Q & A - Eurasia Group president on top risks in 2009

NEW YORK (Reuters) - Leading political risk consultancy Eurasia Group released its annual "Top Risks" report for clients on Monday. Following is an e-mail interview with Eurasia President Ian Bremmer on his forecasts for 2009.

Q - You see populist U.S. government intervention in the economy as one of the biggest risks of 2009. Does this mean the world has misjudged President-elect Barack Obama and his ability to tackle the crisis?

A - Any incoming presidential administration would be overmatched in 2009 by the sheer number of complex challenges the new president will face and the enormous expectations for a change in direction. But the chief source of risk has less to do with Obama than with a Congress looking to reassert itself on policy.

Many U.S. lawmakers (in both parties) feel that the legislative branch has ceded too much of its power and authority to the executive branch over the past eight years. They want that power back. The Democratic leadership, in particular, has taken plenty of heat for failing to flex its muscle following the landslide victory in 2006. They'll have something to prove and won't simply follow wherever Obama leads.

This risk flows directly from the most worrisome current global trend: the willingness of politicians to inject politics into market performance. No matter how forward thinking Obama and the congressional leadership prove to be, allowing populist politics and protectionist pressure to play a substantial role in the rewriting of financial market regulation and the bailout of American companies is a recipe for lasting trouble.

Q - You say a major terrorist attack on the United States is most likely to originate in Pakistan/Afghanistan. Do militants there have the capacity to plan and execute a major attack, and how vulnerable is the United States?

A - The 9/11 attacks didn't require much money or access to sophisticated technology. The al Qaeda leadership simply needed willing recruits and soft targets. Targets inside the United States are not as soft as they were in 2001. International counter-terrorist efforts aimed at tracking militants, their communications, and the flow of funds have made a difference.

But Pakistan and Afghanistan are the likeliest sources of willing recruits in the world. In both countries, the combination of ungoverned space in which to operate, a sympathetic local population, and access to new recruits creates an ideal terrorist launching pad.

Q - If the West is prepared to accept a nuclear Iran and Israel is not, does this mean we may see a rift in 2009 between Israel and its Western allies?