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State of the World: A Look Ahead at 2008
The Washington Diplomat / February 2008

By Larry Luxner

With more than 190 countries around the globe to keep track of, itís no easy task chronicling this year's most important developments before they happen. But as the world reflects on President Bush's latest and last State of the Union address outlining his vision for the United States, The Washington Diplomat wanted to take this opportunity to look at the key issues that other nations will be facing in 2008. For this reason, we've organized the world into five regions and outlined the major trends and events in each for our readers.

AFRICA

It's the poorest continent on Earth, but Africa still boasts three of the world's 12 fastest-growing economies: Angola (21.1 percent gross domestic product growth in 2008), Equatorial Guinea (11.1 percent) and São Tomé e Principe (8 percent).

Yet all three impoverished countries are in the ranking because of skyrocketing oil prices, hardly a bedrock of stability in these unsettling times. Overall, sub-Saharan Africa will see growth of 6.3 percent — not bad for a region usually struggling with drought, famine, civil war and endemic corruption.

South Africa will remain the continent's economic powerhouse, with per-capita income of $5,460 and economic growth of 5 percent driven by a construction and investment boom that shows no signs of letting up. Politically, the country's 48 million people will be riveted by the run-up to the 2009 presidential elections, with the long-dominant African National Congress (ANC) in the forefront of fielding a successor to Thabo Mbeki, whoís led the country since 1999. So far, all eyes are on Jacob Zuma, although the controversial newly elected ANC president is still embroiled in a corruption scandal that could derail his candidacy.

At the other end of the economic spectrum is Zimbabwe, a failed state ruled by Robert Mugabe. Per-capita GDP, already at a dangerously low $133, is expected to drop by a further 2 percent this year, while inflation is projected at a mind-numbing 4,200 percent. There is little doubt that Mugabe, 83, will win the March presidential elections while putting down challenges from around the world as well as from within his own party.

The Maghreb region — which includes Algeria, Libya, Tunisia, Mauritania and Morocco — will continue to struggle against al-Qaeda and other Islamic fundamentalist groups. Terrorism will also be an issue in other countries such as Niger, Senegal, Mali and Chad, where the U.S. government is stepping up military assistance and training programs to counter the potential threat.

The humanitarian crisis in Darfur, where hundreds of thousands have died and another 2 million made homeless, will undoubtedly drag on as the Sudanese government continues to negotiate with rebels. "Sadly, our collective outrage has yet to be transformed into an effective response to the genocide," said the Save Darfur coalition in a Jan. 10 letter to President Bush. "The killing in Darfur began almost five years ago, but peace and security for Darfur's people remain as distant a prospect now as they were then."

The coalition is calling on the U.N. Security Council to impose targeted sanctions on Sudanese officials responsible for obstructing the deployment of the U.N.-African Union hybrid peacekeeping force, and for "crimes against humanity" in Darfur — including Sudan's president, Omar al-Bashir.

Another humanitarian crisis in the making seems to be brewing in eastern Congo, where armed men proliferate amid 17,000 U.N. peacekeeping troops. In the province of South Kivu alone, authorities reported 27,000 sexual assaults in 2006, and aid workers don't see improvement anytime soon under the rule of 36-year-old President Joseph Kabila, who succeeded his father Laurent Kabila upon the latter's assassination in 2001. In fact, death rates in Congo remain far higher than elsewhere in Africa despite years of relative peace and elections that were supposed to bring stability to the beleaguered nation, according to the International Rescue Committee, which estimates the conflict and its aftermath have led to the deaths of 5.4 million people since 1998.

In the Horn of Africa, observers worry that tensions between Ethiopia and Eritrea — two of the world's poorest countries — could inflame an already dangerous situation in neighboring Somalia, which essentially remains an ungoverned state despite the internationally recognized but weak transitional federal government.

Terrence Lyons of George Mason University's Institute for Conflict Analysis and Resolution warned in a recent Council on Foreign Relations report that "while today the most urgent question in the Horn of Africa is the rapidly and dangerously escalating conflict between the Islamic courts and the transitional federal government within Somalia, my argument is that the breakdown of the Ethiopia and Eritrea peace implementation process contributes to what makes the Somalia crisis particularly dangerous."

Kenya, long held up as an example of African stability in the Horn region, remains a big question mark ever since the Dec. 27 contested re-election of President Mwai Kibaki. Ethnic violence in the wake of the voting, which opposition leader Raila Odinga insists was rigged, claimed some 700 lives as of last month and has put a serious dent in investor confidence.

On the other hand, two of Kenya's neighbors have brighter short-term futures as President Jakaya Kikwete of Tanzania and Yoweri Museveni of Uganda reap the benefits of fast-growing economies.

In Nigeria, an oil-rich country that has long been plagued by violence, GDP is expected to jump by 7.8 percent, though much of the income generated by petroleum exports will end up in the pockets of corrupt officials. With nearly 150 million people, Nigeria ranks as Africa's most populous country. Yet the non-oil sectors of the economy are doing poorly, and it's unclear whether President Umaru YaríAdua — elected under dubious circumstances in April 2007 — will be able to turn things around.

