...) By next June? About 25 percent, 30 percent if I'm feeling generous. And it's late, so I'm not particularly.

Tom Friedman, in his every year Davos garb (casual oxford and sweater), had the most enjoyable quote of the evening: "If horses could vote, we wouldn't be driving cars." Really makes me glad we've limited suffrage.

I have no idea if that was already in a Friedman column. Or even Hot, Flat and Crowded. (My apologies, Tom). But having said that, my snap view is that he's a national treasure. He tends to be sensible, he works/travels the world like a banshee with near unparalleled access, and -- most importantly -- he actually speaks English. Crowds of all shapes and sizes can actually relate to what he's saying. They don't tune him out, even when they're jetlagged after a long overnight flight to Zurich. 

I'm convinced we'd be in a much better place on climate change if most serious climatologists could actually present in plain English and engage an audience.

Case in point from dinner: The truly lovely Bangladeshi economist Muhammad Yunus. He is charming one-on-one, and doing tremendous work bringing affordable alternative energy (solar power) to villages throughout his country. But his ponderous intervention, late in the dinner, three times returning to the importance of having the people running the country and not the government, had everybody scratching their heads. Affably, mind you. But still.

One more meeting, and then there's a Clinton thing (he's been ubiquitous today ... and the one fellow at Davos that folks are stopping to take pictures of) that I'd like to attend. Word is Clinton's talking about Haiti. And losing his voice. We'll see.

Ian Bremmer will be blogging from Davos this week sending reports and commentary from inside the World Economic Forum.   

FABRICE COFFRINI/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.

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