In Review : THE YEAR GONE BY : Iraq swallowed tiny Kuwait and touched off a crisis; two Germanys became one; the Cold War thawed; the Thatcher era ended, and South Africa broke out of its paralysis. . .

Compiled by JANE ENGLE from Times staff and wire reports

PERSIAN GULF CRISIS

Oil and Threats: It was a crisis that caught the world by surprise. Still, looking back, there were disturbing signals early on. In the spring, suspicious equipment bound for Iraq started turning up at world ports. In Britain, authorities seized U.S.-built capacitors--devices for triggering nuclear weapons--after a lengthy investigation. Then, there was the bizarre “super-gun” affair. British Customs impounded a shipment of Iraq-bound steel tubes, which they visualized as the barrel of a giant gun capable of firing nuclear or chemical weapons hundreds of miles.

Iraq resolutely denied military intentions.

But by mid-July, Iraqi President Saddam Hussein was sounding bellicose. His nation’s oil-dependent economy was awash in red ink from his 1980-88 war with Iran, and he wanted the Organization of Petroleum Exporting Countries to set higher oil prices. He accused Kuwait and the United Arab Emirates of undermining prices by producing over OPEC quotas. Finally, he threatened violence if they didn’t stop.

While Mideast diplomats shuttled back and forth trying to cool down the dispute, Hussein moved 30,000 troops to the Kuwaiti border. Even then, everyone read it as a bluff. OPEC blinked and agreed to boost oil prices by $3. Iraqi and Kuwaiti negotiators met in Saudi Arabia but failed to resolve anything.

It was Aug. 1.

Kuwait invaded: The word outmatched hardly conveyed it. About 100,000 Iraqi troops with tanks rolled into virtually unarmed Kuwait early Aug. 2, taking it in a matter of hours and forcing the emir into exile. Hundreds died.

That single act was to ensnare the world in its first major post-Cold War crisis. By year’s end, 28 nations had sent troops to the Persian Gulf, and a U.S.-led force of 500,000 squared off against 500,000 Iraqis across the Saudi-Kuwaiti border. Soaring oil prices, trade sanctions and the exodus of nearly a million refugees combined to touch almost every nation. Old alliances were frayed and new ones stitched together.

On the very day of the invasion, the U.N. Security Council condemned it. The next day, the United States announced a naval force for the gulf. Hussein began massing troops on the Saudi border, threatening the Mideast’s biggest oil “barrel.”

In the next weeks, events snowballed. The Security Council imposed a trade embargo on Iraq. Baghdad rounded up thousands of Westerners and shipped some of the men to strategic sites as “human shields” against attack. President Bush dispatched troops and warplanes. Nations around the world agreed to send troops.

It was still August.

In the ensuing months, most of the world united against Hussein, even as he became a nationalist hero to many Palestinians and other downtrodden Arabs. The Security Council passed more than a dozen resolutions against Iraq. On Nov. 29, it authorized use of force for the first time since the Korean War, giving Hussein a deadline of Jan. 15, 1991, to pull out of Kuwait or face invasion. The vote was seen as a triumph for Secretary of State James A. Baker III.

Meanwhile, the military buildup continued. Hussein freed Western women and children in small batches, playing host to pleading foreign visitors ranging from Muhammad Ali to former West German Chancellor Willy Brandt. It was a drama that transfixed the world. Finally, on Dec. 7, the Iraqi leader rang down the curtain: He ordered all the captives released.

The end of the year found the world still wondering if there would be war in 1991, as saber-rattling alternated with diplomacy. But it was clear that the Mideast power balance was shifting faster than the desert sands in a windstorm.MIDEAST Israel Polarizes: Battle lines hardened in this Jewish state between Jew and Arab, leftists and rightists, Israel and the world community. As for U.S. relations, an exasperated Secretary of State James A. Baker III summed them up with this sarcastic advice: “When you’re serious about peace, call us.”

