The death of North Korean dictator Kim Jong Il adds a new, unexpected challenge to the global economy as 2011 comes to a close.
"This is a very dangerous time," says Ian Bremmer, president of Eurasia Group.
By his own admission, "no one knows" how the transition from Kim Jong Il will play out, Bremmer says. The key issue now is whether Kim Jong Il's designated successor, his youngest son Kim Jong Eun, will be able to consolidate power.
What is known is North Korea is an incredibly poor, incredibly isolated nuclear power led be a totalitarian regime with a sudden power vacuum at the top. "All of the things we've been most concerned about...suddenly those are real and they're much more imminent," Bremmer says.
Those fears, what Bremmer calls "tail-end events," include military attacks against South Korea, or the implosion of the North Korean regime, leading to a refugee crisis on China's southern border. In either scenario, there's a good chance both U.S. and Chinese troops will be active on the Korean peninsula, putting pressure on already strained relations between the two superpowers.
An outright shooting war between the U.S. and China is "very unlikely," Bremmer says, "but the potential for U.S.-Chinese relations to deteriorate significantly in the [event] of a bad North Korean outcome is very great."
And while Kim Jong Il's death does raise the possibility of a better outcome -- of a new regime seeking to reform North Korean society or even reunification with the South -- that hopeful scenario is months away at best, he says.
"Anyone that's taking over, the first order of business - you walk into a room and shoot the first person you see and then the first person that moves," Bremmer predicts. "There are going to be purges in North Korea because you need to establish that iron fist before you can start opening it a little bit."