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.

Must-Reads

1. "Freshmen From Kennedy to Double Amputee Join Polarized Congress"
Steve Walsh, Bloomberg

An interesting glimpse at some of the new personalities in the 113^th Congress, a group of representatives that runs the gamut of conceivable paths to Washington -- and the new Congress breaks records, with 81 women in the House and 20 women in the Senate (both all-time highs).

2. "Discordant Development and Insecurity in Africa"
Richard Joseph, allAfrica.com

How to reconcile the similar economic growth we've seen in Mali and Ghana with their starkly different development trajectories? There's no simple answer, but this piece is a good primer on many of the variables involved. 

3. "The Art of Snore"
John Arquilla, Foreign Policy

On US defense spending, are there more than budget cuts to fear?  Is there an innovation deficit? Arquilla outlines what he perceives as shortcomings in the current military spending approach -- as well as some interesting solutions.  

4a."Myanmar Launches Airstrikes on Kachin Rebels"
Simon Roughneen, Christian Science Monitor

4b."Burma's Military Follows Own Course in War against Kachin Rebels"
Jonathan Manthorpe, The Vancouver Sun

When Barack Obama and Hillary Clinton visited Myanmar in November, it was an historic occurrence -- the first-ever US presidential visit to the country, and a firm endorsement of the recent reforms that have taken place. But while national hero and opposition leader Aung San Suu Kyi warmly greeted the visitors, she also admonished that "we have to be very careful that we are not lured by a mirage of success." Fighting between the military and Kachin rebels in the north has clouded reform efforts. And, as Jonathan Manthorpe explains, Myanmar's relations with China -- and water security issues -- underpin much of the issue. These are two sources of conflict that are only trending upward throughout the region as a whole. 

Longer Reads

5. "Better Than Human"
Kevin Kelly, Wired

At Eurasia Group, we've devoted a lot of attention to the long-term labor force impact that the advent of robotics and 3D printing will have, particularly on emerging markets like China, where the country's greatest resource -- cheap labor -- could very well become one of its biggest obstacles as its citizens are displaced from manufacturing jobs following technological advances. Kelly looks on the bright side of a robotic future, outlining the opportunities for innovation and productivity that come with a mechanized work force. His vision is a bit rosy, but it's a useful counterweight to the much-discussed downside risks.  

By Risa Grais-Targow

By all rational measures, Cuba is effectively irrelevant to the United States. The island is small, its economy is about the size of New Hampshire's, and since the collapse of the USSR it poses no strategic threat. Yet the Castros have a habit of popping up in the headlines. In part, that is because of the inevitable fascination with a small country that has been a foreign policy irritant for the United States since 1959 and, more recently, its outsized role in Florida politics. But change is coming to Cuba, slowly but surely, and with change comes the possibility of unexpected volatility.

Cuba is gearing up for the first Cuban Communist Party (CCP) congress in 14 years, to be held April 16-19. Much of the event will be focused on formalizing Raul Castro's small steps toward economic liberalization (e.g., trimming the state's workforce and allowing more room for entrepreneurs) outlined in a November 2010 wish-list of 300 reforms. Another, perhaps more important, development will be the identification of the next generation of leaders, including the appointment of a new second-in-command for the CCP (the second most powerful position in Cuba). The long delay since the previous CCP congress suggests that there has been much internal wrangling over that issue.

The Castros are clearly on the way out (Fidel is 84 and Raul is 79), and the CCP has promised that the congress will usher in a new generation of leaders. Just how new and young they will be remains to be seen. On March 25, Raul Castro announced that the 50-year-old Economy and Planning Minister Marino Murillo, who has been the architect of much of the economic reform agenda, would now oversee its implementation as a sort of economic czar, signaling Raul's devotion to the reform process. The CCP may, however, simply shuffle senior party members into new positions rather than appoint younger reformers.

Such developments could also be important for the U.S. and perhaps trade with Cuba. Unless Congress decides to revisit the issue, the Helms-Burton Act of 1996 stipulates that the Cuban embargo cannot be lifted while the Castro regime is still in power. A shift in the leadership could also open the way to dealing with other potential concerns. For example, Cuba is actively exploring for oil in the Gulf of Mexico, raising U.S. concerns about how it would handle disasters similar to the 2010 Macondo well blowout.

