By David Bender

On March 7th, Iraq will hold its second parliamentary election and the world will again see pictures of Iraqis' purple fingers. But these images of democratic participation may obscure more than they reveal: Iraq's democracy is in trouble. Currently, only 28 of more than 500 banned opposition candidates will be permitted to run in the election. Through clever political and judicial manipulation, the opposition has been eliminated before election day and left with no clear constitutional or legal recourse.

Since January, an aggressive campaign to ban more than 500 largely Sunni and secular Shia candidates -- mostly from Iyad Allawi's largely Sunni and secular Shia Iraqiyya Alliance for alleged Baathist links -- has started to undermine the weak democratic process that was beginning to take shape in 2009. The Iraqiyya Alliance presented a non-sectarian alternative to the increasingly unpopular Iraqi Prime Minister Nuri al Maliki; and as a pro-US, secular nationalist, Allawi is a nightmare for pro-Iran factions in Iraq. With Maliki's support, the Justice and Accountability Council (JAC), which is charged with de-Baathification and is run by two notoriously pro-Iran figures, Ahmed Chalabi and Ali Faisal al Lami, ordered electoral bans against many Iraqiyya candidates linking them to Baathism.

Read on

Did everyone notice the Saudis suggesting that further sanctions against the Iranians are well and good, but that they'd rather see a quicker resolution? (The FT did, with the Saudis saying that they meant the Middle East peace process. Umm, that's not credible. And not what they've been saying privately.) 

I'd discount hints at support for the more direct approach as 90 percent bluster, since the Saudis know the Obama administration is completely committed to the present course. But the absence of routine communications between Saudi Arabia and Israel gives you the remaining 10 percent -- many in the kingdom could think of worse outcomes than having the Israelis "resolve" their looming Iranian nuclear issue through surgical strikes. 

At one level, given the attendant risks in the region, it's an eye-opening assertion. At another, in the absence of Bush administration hawks willing to keep the "or else" drumbeat going, it's a little less surprising.  

Having said that, when I was in Saudi Arabia a few weeks ago -- the geopolitical issue most frequently brought up was neither brewing tensions with Iran (No. 2 issue) nor the potential for a failed state and cross-border terrorism coming out of Yemen (No. 3 issue) ... but the enormous investment opportunities afforded in a stabilizing oil-rich Iraq. Not at all where the Saudis were a year ago. Interesting.

By Ian Bremmer and David Gordon

Now for the red herrings, the places and problems where we think there is less risk than meets the eye.

In Iraq, elections in March will spark violence as foreign militants try to undermine the transition to Iraqi national sovereignty. A U.S. troop withdrawal beginning right after the elections will invite more violence. We could see a Sunni election boycott. But compared to what we've seen before, and what might have happened, the overall story is remarkably positive. For the markets, Iraq is suddenly an opportunity. The institutions are becoming legitimate (even with the unresolved Kurdish issue), the army is starting to work, and most importantly, political leaders from all communities are beginning to recognize the value of Iraq's tremendous natural resource base from which all can benefit if they make the compromises to maintain stability in the country. For all their basic governance problems, there's very little chance of Iraq actually becoming a failed state at this point -- a meaningful risk even a year ago. It's not a place we're ready to vacation in, but we're bullish on Iraq.

Iraq is also moving in a positive geopolitical direction. Ties with Turkey have grown particularly quickly -- not just in the Kurdish region in the north, but in Baghdad. That's one of the few positive stories for Ankara this year. Arab states in the region are still hesitant to build ties with Iraq as they wait for clarity on its next government. Maliki hasn't been a popular figure with neighboring gulf Arabs, but they recognize that Iraq's economic consolidation won't wait for another four years, and they'll start making political overtures to Baghdad if Maliki's mandate is extended. And if the Iraqi prime minister isn't returned (which is certainly plausible), we'll see a stream of head of state visits to place relations with a new leader on a more solid footing. So whatever the electoral outcome in March, we're likely to see Iraq on a faster path to integration with regional political and economic infrastructure next year. Meanwhile, Iran's role in Iraq has quietly receded. Iran's controversial presidential election and subsequent state violence did nothing to improve Tehran's influence among Iraq's Shia population, where Iraqi nationalism has been steadily growing.

The headlines for Iraq next year will undoubtedly be the timing/delays/pace of the US troop withdrawal. But the real story is going to be a moderate government, growing geopolitical influence, and the most exciting new investment opportunities the region has seen in a decade.