From March through June, the country was virtually without a government after Prime Minister Yitzhak Shamir lost a no-confidence vote in the Knesset (Parliament). The issue: his refusal to accept Baker’s plan for peace talks with the Palestinians. Despite weeks of furious horse-trading, Labor Party leader Shimon Peres couldn’t cobble together a Cabinet, and Shamir tried his hand. Months later he succeeded. But his Cabinet was the most narrowly right-wing in years, shutting out leftist Labor. Peace talks with Arabs were not on the agenda.

The Palestinian intifada in the occupied lands entered its fourth year in December, with more than 1,100 slain by Israelis or fellow Arabs and about 60 Israeli soldiers and civilians killed. There were other grim milestones: Jerusalem’s first terrorist bombing in two years and the single bloodiest day of the uprising (Oct. 8, Temple Mount, 20 Arabs slain). In May, a lone gunman killed seven Arab workers, setting off more rioting. The bloodletting brought rare rebukes from Washington, which blamed Shamir for creating an atmosphere for violence; it also refrained from vetoing U.N. condemnation of Israel.

In November, anti-Arab Rabbi Meir Kahane was murdered while visiting New York; a naturalized American from Egypt was the suspect.

Israel also angered many, including Washington, by expanding Jewish settlement in occupied lands and in Jerusalem’s Old City, where it financed purchase of a lease for Jewish nationalists to move into a Christian Quarter church building. The year’s record flood of nearly 200,000 Soviet Jewish immigrants brought housing shortages and economic problems.

If Washington was angry at Israel, it seemed equally angry with Israel’s nemesis: the Palestine Liberation Organization. In June, President Bush ended an 18-month dialogue with the group. He cited its failure to expel radical Abul Abbas, the alleged mastermind of an abortive May 30 raid on Israeli beaches. Bush said the raid violated the PLO’s pledge to renounce terrorism.

Lebanon’s Hope: This battered nation provided a rare hope for peace in the Mideast. After 15 years of ceaseless civil war, capped by a vicious internecine struggle among rival Christian forces, the militias finally relinquished control of Beirut. The infamous Green Line that separated the Muslim West and Christian East sides of the capital was dismantled, and residents streamed across the divide. The national government of President Elias Hrawi moved to take control.

But relative peace came at a price. Renegade Maj. Gen. Michel Aoun battled the rival Lebanese Forces for control of Christian areas for months; more than 1,000 died. In October, Syrian and Lebanese troops finally ousted him from the presidential palace. Muslim and Christian militias alike withdrew from the capital and some normalcy returned.

April saw the release of the first captive Americans in Lebanon in more than three years: Robert Polhill, 55, and Frank H. Reed, 57. Freed Irishman Brian Keenan reported seeing two other Americans: Terry A. Anderson and Thomas Sutherland. But those two, plus four more Americans, remained in captivity.

Islam and Democracy: These two movements gained ground, most powerfully in Algeria, where Islamic fundamentalists in June swept the first multi-party elections in 28 years. In Jordan, Muslim candidates took 33 of 80 Parliament seats and elected a leader of the radical Muslim Brotherhood as Speaker in November. In the Israeli-occupied West Bank and Gaza Strip, the Islamic Resistance Movement, or Hamas, vied with the PLO for leadership of the uprising. The Tunisian government cracked down on fundamentalists, and Egyptian authorities blamed Muslim radicals in the assassination of Parliament Speaker Rifaat Mahgoub, 62.

Etc.: In May, non-Communist Yemen and Marxist South Yemen merged into the new Republic of Yemen. Summer brought two disasters. In Mecca, Saudi Arabia, 1,426 Muslim pilgrims died in a stampede--the worst tragedy to afflict the annual haj in recent history. A massive earthquake in Iran killed an estimated 50,000; a worldwide relief effort was mobilized. Meanwhile, moderate President Hashemi Rafsanjani consolidated his hold on Iran’s government, his backers winning nearly all seats on the powerful Assembly of Experts in the fall.