"The new president's first full year in office will reveal whether he is to be the instrument of reform that his background and platform promise," said The Economist magazine. "Even a modest push for electoral transparency, official accountability and economic even-handedness would help the country to realize its considerable potential."

EUROPE / RUSSIA / FORMER SOVIET BLOC

The European Union, with 27 member states and a population of nearly 500 million, generates an estimated 31 percent share of the world's GDP. The euro zone, where the euro is the legal currency, is comprised of 15 EU member states that are home to 318 million citizens; the most recent countries to join the euro zone, on Jan. 1, 2008, were Cyprus and Malta.

The euro, worth nearly $1.50 of press time, is now viewed by many as the world's strongest currency, though this has not necessarily helped all of Europe's economies. In Spain, higher interest rates will hurt construction and consumption, though Spain's socialist prime minister, José Luís Rodríguez Zapatero, will probably win a second term in the March general elections.

Across Eastern Europe, a lack of real reform in the EU's newest member countries could manifest itself during 2008 in the form of slowing economies, particularly in countries such as Poland, Hungary and the Czech Republic.

Others have fared better economically, namely the booming Baltic states, as well as Great Britain — boosted by the seemingly indomitable pound. Even Germany has been successfully tackling the age-old European dilemma of balancing the benefits of the welfare state with the competitiveness of globalization.

Politically, Germany and other EU nations have been increasingly flexing their muscle on the world stage — particularly on global warming, where German Chancellor Angela Merkel has taken a commanding role. British Prime Minister Gordon Brown, meanwhile, will continue to exert foreign policy influence, as will French President Nicolas Sarkozy, who's sure to be grabbing headlines whether he's romancing former Italian model Carla Bruni or reasserting France's influence in world affairs, on issues ranging from Darfur to Iran.

The EU may also finally iron out some of the bloc's strangling bureaucracy with the signing of the EU reform treaty, a slimmed-down version of the ambitious EU constitution but nevertheless an important step toward uniting the wieldy bloc so that it can play a greater role in international affairs.

Further enlargement of the 27-member bloc, though, won't maintain the breakneck pace of past years, as Western Europe still struggles to fully integrate less-developed, newer members such as Romania and Bulgaria. In fact, the most likely candidate country, Croatia, probably would not join the bloc until at least 2009. Likewise, talks seemed to have stalled with Turkey, and any possible accession of the Muslim nation remains a big uncertainty far, far off in the distant future.

Indeed, many once-open European nations are taking a more inward, closed approach, especially with regard to immigration — an issue that, much like in the United States, has gripped the continent, as thousands from North Africa as well as large numbers of Muslims continue to change the societal fabric of European countries from Italy to Switzerland, prompting an ongoing backlash and border crackdowns.

Yet Europe's most important story of 2008 will be the efforts by Kosovo Albanians to achieve independence, which will most likely prove successful given the strong backing of the EU and the United States.

The Serbian government in Belgrade has pledged to use all peaceful means at its disposal to prevent Kosovo — an autonomous region of Serbia with 2.2 million people, 90 percent of them ethnic Albanians — from declaring independence. Kosovo is currently administered by the United Nations, though once independence is proclaimed, the EU would send a mission to replace the United Nations.

The Russian government has already warned against such a move, saying independence for Kosovo would "create a chain reaction throughout the Balkans and other areas of the world."

In late January, Serbian hard-line nationalist Tomislav Nikolic won the first round of presidential elections with 39 percent of the vote, beating his rival, current President Boris Tadic, who got 35 percent, setting the stage for a runoff this month. Nikolic, an adamant opponent of independence for Kosovo, favors eventual EU membership for Serbia but says the country's friendship with Orthodox Slavs in Russia is more important.

In Russia, meanwhile, the middle class seems to be growing and the rich are getting richer thanks to the country's vast energy wealth. Last year, the land that gave birth to communism boasted 119,000 millionaires and a record 53 billionaires. President Vladimir Putin, who has presided over Russia's economic boom for the last eight years, has ruled the country in an increasingly authoritarian manner, with unabashed support from the Russian media. Yet few people are complaining, and no one expects Putin's United Russia party not to win big in the March 2 presidential elections.

As Time magazine, which named Putin its 2007 "Person of the Year," put it, "though he will step down as Russia's president in March, he will continue to lead his country as its prime minister and attempt to transform it into a new kind of nation, beholden to neither East nor West."

Putin, the magazine adds, "is not a boy scout. He is not a democrat in any way that the West would define it. He is not a paragon of free speech. He stands, above all, for stability — stability before freedom, stability before choice, stability in a country that has hardly seen it for 100 years."

Oil exports have played a crucial role in this stability, enriching not only Russia, but some of its once-Marxist neighbors. In fact, four of the world's fastest-growing economies are former Soviet republics: Azerbaijan (17.4 percent), Kazakhstan (9.2 percent), Georgia (8.5 percent) and Armenia (8 percent).