Read on

By Ian Bremmer

As President Obama works toward finalizing a new plan for Afghanistan, here are five reasons why the challenges U.S. forces face in building stability there are more formidable than those in Iraq:

1) Political legitimacy. Parliamentary elections in Iraq scheduled for January will spark violence, the results will create controversy, and the eventual leaders will take their places within a system that pits lawmakers and cabinet ministers against one another in a more-or-less direct struggle for power. But voters will turn out in large numbers, and Iraq's new political institutions are slowly developing a broad popular legitimacy. That's not true in Afghanistan, which might have been better off without elections earlier this year. Virtually no one believes President Hamid Karzai won the August vote; few will embrace him when he claims victory following the November 7 run-off. He may hold the office, but he has virtually no natural political base in the country. Karzai is not exactly a reliable partner in efforts to build lasting stability.

2) Training of local forces. U.S. forces have had real success in helping the Iraqi government build its police and security forces. The large-scale drawdown of U.S. troops beginning next year will create a power vacuum that encourages battles over political turf and control of oil revenues. We've seen an uptick in violence in recent weeks, and we'll see more in months to come. Corruption remains a serious problem. But the Iraqi government has shown considerable progress over the past year in asserting control over territory and in beating back challenges from insurgents. In Afghanistan, there's almost no local support for a national professionalized military. Because Karzai's government has so little legitimacy, and few local leaders believe he can offer protection against Taliban attacks, very few people are lining up to don a uniform and pick up a rifle.

3) International coordination. In the battle against insurgents in Iraq, the United States has called most of the shots -- with significant (though now more modest) help from Great Britain. American and British forces have been well coordinated from the start, both operationally and strategically. Afghanistan's International Security Assistance Force has included troops from 43 countries with widely varying degrees of professionalism, morale and operational capability. Short of the U.S. military accepting responsibility for the entire mission, there's no short-term fix here.

4) Tribal/warlord patronage networks. More than any other factor, the willingness of Sunni tribal leaders to partner with U.S. forces against a common external enemy has been central to improvements in Iraq's security over the past two and a half years. In Afghanistan, tribal leaders and local warlords face US requests for help against a domestic foe, the Taliban, with whom they may find themselves negotiating long after NATO forces have left the country.

5) Resource base. Iraq has enormously underdeveloped oil reserves, a relatively well-educated urban elite, a population with some limited but real sense of national identity, and a favorable geographical position for development of trade and investment ties with other countries in the region and beyond. For the foreseeable future, the bulk of Afghanistan's cash will come from foreign aid and opium production. Neither offers much hope as a source of long-term stability.

Iraq's government has a long way to go before it can function as a set of independent, secure and self-confident institutions and as guarantor of Iraq's long-term stability. But in Afghanistan, it will be years before local leaders can move from coping with serious problems to solving them. 

Ian Bremmer is president of Eurasia Group.

Majid Saeedi/Getty Images

By Eurasia Group analyst Willis Sparks

The Iraqi government draws 95 percent of its revenue from oil production. Every plan its political leaders can imagine will depend on reliable access to oil profits, and every political faction knows that the country can't achieve lasting political stability until a durable agreement is reached on who owns the estimated 115 billion barrels of reserves and who holds the right to sell them. As tens of thousands of US troops withdraw from the country over the first eight months of 2010, competition for control of that oil will intensify.
 
After years of haggling, Iraq's political leaders have yet to reach agreement on a hydrocarbon law that determines how oil profits will be divided among the country's competing factions -- a plan that is necessary to revive an energy sector that has suffered from years of under-investment -- and a steep drop in oil prices from $147 per barrel last July to less than $65 today.
 
Plans to attract badly needed investment and technical expertise from international oil companies face serious political obstacles. Many Iraqis continue to believe that the United States invaded Iraq to grab control of its oil. As Iraq fell under foreign military occupation, its would-be political leaders discovered that pledges to protect Iraqi oil for Iraqis boosted their personal popularity. Support for opening the country's oil sector to Western companies won't win many votes in upcoming parliamentary elections, now scheduled for January.
 
Political competition for control of the country's oil will sharply intensify next year. The post-Saddam constitution stipulates that Iraq's natural resources belong to the Iraqi people. But different political factions read this idea in different ways. The document also provides that "the federal government, with the producing governorates and regional governments, shall undertake the management of oil and gas extracted from present fields." Some interpret this clause to mean that the central government in Baghdad has the right to manage Iraq's oil. Provincial leaders argue that this stipulation gives local governments the right to exploit resources located on their territory, especially in newly discovered fields.
 
