Natural gas could possibly become a significant portion of the future fuel mix in China. However, there is still great uncertainty surrounding the size of this potential market and therefore its impact on the global gas trade. In order to identify some of the important factors that might drive natural gas consumption in key demand areas in China, we focus on three regions: Beijing, Guangdong, and Shanghai. Using the economic optimization model MARKAL, we initially assume that the drivers are government mandates of emissions standards, reform of the Chinese financial structure, the price and available supply of natural gas, and the rate of penetration of advanced power generating and end-use. The results from the model show that the level of natural gas consumption is most sensitive to policy scenarios, which strictly limit SO2 emissions from power plants. The model also revealed that the low cost of capital for power plants in China boosts the economic viability of capital-intensive coal-fired plants. This suggests that reform within the financial sector could be a lever for encouraging increased natural gas use.

President-elect Barack Obama will inherit an Iraq that has experienced substantial improvements in security, but remains rife with unresolved internal issues. If not handled carefully, Iraq's fragile progress could dissolve and the country could become a dangerous foreign policy minefield for yet another American president. Here are the top 10 issues the next administration must address:

1. Determination of Objectives: The Bush administration invested vast resources in the hopes of achieving maximalist aims in Iraq. Though the results in Iraq have clearly fallen short of those aims, the Obama administration needs to formulate a policy that is more comprehensive and nuanced than "end this war." What can the U.S. realistically achieve? What are the outcomes that the U.S. can or cannot live with? How does Iraq fit in to a cogent strategy for the broader region, including Afghanistan, Pakistan, and Iran?
2. Approach to Withdrawal: The Status of Forces Agreement moving forward between the U.S. and Iraqi governments, combined with the urgent need for reinforcements in Afghanistan, will shape the contours of withdrawal. But what if Baghdad wants to change the schedule? Will changing conditions on the ground affect the pace and process of withdrawal? Is Washington willing to extend or accelerate the current "time horizon" if the security situation significantly deteriorates?
3. Management of the Security Transition: Earlier attempts to transfer security responsibility to Iraqi forces in 2006 encountered many problems. Do current assessments of when provinces will be ready for transition accurately reflect conditions on the ground? Can the U.S. effectively "thin out" its forces, while maintaining robust enabling capabilities (intelligence, air support, medical evacuation) in critical areas?
4. Development of the Iraqi Security Forces (ISF): America must help the Iraqi forces foster competence and professionalism and prevent the reemergence of sectarianism in the ranks. To make this happen, U.S. military advisors will likely be needed for years to come, particularly to help develop support capabilities that the Iraqis currently lack. Is this advisory effort effective as currently organized and prepared? How will advisors be allocated to meet growing demands in Afghanistan as well as Iraq? Can the Defense Department accelerate its Foreign Military Sales program to provide the ISF with badly-needed equipment?
5. Sunni Reintegration: The Sunni Awakening and Sons of Iraq groups are facing an uncertain future as they transition from American control to Iraqi payroll and command structures. How can the U.S. help ensure that Sunnis are reintegrated into Iraqi society so they have a stake in the political system and do not return to the insurgency?
6. Status of Kirkuk: Kirkuk, the oil-rich city of northern Iraq claimed by both Kurds and Arabs, will be a flashpoint for continued conflict. What role can the U.S. play to minimize the potential for re-escalation of Arab-Kurd violence over Kirkuk? Should U.S. policy emphasize indefinite postponement of this issue, broker a territorial compromise, or encourage Iraqis to "give" the city to one side and focus instead on sharing oil revenues?
7. Dealing with Iranian influence: As Iraq's neighbor, Iran has a natural interest in influencing Iraq's domestic affairs. However, Tehran's political obstructionism and support for militants ultimately undermines Iraqi as well as American interests. How much and what types of Iranian influence in Iraqi affairs can the U.S. tolerate? How can the U.S. help Iraqis counter the most destabilizing and pernicious Iranian influences?
8. Future of Political Relations with Iraq: How does the U.S. envision its relations with an emerging sovereign Iraq that is likely to exhibit erratic behavior on the international stage? How and to what extent should America insert itself in Iraqi politics? Should the U.S. government actively seek a balance of power between Iraq's major factions, so as to spread the risk and avoid linking itself to the fortunes of any one group? Or should it remain on the sidelines, so as to extricate ourselves as best we can?
9. Economic Development: Iraq's economy is currently 90 percent dependent on oil exports, resulting in substantial volatility in revenue. How can the U.S. help Iraq diversify its economic base? How can the U.S. encourage greater foreign investment in the Iraqi economy beyond the energy sector? What incentives could Baghdad provide provincial and local officials to improve transparency and revenue sharing mechanisms?
10. Return of Refugees: Huge numbers of Iraqis fled to Jordan and Syria to escape sectarian violence. Does Baghdad owe those nations financial aid? As refugees return, what is the best way to handle this influx? Is America committed to reestablishing the mixed-sect districts that existed prior to 2006? Is a level of sectarian separation necessary to keep the peace?