Also in the fall, Iran and Britain restored diplomatic relations broken over the Salman Rushdie novel “The Satanic Verses.” Later, novelist Rushdie embraced Islam but was unable to get Iran to lift the death sentence imposed by its late spiritual leader, Ayatollah Ruhollah Khomeini, who had denounced the book as blasphemous. Iraq finally made peace with Iran, officially ending their eight-year war. And Washington announced plans to sell Saudi Arabia $22 billion worth of advanced jets and other weapons.

EUROPE Germany Reunites: The fall of the Berlin Wall in 1989 stunned the world. And who could have believed that 11 months later, Communist East Germany and capitalist West Germany would be one nation? What had been torn asunder for four decades was finally stitched together in 1990, producing Europe’s most economically powerful country.

The whirlwind diplomacy began in February, when 23 foreign ministers from the North Atlantic Treaty Organization and the Warsaw Pact agreed in Ottawa to hold formal talks on reunifying Germany. In April, the leaders of the two Germanys met for the first time, quickly agreeing to complete economic, currency and social union by July 3; full unity would come later.

Over the next five months, the two Germanys and the four World War II Allies--the United States, France, Britain and the Soviet Union--met three times, forging a new era in East-West cooperation. In September, they produced a treaty that approved German unity and ended the Allies’ occupation rights. The Kremlin relented, agreeing to NATO membership for the new nation and to gradually withdraw its 370,000 troops from the East.

On Oct. 3, hundreds of thousands of Germans flocked to Berlin’s Reichstag to celebrate reunification day. And in December, Chancellor Helmut Kohl’s Christian Democratic Union swept all-German elections, clinching Kohl’s place as Europe’s strongest leader.

As the year ended, Germans’ euphoria was tempered with anxiety over the social and economic costs of marrying the impoverished East with the wealthy West. And the world needed reassurance too. “In the future, German soil will be a source of peace only,” Kohl vowed.

Cold War Ends: The thaw seemed to begin, fittingly enough, in the spring. Soviet Foreign Minister Eduard A. Shevardnadze announced in Bonn: “The Cold War is over.” The mercury peaked Nov. 19, when NATO and the Warsaw Pact signed the biggest weapons cut in history. The accord on Conventional Forces in Europe will slash Warsaw Pact weapons by more than 50% and NATO’s by 10%. It was the highlight of the Paris summit meeting of 22 European leaders, plus the United States and Canada, at the Conference on Security and Cooperation in Europe. That event was billed by many as the debut of a new, post-Cold War Continent.

There were other milestones. In the summer, President Bush and Soviet President Mikhail S. Gorbachev signed a treaty to reduce chemical arsenals and reached tentative accords on reducing nuclear weapons. NATO outlined plans to modify its reliance on nuclear weapons and to restructure itself. The Warsaw Pact divvied up its tanks and artillery pieces among its six remaining nations as it prepared to go out of business. And in the fall, the Pentagon announced the largest U.S. troop cut in Europe since 1948, with an initial pullback of 40,000 personnel. The war machines were being dismantled.

Marxist Legacy: It was Eastern Europe’s Year of the Ballot. After the fall of communism in 1989, the first free elections since World War II were held in the new democracies. But freedom did not automatically bring prosperity. The East struggled with the economic disasters bequeathed by 40 years of Communist mismanagement as it tried to establish free markets.

Those who had led the charge against communism won elections in Hungary in March, Czechoslovakia in June, Poland in December and in four of Yugoslavia’s six republics. The new presidents included 1956 Hungarian Uprising veteran Arpad Goncz in Hungary and reformers Vaclav Havel in Czechoslovakia and Lech Walesa in Poland. But the volatile mix of democracy and ethnicity drove Yugoslavia toward disintegration, as secession-minded nationalists won control of several of its republics.

