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A police officer grabs a demonstrator during an opposition rally in Moscow on Dec. 14. Some analysts believe the strong powers of Russian Prime Minister Vladimir Putin combined with weak, undemocratic institutions is a recipe for Russian instability. AP NEW YORK, Jan 5 (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?

A - We'll only see signs of a rift between Israel and its Western allies in 2009 if the Israelis launch a unilateral attack on Iranian nuclear sites. Short of that, support for Israel will remain unchanged. Israel doesn't want a nuclear Iran, but few Israeli politicians are willing to endanger the country's relationship with the U.S. by going their own way on Iran.

Over the longer term, however, Israel will eventually find itself in a tougher regional position. As the U.S. reduces its presence in the Middle East -- both as part of a troop withdrawal from Iraq and a broader U.S. recognition that Washington can no longer afford to police the region alone -- the Arab world will learn to live with a nuclear Iran. The Gulf States, in particular, will engage Iran to minimize risks of regional instability. Israel will begin to feel more isolated. How Israeli officials respond to that feeling will be a crucial determinant of the future of their country's relations with the West.

Q - You don't appear to share the concern that an economic slowdown in China could spark serious social unrest there. Why?

A - There is a tremendous amount of unrest in China. That's not new. There are tens of thousands of large-scale protests every year. But the grievances remain localised, and the targets of the anger are almost always corrupt local politicians or businessmen, not the Chinese Communist Party elite.

Many years of strong and sustained economic growth have led many Chinese to credit the Party with creating a steady stream of opportunities for a better life. At the same time, we've seen a strong surge in Chinese national pride, which was both fully on display and cleverly leveraged by the government during the Beijing Olympic Games last August. The party has built a large stockpile of domestic goodwill over the past three decades. Toughening economic times will erode some of that credit, but the reserves are too deep for China to reach a crisis point in 2009.

Q - In contrast to China, you predict that social unrest in Russia could have major global consequences. Why is this more likely in Russia than China?

A - There are several important differences here between Russia and China. To start, Russia's relations with the West are already at their lowest level since the fall of the Soviet Union. That's not true of China, where the leadership recognises that relatively positive and constructive relations with the U.S. and the European Union are essential for economic prosperity.

Second, Russia is less secure than China. As Russian politicians dig out from under a decade of humiliation in the 1990s and nostalgia for a lost empire, they are far more likely than Chinese officials to see themselves as surrounded by hostile (and potentially hostile) forces. In Georgia, Ukraine, the Baltic States, and Central Asia. Russia is threatened by the expansion of NATO and the European Union into areas that many Russians feel are within their legitimate sphere of influence. The Chinese see far fewer dangerous external threats.

Third, as China profits from participation in the global economy, it has become a status quo power. China knows it must venture into new parts of the world to secure long-term access to the commodities on which growth will depend. China prefers international stability, as stability is good for business.

Russia is open for business too, but its growth depends much more on the export -- not the import -- of oil, gas, and other raw materials. Russia doesn't need to reach U.S. consumers as China does. So Moscow worries less about smoothly functioning international relations and more about building its domestic popularity by showing the Russian people that the Kremlin is again strong enough to stand up to the United States and its European allies. Anti-Americanism matters in China, just as it does in many other parts of the world. But it is a much more potent political weapon in Russia than in China -- or in most other emerging market countries.

Russia has powerful leaders, but it does not have comparably powerful institutions. Vladimir Putin continues to exert enormous personal influence. Dmitry Medvedev can only bask in the reflected glow. But there is no political party or governing institution that gives Putin his legitimacy. Over the longer term, that makes Russia's stability more brittle than China's -- and the impact of sustained unrest in Russia more unpredictable than comparable turbulence in China.

Regarding Ukraine, Eurasia Group said that direct military conflict is unlikely between the two nations. But it said battles between Prime Minister Yulia Tymoshenko and President Viktor Yuschenko will continue to divide the government and complicate attempts to deal with the country's economic crisis, a consulting firm has said.

This forecast for Ukraine's future in 2009 comes from the Top Risks of the Eurasia Group consulting firm, as introduced by its president, Ian Bremmer.

Growing unemployment, falling wages, and anger at politicians will increase the risk of social unrest in major cities, the group's experts said.

Ukraine was put eighth on the list of Top Risks, which identify the year's key geopolitical areas to watch for global investors and market participants.

Highest on the list of Top Risks is the U.S. Congress, which faces a difficult task of the financial regulation due to the crisis.

South Asia and Iran/Israel security follow the U.S. Congress. Russia is fourth, followed by Iraq, Venezuela and Mexico.

Turkey and South Africa close the list after Ukraine.

Eurasia Group, founded in 1998, is the world's leading global political risk research and consulting firm. It headquarters in New York and has offices in Washington and London.

Its advisory board includes representatives of Google, JP Morgan Securities, Japan Industrial Policy Research Institute, Sun Group, Japan Bank for International Cooperation, News Corporation, PricewaterhouseCoopers, Boeing, Eni Corporation.

Q - You've identified what you see as the top risks. Where do you see the likeliest positive surprises in 2009? Which countries will outperform, and are there global issues that may move closer to resolution this year?

A - The Persian Gulf states are weathering the current financial crisis quite well. These countries remain remarkably stable despite the steep drop in oil prices of recent months and a drop in portfolio investments from the global market slowdown. This is especially true in Saudi Arabia, where the royal family had the good judgment to budget for a lower oil price than many other oil-producing nations factored in. The kingdom has also taken meaningful steps toward economic reform. In 2009, the big regional story will likely be better relations among member states of the Gulf Cooperation Council.

In addition, there's not much reason to fear that Brazil will stray from its responsible macroeconomic path. President Lula's government illustrates the point that the differences between responsible economic policymaking (as in Brazil) and irresponsible economic policymaking (as in Venezuela) are most obvious during a downturn.

North Korea may generate a few headlines in 2009, but isn't likely to produce a crisis this year. That's because the two countries with the most power to help avoid a crisis, China and South Korea, have every incentive to avoid conflict and to continue to prop up the decaying North Korean regime.

We won't likely hear much about Taiwan this year either. For the moment, the Chinese military leadership has pronounced itself angry with the U.S. over arms shipments to the island. But there's nothing new about the U.S. role as Taiwan's arms supplier, and Washington and Beijing have bigger worries than any inflammatory rhetoric coming from Taipei. (Editing by Paul Tait)