No panacea exists for Iraq's remaining ills, and no amount of planning will account for all of its complex and sometimes contradictory dynamics. But with America's direct influence likely to wane as its troop presence diminishes, it is increasingly important to anticipate the full spectrum of difficult issues and choices ahead, in order to devise the best way forward for the United States and Iraq.

Brian M. Burton is a research assistant at the Center for a New American Security and a graduate student at the Georgetown University Security Studies Program. John Paul Schnapper-Casteras is a predoctoral fellow at Stanford University's Center for International Security and Cooperation.

South Korea's new president, Lee Myung-bak, has taken a hardline approach in dealing with North Korea, effectively signaling the end of former president Kim Dae Jung's once-vaunted "Sunshine Policy." Relations between the two nations have desintegrated in recent months. North Korea experts suggest, however, the the DPRK's growing belligerence toward the South actually follows a consistent pattern that may even help the United States in future negotiations.

North Korea's recent tactics -- including shutting down the successful Kaesong industrial zone -- put President Lee in a difficult position, assorcing to the New York Times. Abandoning his principled stance will be seen as surrender by Lee's supporters, while staying the course will all but guarantee that North Korea shuts down Kaesong, analysts say. That will feed South Korean fears of an unstable peninsula and provide Mr. Lee’s liberal critics with plentiful ammunition.

Perhaps the greatest current concern about North Korea’s recent moves, Korea experts say, is what they may signal about the internal dynamics of the regime. “The more intriguing issue is whether all these developments signal a growing role of the military,” said Daniel C. Sneider, associate director for research at Stanford's Shorenstein Asia-Pacific Research Center. “And the tour of Kaesong by the military was troubling in that regard.”

"How grievous are the wounds the rule of law has sustained over the past seven and one-half years?" FSI Director Coit D. Blacker asked at the beginning of FSI's fourth annual conference, Transitions 2009. This year's conference, coming on the heels of the U.S. presidential election, focused on opportunities for change offered by historic transitions at home and abroad. The Nov. 13 invitation-only event was attended by 370 Stanford scholars, outside experts, policymakers, diplomats, and leaders from business, medicine, and law, bringing together some of the sharpest minds in the country to formulate and discuss recommendations for U.S. President-elect Barack Obama and other world leaders.

The day-long conference was structured around a morning and an afternoon plenary, with a luncheon address by Oxford professor and Hoover Institution senior fellow Timothy Garton Ash. In his address, "Beyond the West? New Administrations in the U.S. and Europe Face the Challenge of a Multipolar World," Garton Ash urged concerted action on four projects of visionary realism: global economic order; development, democracy, and the rule of law; energy and the environment; and banishing nuclear weapons. Garton Ash also called for relaunching a strategic partnership among the United States and the 27-member European Union, not as a partnership against other nations, but as an alliance that would reach beyond the West to develop new and effective communities of shared purpose.

The morning plenary, "U.S. Transition 2009: Where Have We Been? Where Are We Going?" brought FSI Director Blacker together with Stanford President Emeritus and constitutional law scholar Gerhard Casper, Center on Health Policy/Center for Primary Care and Outcomes Research Director Alan M. Garber and FSI senior fellow and former State Department policy planning director Stephen D. Krasner. Their varying but esteemed backgrounds allowed for a truly interdisciplinary discussion of the policy challenges, priorities, and prospects facing the new American president. "We have just lived through the most extraordinary claims to unbound power since the days of Richard Nixon," said Casper. "This rejection of the rule of law, just like the images of Abu Graib, will be present in the minds of many with whom we have to deal the world over."

The afternoon plenary, "Power and Responsibility: Building International Order in an Era of Transnational Threat," featured Stephen J. Stedman, FSI senior fellow and director of the Ford Dorsey Program in International Studies; Bruce Jones, director of the Center on International Cooperation at New York University; and Carlos Pascual, director of Foreign Policy Studies at the Brookings Institution. The three discussed their ambitious new project, Managing Global Insecurity Project (MGI) (MGI), which aims to provide recommendations and generate momentum for the next American president, the United Nations, and key international partners to launch a strategic effort to build the global partnerships and international institutions needed to meet 21^st century trans-border challenges and threats. One key recommendation is to expand the current G-8 to a G-16 of established and rising powers by including China, India, Brazil, Mexico, South Africa, and major Muslim nations such as Indonesia, Turkey, and Egypt.

Interactive breakout sessions in the morning and afternoon allowed participants to engage in debate with Stanford faculty and outside experts. Breakouts covered such diverse topics as combating HIV in low-resource countries, rethinking the war on terror, leveraging the EU to promote democracy and human rights, whether the U.S. should promote democracy, transitions in African society, working in a global economy, and overcoming barriers to nuclear disarmament.