In Romania, the National Salvation Front, which grew out of revolutionary forces that toppled Communist dictator Nicolae Ceausescu in 1989, swept elections in May. But the front included former Communist Party members and was accused of being undemocratic and harassing opponents. In June, the government called in coal miners to terrorize dissidents in Bucharest. In November, 200,000 marched against skyrocketing prices and perpetual shortages.

Declining living standards also roiled Bulgaria, the only new democracy to reelect the Communists to power, in June. Soon after, President Petar Mladenov resigned over his role in suppressing anti-Communist protests in 1989, and the government was paralyzed for weeks. A new Cabinet, headed by Prime Minister Andrei Lukanov, lasted only two months before quitting under opposition pressure, capped by a general strike. Bulgaria seemed rudderless.

Albania was a hard-line Communist holdout. In July, thousands of its citizens stormed foreign embassies in Tirana in a desperate bid for political asylum. They told tales of crushing hardship. Protests mounted and, in December, President Ramiz Alia finally legalized an opposition party and promised reforms. Elections were planned for 1991.

Thatcher Quits: Western Europe saw several leadership changes. The most stunning came in December in Britain, when Prime Minister Margaret Thatcher stepped down after 11 1/2 years. The government’s “poll” tax, imposed in April, and the Iron Lady’s wary attitude toward the European Community had sent her popularity plummeting. After her deputy quit and a backbencher made a strong showing against her for the Conservative Party leadership, she gave up. Her successor, John Major, 47, became Britain’s youngest prime minister in this century.

In nearby Ireland, left-wing lawyer Mary Robinson was elected and became that country’s first female head of state in December, vowing to push for women’s equality and liberalized divorce laws. In Greece, voters ousted the Socialist government and Constantine Mitsotakis took office as prime minister in April, clearing the way for a U.S.-Greek military accord.

In France, tens of thousands took to the streets in May to protest growing anti-Semitism and in November to demand more money and better security for inner-city schools.

Western Europe as a whole took a big step forward in October, when the European Community agreed to join in a monetary union effective today.

And on Dec. 1, England officially ceased to be an island. After three years of digging a train tunnel beneath the English Channel, workers from Britain and France broke through and shook hands. In 1993, high-speed trains are to begin rocketing through the $16.7-billion “Chunnel.”

SOVIET UNION Uncertain Captain: President Mikhail S. Gorbachev tightened his grip on the Soviet helm but seemed uncertain how to sail his perestroika reforms through gale-force winds. The year brought the Soviet Union to the verge of collapse, with all its 15 republics declaring sovereignty and its economy a shambles. In foreign policy, Gorbachev continued to shine, achieving weapons cuts and new superpower cooperation and easing European integration. Perhaps nothing symbolized his dilemma better than the Nobel Peace Prize. He won it in October but by December he was too mired in domestic problems to travel to Norway to receive it.

Separatist Shift: Ethnic unrest and nationalism rolled across the country. In January, troops were dispatched to Azerbaijan to quell near-civil war between Muslim Azerbaijanis and Christian Armenians. In May, Armenia was the flash point when soldiers shot to death six militants in Yerevan. The worst ethnic fighting in two years killed more than 100 in Kirghizia and spread to Uzbekistan in June. In October and November, Moldova, formerly Moldavia, was racked by separatism and ethnic warfare.

Lithuania was the first republic to declare independence, in March, prompting the Kremlin to cut off gasoline and oil shipments in retaliation. After a two-month standoff, the republic agreed to suspend the independence declaration and the blockade was lifted. But no final accord was reached. The other Baltic republics, Estonia and Latvia, soon followed suit. By year’s end, all the 15 Soviet republics had laid claim to various forms of sovereignty, threatening to pull apart the Soviet Union.

