The World: '96 Model

HUMANS continue to be superb at forecasting the mechanics of our solar system. We're somewhat improved at understanding galactic mechanics, and moderately better but still error-prone at long-range weather prediction.

Why, then, should we presume to be any good at global political and economic forecasting, where the variables are more numerous and include human nature? Partly because we have history as a rough guide. And partly because we wouldn't be true to our nature if we didn't try to understand where we're going and take steps to make the path ahead more sensible than the path behind.

So, for this year celestially sure of a leap-day, what else seems certain? What seems probable? How might we improve?

Super- and semi-superpowers

Russia and the United States, the once and present superpowers, will have significant elections affecting the pendulum swings between welfare-statism and unregulated free enterprise. China, the likeliest future superpower, will show more clearly whether its central government hews to the Deng policy of welcoming economic growth at the cost of some control, or stifles growth in order to increase control. How Beijing takes over Hong Kong next year should provide a bellwether. It will certainly affect attitudes toward Beijing in all the high-growth states surrounding China.

Probability: Beijing will stick to the letter of its agreement with London giving Hong Kong separate status for 50 years. It will do so in order not to jeopardize economic growth and not to frighten Taiwanese voters, who ultimately must decide whether they too will trust a future Beijing pledge of separate status within China.

World trade: NAFTA, EU, Asia

The early '90s thesis that the world economy was rapidly headed toward three massive free-trade zones will be vigorously tested this year.

NAFTA's foes already have launched a counterattack against the North America Free Trade Agreement. They aim, in part, to slow its momentum by preventing the addition of Chile, and eventually other South American nations to build a Western Hemisphere trade zone. Opponents may sense an opportunity created by Mexico's current economic/political squeeze and Canada's continuing brush with Quebec separatism.

Probability: NAFTA will not be reversed. Chile may have to wait till after US elections. Canada will find a way to muddle through.

European unity is in a similar expand-or-dilute phase. A calendar for inducting central European applicants (Czechs, Poles, Hungarians) is getting firmer, even as the calendar for a single currency among current core members seems in jeopardy. The latter is tangled in the great upheaval facing most wealthy nations: how to shrink the budget and debt demands of welfare systems that continue to grow much faster than their economies.

Probability: EU expansion will haltingly move forward after Russian election fallout. The 1999 deadline on currency integration may be delayed.

Inter-Asian trade will almost certainly continue to grow at a rapid pace - unless disputes between China and its Pacific neighbors, North and South Korea, or India and Pakistan disrupt relations. Even authoritarian Vietnam and Burma should benefit from trying to follow their neighbor's investment and trade patterns.

Overall probability: World trade will grow at a more moderate pace, with European economies expanding after a long lull, and a stronger dollar mildly slowing US exports.

And elsewhere...

Oil spigot. Two ends of the great oil crescent running from the Persian Gulf through the former Soviet lands north of the Caspian Sea bear watching. First, will the US join major European nations and Japan in trying to reach calmer relations with Iran? Second, will the US, Europe, and Turkey succeed in preventing Moscow from routing all the major pipelines from north of the Caspian through Russia?

Probability: Although Washington should try to find a way to deal with Iran, election-year politics will make that unlikely. Turkey is apt to succeed in routing some Caspian oil over its territory to the Mediterranean.

Turkey, like Algeria and Egypt, needs to woo its Muslim-revivalist opposition into dialogue. To do so would further the potential Middle Eastern renaissance emerging from Israel's deals with its immediate neighbors. And, in the case of Algeria, it would ease the North African emigration problem facing Europe.

That specific problem is a reminder of two of the broadest challenges facing the world in coming decades:

*Demographically, the rich world is "graying" and the poorer world is "youthening." Wealthy states will have to choose between contracting out even more industry to the third world or admitting more immigrant workers. Despite resistance, the former course seems more desirable.

*Even with such an adjustment for demographic pressures, scientists, engineers, and business managers will have to speed knowledge of how to expand economies without wrecking environments.

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