But the CCP faces deeper challenges than this round of leadership refreshment. Most young Cubans are disenchanted with the regime. They have spent most of their lives in post-Soviet Cuba dealing with grinding economic hardship. Finding true believers among that generation is likely a difficult task and the regime's ability to implement meaningful reforms will affect the stability of Cuban politics further down the line.

Risa Grais-Targow is an analyst in Eurasia Group's Latin America practice.

By Dan Alamariu

Despite rising concerns over a Republican Senate filibuster, over the next month or so, the U.S. Congress will probably pass the most comprehensive financial regulatory reform overhaul since the aftermath of the Great Depression. Yet the proposed overhaul has drawn strong criticism-from the left and the right-for not doing enough to prevent the next crisis, whether in dealing with too-big-to-fail banks, oversight of "shadow banking" or by not providing solutions for dealing with Government Sponsored Entities like Fannie Mae and Freddie Mac. Market reaction to each step in the congressional process has only added to the skepticism. Bank stocks gained both when the reform bill cleared the Senate and when it was reported out of the House-Senate conference. That indicates that investors see reforms as "manageable" for the financial sector.

In the very short term, the markets and the bill's critics have a point: it could have been tougher. It won't be a replay of the Glass-Steagall Act that separated investment from commercial banking in 1933.

But these reactions miss a crucial point: The reforms currently debated in Congress represent only the opening salvo of a larger reform process that will take years to complete and whose outcome will be both unexpected and more stringent on financials than the currently debated legislation.

Despite its critics, the Dodd-Frank bill (assuming it clears the Senate) will limit some of the activities that helped trigger the crisis. Large systemically important banks will need to hold more capital. Consumer protections will go a long way toward addressing issues like mortgage lending. Derivatives rules will move a significant number of these products into clearinghouses, allowing for increased transparency. Add enhanced investor protections, reforms of credit rating agencies, and changes to corporate governance, and you have something more substantive than its critics appear to realize. These may not be the radical solutions that some prefer, but they will have a large long-term cumulative impact on the U.S. financial sector.

It's impossible to say, of course, whether these measures can head off the next meltdown. The new rules will also create new risks and new loopholes that will be exploited. That's always the case with regulatory reform. But the current package will nonetheless limit the scope of financial activities that banks undertake today, and there are just too many changes in the Dodd-Frank bill to conclude that the proposed reforms are a wash. Their impact will be staggered, as rules based on the legislation will come online over a two-year period, if not longer. But they will impose significant hurdles on large financial institutions, which may become less competitive relative to smaller institutions. It may not be the sudden change that critics prefer, but it could still lead to a welcome and gradual diminution of the too-big-to-fail risks over time.

Second, the current legislation is far from the last word. Congress will take up regulatory reform again next year, following the Financial Crisis Inquiry Commission (FCIC)'s report in December. Mandated by Congress last year, the FCIC is based on the Pecora Commission that investigated the causes of the Great Depression and provided the rationale for the landmark pieces of legislation of the Great Depression Era (the Glass Steagall Act, the Securities Act of 1933, and the Securities Exchange Act of 1934). The FCIC has kept a relatively low profile until now, but its findings will bring another round of legislation. It remains unclear what we can expect on the 2011 agenda; that will depend on the post-election balance of power within Congress, on the perceived impact of the current regulations, and, obviously, on the findings of the FCIC. But there will be another debate and more legislation.

Then there's the bigger picture. Regulatory reform following a crisis is often a matter of trial and error. New rules are written, and sometimes rewritten. More regulations are introduced as the economic picture changes and as new risks land on the policymakers' agenda. Congress was still passing new pieces of Depression-era reform as late as 1940.

Congress may no longer have an 11-year attention span, but the current round of reform marks the beginning of a process that will last several years. And Washington won't be the only source of change. The Basel capital accords, which set the thresholds for capital reserve requirements, liquidity, and leverage that financial institutions must hold, are also being negotiated. This complex multilateral process involving all the developed economies, will take years to implement, once the changes are agreed on, likely later this year or early next. Finally, the United States will need to harmonize its extensive regulatory reforms with other large jurisdictions, most notably the European Union, and further changes to the regulatory environment will be needed.

The complexity and time-span of this process guarantees that nobody can predict exactly how the United States and global architecture will look in three or four years. A surge of economic growth -- or another financial crisis -- might radically change the list of available options. One thing we can say for certain: The current debate is merely the "end of the beginning" for reform of the U.S. financial sector.  

Dan Alamariu is an analyst in Eurasia Group's Comparative Analytics practice.