Hard Times: The economic situation was equally chaotic. Despite a record grain harvest, food and other shortages spread--bread, gasoline, cigarettes and all sorts of consumer goods. Supply and transport networks fell apart. Leningrad and Moscow rationed food. Coal miners went on strike, and hundreds rioted in Chelyabinsk to protest shortages.

During the year, the government proposed nine economic plans. In May, it tried to reduce subsidies and raise bread prices, setting off panic buying. In October, authorities finally settled on a compromise, proposed by Gorbachev, to move gradually to a mixed economy with market forces as the engine. The ruble was devalued by 69%. But the deterioration continued.

Power Grab: To cope with the crisis, Gorbachev repeatedly sought more authority from the government. Despite savage attacks by the right and left, he got it.

At the 28th Communist Party Congress in July, he fended off calls for his resignation and was reelected party general secretary. In the fall, the Supreme Soviet gave him sweeping powers to make laws on economic management, law and order, prices and other areas. Weeks later, it agreed to let him seize all executive powers for himself and run the nation as head of a committee of the 15 republics. But the new powers exacted a price. In December, Foreign Minister Eduard A. Shevardnadze resigned to protest what he saw as a growing danger of dictatorship. Gorbachev’s radical nemesis, Boris N. Yeltsin, elected Russian Federation president, soon eclipsed the president in popularity.

In other milestones, the Congress of People’s Deputies repealed the Communist Party’s monopoly on political power in March, citizenship was restored for many political exiles, state restrictions on religion were ended and Gorbachev proposed a new federal treaty. The Soviet leader also met with President Bush three times, and U.S.-Soviet relations progressed to day-to-day cooperation on the Persian Gulf crisis and European issues.

In December, Prime Minister Nikolai I. Ryzhkov, who had been criticized for much of the year over his economic management, suffered a serious heart attack.

AFRICA Pretoria Reforms: President Frederik W. de Klerk, in a succession of swift moves that stunned South Africa and the world, began to dismantle 42 years of apartheid and white domination of the black majority.

The remarkable transformation began Feb. 2 with a speech in which De Klerk--only five months in office--lifted the 30-year-old ban on the African National Congress, the Communist Party, the Pan-Africanist Congress and dozens of other anti-apartheid organizations. A week later, he freed ANC deputy president Nelson Mandela, 71, who was serving the 27th year of a life prison term. Mandela later toured the United States.

By year’s end, the reformist government had removed a four-year-old state of emergency, abolished a notorious law that allowed white towns to deny blacks access to public facilities and launched talks with its old enemies in the ANC. After 30 years in exile, ANC President Oliver R. Tambo, 73, returned in December to chair the group’s first national congress since the 1950s.

The United States also responded to the changes. De Klerk made the first official visit to Washington by a South African head of state since 1945. President Bush urged an early end to anti-apartheid sanctions.

But with South Africa’s volatile political climate, black factional fighting, clashes between police and black protesters and attacks by right-wing white extremists left more than 1,000 dead.

Liberia’s Agony: What began as an anti-government revolt in December, 1989, soon turned into bloody tribal warfare that plunged Liberia into chaos. By June, rebels led by Charles Taylor, former aide to President Samuel K. Doe, were advancing toward the capital, Monrovia. They accused Doe of corruption, bungling and human rights abuses. As the siege dragged on, Liberian troops were blamed for massacring hundreds of refugees in a church, hundreds of Americans and other foreigners were evacuated and six West African nations mustered a peacekeeping force.

In September, rebels led by a Taylor rival, Prince Johnson, killed Doe. But the bloodletting continued as Taylor, Johnson and two others all claimed the presidency. In December, a truce was signed, but Taylor still refused to recognize the interim government, leaving little resolved. More than 1,000 had died in the revolt.