This is the dispute that generates constant tensions between Baghdad and the Kurdistan Regional Government (KRG). Kurdish leaders, ever ready to assert the KRG's political and economic autonomy and much less resistant to doing business with Western companies, claim the right to formulate their own energy strategy and to award contracts to international oil firms. Baghdad insists these contracts are invalid and has "blacklisted" companies that invest in the Kurdish region. This multilevel game of chicken stokes political instability and fuels mutual suspicion.
 
And though the two sides managed to agree on an improvised revenue-sharing scheme that gives the KRG 17 percent of the profits from the oil exploited on its territory, the lack of an established energy law limits the inflows of investment that Iraq's rusting energy sector badly needs if it's going to maintain current levels of production -- let alone expand output.        
 
The Iraqi government has now received its wake-up call. On June 30, Baghdad launched an international bid round to offer service contracts for field development. Iraqi officials calculated that access to some of the country's vast reserves would persuade reluctant firms to ignore the considerable political and security risks and jump into Iraq's oil sector. They gambled that the bid round would make for good television, broadcasting it across the country. They were wrong. Oil Minister Hussein al Shahristani now faces an uncertain political future.
 
As Iraq moves toward the next parliamentary elections scheduled for January 2010, oil will remain at the heart of every political debate. And as US troops begin to leave the country in large numbers, the Iraqi government will need steady flows of oil revenue to finance reconstruction of the country, further development of Iraq's army and police forces, and the social spending needed to provide Iraqis with basic services. Until Iraq's various political factions forge the political compromises necessary for equitable sharing of oil profits, and until large-scale outside investment in oil infrastructure expands production and export capacity, there will be plenty to fight over and no guarantee that Iraq can be rebuilt.  

MARWAN IBRAHIM/AFP/Getty Images

By Eurasia Group Analyst Rochdi Younsi

As U.S. combat troops begin a gradual withdrawal from Iraq, a growing number of Iraqi politicians, militia groups, tribal leaders, and others will compete to fill the power vacuum that Americans leave behind. Last weekend's provincial elections across the country have exposed some of the emerging tensions within Sunni and Shia communities.

Most Sunnis boycotted the most recent provincial elections in 2005. But tribal leaders in Sunni-dominated al Anbar province successfully mobilized the community to vote this time, and leaders of the Islamic Iraqi Party (IIP) are determined that control of the provincial council will allow them to claim the speakership of the Iraqi parliament in Baghdad. Official voting results won't be announced for several weeks, but IIP members have already declared victory in several districts.

In response, Sheikh Ahmad Abu Risha, leader of the collection of Sunni tribes known as the Awakening Council, has charged the IIP with fraud and threatens to take up arms. Without intense mediation by both the U.S. and the central Iraqi government, these rival Sunni factions may well provoke new turmoil across Iraq's central provinces.

Local authorities imposed an overnight curfew Tuesday to reduce the risk of armed clashes, but there is little assurance that Iraq's central government and U.S. forces can quell the threat of violence indefinitely -- particularly since the Awakening Council is armed with weapons provided by the U.S. in exchange for cooperation in targeting foreign-born al Qaeda-inspired militants. Prime Minister Nouri al Maliki will try to limit any outbreak of violence, but other Shia leaders in Baghdad will view divisions among Sunnis as an opportunity to consolidate their influence.

Then there's the risk of violence among Shia groups. Early (and incomplete) results suggest that al Maliki's State of Law Coalition leads in Iraq's southern Shia-dominated provinces. Until now, the prime minister has depended on leading Shia factions for support. Victory for his coalition could shift the local balance of power in al Maliki's favor.

Why might that provoke violence? Because members of the Supreme Islamic Iraqi Council and the Fadhila party, both Shia-dominated groups, fear that al Maliki means to enact constitutional reforms that would strengthen the power of the central government at the expense of local authorities and replace the current parliamentary system with a strong presidential regime. Several Shia political parties worry that this plan would reverse the political gains they've made through greater representation in parliament and thwart their plans for regional autonomy (and tighter control of local oil wealth).

Al Maliki has yet to publicly propose a specific plan, but he'll face strong resistance if he backs any idea that strengthens Baghdad at the expense of provincial governments.

AHMAD AL-RUBAYE/Getty Images