Ballots and Bullets: Elsewhere in Africa, democracy made halting progress. In October, Ivory Coast held its first contested election in 30 years, returning longtime President Felix Houphouet-Boigny to office. Traditionally Marxist Mozambique approved a constitution setting up a multi-party system. Multi-party elections were held or proposed in Gabon, Benin, Zambia and Cameroon. But elsewhere, violence ruled. Nigeria crushed a coup in April, Kenya cracked down on dissidents and in December, Chadian President Hissen Habre was toppled in a revolt led by former armed forces chief Idriss Deby.

LATIN AMERICA Nicaragua’s Surprise: Latin America’s major story was the stunning upset victory of newspaper publisher Violeta Barrios de Chamorro over President Daniel Ortega on Feb. 25, ending a decade of leftist Sandinista rule. But the political novice faced plenty of problems after her election. Sandinistas and sympathizers controlled much of the army and public sector. Ten years of civil war had bankrupted the nation. Violent strikes by public workers broke out in May and July, forcing a slowdown of privatization. And thousands of anti-Sandinista Contras balked at disbanding for months, finally turning in their weapons in June. Nicaragua remained troubled and divided.

Noriega Gives Up: The new year brought the denouement of the U.S. military action in Panama. On Jan. 1, the U.S. force of 14,000 that ousted dictator Manuel A. Noriega in December, 1989, began to withdraw. Two days later, Noriega, who had sought asylum at the Vatican’s diplomatic mission in Panama City, surrendered and was flown to Florida to await trial on drug charges. The Pentagon disclosed that 220 civilians and 314 Panamanian troops had died in the military operation. As the year wore on, Panama made sporadic and uneven progress toward establishing a workable democracy.

Mexico Opens Up: President Carlos Salinas de Gortari tilted but didn’t entirely topple barriers to modernization. Under his leadership, Mexico in February negotiated the first debt-reduction agreement under the so-called Brady Plan. In May, Salinas asked Congress to repeal the 1982 nationalization of banks. Reversing another longstanding policy, he said he would pursue a free-trade agreement with the United States. In November, at a summit meeting with President Bush, he appeared to crack open the door for U.S. investment in the government-controlled oil industry.

Mexico and the United States tightened their cooperation on fighting drugs. But sovereignty was still a sensitive issue. The reported involvement of the U.S. Drug Enforcement Administration in kidnaping a Guadalajara doctor, accused of aiding the kidnap-murder of a U.S. drug agent, outraged Salinas’ government.

Etc.: Democracy made widespread headway in the region. In Chile, Gen. Augusto Pinochet, the last military dictator in South America, quietly turned over power to elected President Patricio Aylwin. The action in March ended 16 1/2 years of military rule. In Brazil, the same month, Fernando Collor de Mello took office as the first directly elected president since a 1964 military coup. In Peru, obscure outsider Alberto Fujimori outpolled novelist Mario Vargas Llosa for the presidency in June. And in Haiti, a leftist Roman Catholic priest, Father Jean-Bertrand Aristide, swept that nation’s first fully free democratic election for president in December. Suriname was an exception to the trend. There, a bloodless military coup in December overthrew President Ramsewak Shankar.

In Colombia, police blamed the notorious Medellin cocaine cartel for assassinating two leftist presidential candidates and scores of police and others. In May, Cesar Gaviria, 43, was elected president on a vow to end the narco-terrorist violence. He opened the door to negotiations with the drug lords on extradition and other issues.

Two island nations also underwent trauma. Cuba’s economy reeled under the Soviet slowdown in oil shipments and the switch to hard-currency trading by its Eastern European trading partners. And scores of Muslims staged a bloody, five-day coup attempt in Trinidad and Tobago.

ASIA Japan’s Diplomacy: Under Prime Minister Toshiki Kaifu, Japan moved closer to the spotlight on the world stage and tightened cooperation with Washington and its Asian neighbors. In February, Kaifu was bolstered by his Liberal Democratic Party’s rousing victory in parliamentary elections. The party overcame scandal, a record surge by the Socialists and a humiliating defeat the year before.

Soon after, Kaifu and President Bush met in Palm Springs to spur faltering trade talks. They pledged to build a “global partnership.” In June, the partnership paid off: The two nations reached a landmark agreement on reforms aimed at reducing the huge U.S. bilateral trade deficit. But toward year’s end, Japan angered Washington by its delay in pledging and delivering funds for the U.S.-led force allied against Iraq. And when Kaifu proposed sending noncombat troops, he incurred wrath at home in a dispute that eroded his standing.

Japan also tried to mend fences with both Koreas. In May, Emperor Akihito offered visiting South Korean Prime Minister Roh Tae Woo his “deepest regret” for the “sufferings of your people” during Japan’s 1910-45 colonization of the peninsula. In the fall, a Japanese delegation arrived in North Korea with a similar apology. In November, Tokyo played host to 158 nations for Akihito’s official accession to the throne--the first such ceremony in 62 years.

It was a mixed year economically. Asia’s powerhouse outinvested the United States in capital equipment for the third straight year and surpassed it in the nominal value of manufacturing output. But the Tokyo stock market took a beating, and the whole economy showed signs of cooling off.

Korean Detente: The two Koreas moved in fits and starts to bridge their 45-year-old rift. In August, plans to open the border for just five days collapsed in discord. But in September, the premiers of north and south met for the highest-level talks since the peninsula was split. They disagreed but continued to meet. Seoul made more progress with the superpowers: Washington agreed to withdraw part of its forces and eventually turn over major commands to South Koreans, and Moscow established full diplomatic relations. Local politics were stormy. In May in Seoul, 900 were arrested in the most violent riot in three years, when tens of thousands protested the merging of two opposition parties into the ruling party.

Whither China?: This nation rapidly faded from the front pages that it dominated in 1989. The hard-line leaders who had smashed the pro-democracy movement retained power but made occasional concessions. In January, they lifted martial law. In June, they allowed leading dissident Fang Lizhi and his wife, Li Shuxian, to leave their yearlong confinement at the U.S. Embassy in Beijing and fly to freedom in Britain. But authorities also cracked down on Beijing University protesters who marked the 1989 Tian An Men Square massacre, put activists on trial and tightened control over culture.

The generally low profile of the leadership, still topped by aged patriarch Deng Xiaoping, paid off abroad. The European Community lifted most of its sanctions against Beijing. A much-ballyhooed effort by the U.S. Congress to deny most-favored-nation trade status died in the Senate. And in December, President Bush, saying he prefers to “emphasize the positive” rather than human rights concerns, hosted Foreign Minister Qian Qichen. It was the highest-level contact between the nations since June, 1989.

Manila’s Mess: Coup attempts, guerrillas, and even Nature itself bedeviled the Philippines. There was a drought, then a 7.7-magnitude earthquake that killed 1,600 in July, then a devastating typhoon. Forty bombings rocked Manila, and two rebel leaders mounted unsuccessful mini-revolts against President Corazon Aquino’s government. Communist guerrillas killed three U.S. servicemen and threatened Peace Corps volunteers, prompting the U.S. program to pack up in June.

In September, Aquino ended months of fence-sitting and served notice that she wants the “orderly withdrawal” of all U.S. forces, stunning negotiators.

By year’s end, the dollars had dried up, the peso was in free fall and gas prices more than doubled--driven by the worldwide oil crisis. Only former First Lady Imelda Marcos seemed to get a break: A U.S. jury in July acquitted her of fraud and racketeering stemming from charges that she looted her nation.

India’s Agony: Bitter Hindu-Muslim strife toppled the government, roiled relations with Pakistan and fanned a separatist movement. More than 2,000 died in mainly Muslim Jammu and Kashmir state after a separatist movement broke into open revolt. Among the victims: more than 50 shot to death by Indian troops in unrest after the May assassination of a top Muslim leader. Then in October, 15,000 Hindu pilgrims stormed a 16th-Century mosque on a site where Hindus want to build a temple in Ayodhya, sparking nationwide religious violence. Soon after, Prime Minister Vishwanath Pratap Singh lost a vote of confidence in Parliament, and veteran dissident Chandra Shekhar was named to head a new government.

Democracy’s Fruit: The ballot produced forceful and varied results in Asia. After only 20 months in office, Prime Minister Benazir Bhutto was sacked by Pakistan’s president on corruption charges and then humiliated by voters, who scorned her party in October elections. Nawaz Sharif of the Islamic Democratic Alliance succeeded Bhutto, putting fundamentalists in charge of Pakistan. In Bangladesh, “anti-autocracy” demonstrations finally ousted dictator Hussein Mohammed Ershad in December. His successor promised elections in March, 1991. Nepalis overthrew the monarchy in April and made plans for elections. Communist Mongolia held its first multi-party vote. And in Myanmar, formerly Burma, the opposition swept the first multi-party elections in 30 years but the government refused to yield power.

CANADA Divisive Deals: This normally quiet nation underwent two traumas: a constitutional crisis and violent protests by Mohawk Indians.

In early June, Canada’s leaders signed a tentative agreement, known as the Meech Lake Accord, to amend the constitution and grant special status to French-speaking Quebec. Hopes were high that linguistic and cultural barriers could be overcome, allowing the constitution to finally be ratified. But the pact ran into immediate public opposition. It died when the Newfoundland legislature failed to act by the deadline. Bitter feelings prevailed on both sides of the Anglo-French gulf.

In July, a plan by Oka municipal authorities to expand a golf course onto land regarded as sacred by Mohawk Indians sparked a seven-week standoff in which a police officer was killed. The protests spread across the nation as Mohawks and their supporters blockaded highways.

INTERNATIONAL BUSINESS Oil Spurts: Iraq’s invasion of Kuwait on Aug. 2 sent oil prices soaring and shook up stock markets around the world. Rumors of peace and war alternated almost daily, putting stock prices on a seesaw in New York and Tokyo. Some U.S. officials blamed Iraqi leader Saddam Hussein for pushing the United States into a recession. And rising fuel prices affected every corner of the world, especially cash-poor Third World countries. In the fall, crude-oil prices reached record highs, more than $40 per barrel, despite the unprecedented release of 5 million barrels from the U.S. Strategic Petroleum Reserve.

Networking: Four years of work ended in frustration in December, when the General Agreement on Tariffs and Trade talks adjourned in Brussels. A major stumbling block was agriculture, with Europe and the United States squabbling over the size of farm subsidies. Progress on trade in services, intellectual property rights and other issues was also stalled. There was some promise of resuming and settling some issues in 1991, however.

The former East Bloc underwent major changes as the economically troubled Soviet Union pulled back on oil shipments and Eastern Europe struggled to create free markets. The Council for Mutual Economic Assistance (Comecon), the Soviet-led trade network, prepared to restructure itself. Starting today, it will keep its books in real money instead of the synthetic “transferable ruble” and end subsidized transport for its 480 million people--potentially explosive changes.

In Western Europe, the European Community agreed to join in a monetary union as it hurtled toward a unified market in 1992.

Nation by Nation: Several major countries had a tough year. The Soviet Union was the world’s basket case, struggling with a collapsing economy and borrowing heavily from Western banks. Tokyo’s high-flying stock market took a severe tumble as the Bank of Japan tightened the money supply and raised interest rates. The result: a pullback of international loans and investment. Still, Japanese companies kept acquiring U.S. properties. Late in the year, Matsushita bought MCA for $6 billion in the biggest Japanese acquisition of a U.S. asset.

In Mexico, the trade deficit widened and spending power shrank. But that nation also made progress toward dismantling the economic hothouse that has nurtured business for 40 years. The government sold off more state-owned companies, including the biggest one, Telefonos de Mexico. It also began negotiating a free-trade agreement with the United States.