And although oil has pumped unprecedented profits into countries such as Azerbaijan and Kazakhstan — which have admirably invested a large amount of that revenue back into societal improvementsónot all is rosy in the Central Asia-Caucasus region. Human rights and democracy are sorely lacking in former Soviet bloc nations such as Belarus, Turkmenistan and Uzbekistan, which remain some of the most authoritarian regimes in the world.

Bright spots Ukraine and Georgia are still waiting to see all the promises of their colored revolutions come to fruition, although neither has abandoned its NATO hopes despite vehement Russian opposition. But Russia will continue to test international allegiances, as it wages a tug of war with the United States and its Western allies to solidify influence in the regi

LATIN AMERICA / CARIBBEAN

In South America, this should be a year of general prosperity and regional growth, projected at 4.5 percent. Only Paraguay has an election scheduled for 2008, and democracy has taken hold in much of the region — once largely ruled by despots and dictators. Despite relative good news on the economic and political fronts, many countries, especially in Central America, remain mired in poverty, inequality, narco-trafficking, crime and remnants of military insurgencies.

These conditions have led many to weigh the benefits of democracy and free trade, as well as relations with Washington, which has widely been perceived as ignoring the region since 9/11.

Doubts over Western-style democracy and capitalism have fueled a leftist resurgence in recent years, notably in Venezuela, run by anti-American firebrand Hugo Chávez. And despite the failure last December of President Chávez to push through a referendum on the constitution, similar efforts are under way in two other left-leaning countries, Bolivia and Ecuador.

Meanwhile, expectations remain high for economic bright spots such as Brazil — a potential energy powerhouse — as well as Chile and Argentina, both run by women. And the world will continue its wait-and-see approach toward ailing Cuban leader Fidel Castro — though for all intents and purposes his younger brother Raúl is running Cuba, and Fidel is increasingly irrelevant. On Feb. 24, Cuba's 614-member National Assembly will decide whether to choose Fidel as council president, or whether the 81-year-old revolutionary will permanently setp down after nearly half a century at Cuba's helm.

Mexico, which shares a 2,000-mile border with the United States, will be preoccupied this year with fighting crime, illict drug trade and illegal immigration to the north, though President Felipe Calderón has made it clear he adamantly opposes U.S. construction of a 700-mile wall to separate the two countries. As he told Bush last year: "It would be better to stop immigration by building one kilometer of highway in Michoacan or Zacatecas than 10 kilometers of walls along the border."

Colombia and Peru will by lobbying the U.S. government over free trade, trying to push through their respective free trade agreements, which still await congressional approval. The Central American Free Trade Agreement (CAFTA), marking its first full year in effect, has helped boost dramatically boost exports by El Salvador to the U.S. market. Other CAFTA signatories are also expected to benefit in the long run, including Costa Rica, where the government of President Oscar Arias Sánchez prevailed last year in a referendum that had threatened to derail Costa Rica's participation in the free-trade accord.

In Panama, construction will begin next month on a $5.25 billion widening and deepening of the Panama Canal — a massive project aimed at keeping the 51-mile waterway competitive into the 21st century. No elections are scheduled in Central America this year except for Belize, Central America's only English-speaking nation, where voters will head to the polls Feb. 7 as a result of early elections called by Prime Minister Said Musa.

On the Caribbean front, presidential elections in the Dominican Republic are set for May 18 and will pit incumbent Leonel Fernández of the Dominican Liberation Party against Miguel Vargas Maldonado of the Dominican Revolutionary Party and Amable Aristy Castro of the Social Christian Reformist Party.

Meanwhile, one of the most prosperous Caribbean islands, Puerto Rico, continues to suffer economically. In 2007, the U.S. commonwealth's GDP shrank by 1.5 percent, marking the island's second consecutive year of homemade economic recession. A debate over Puerto Rico's permanent political status — statehood, independence or continued commonwealth — will continue to be debated throughout 2008.

For a complete overview of Latin America, please see our article on democracy in the region on page 18.

MIDDLE EAST

The most closely watched region in the world — and the least stable — is the Middle East, where the ongoing war in Iraq and seemingly never-ending Israeli-Palestinian conflict will dominate headlines in 2008, as will Iran's nuclear ambitions and the skyrocketing price of oil — which is fueling the greatest transfer of wealth in world history.

Nearly 4,000 U.S. soldiers have died in Iraq since the war began, and given the current scenario, U.S. forces are likely to remain there for quite some time to come. Iraq's defense minister, Abdul-Qader Mohammed Jassim al-Mifarji, recently said Iraqi troops won't be able to assume responsibility for the country's internal security until 2012, or be able to defend Iraq's borders before 2019.

Yet with things quieting down somewhat in recent months, recommendations announced in mid-January call for U.S. overall troop strength in Iraq to be reduced from the current 160,000 to about 130,000 by July — with more soldiers moving out of front-line combat and into assignments that allow soldiers to monitor and support U.S.-trained Iraqi units.

"With the withdrawal of the first brigade combat, we began the process of a transition of mission," U.S. Defense Secretary Robert Gates told reporters on Jan. 18. "Ultimately, the mission will be one that we call strategic over-watch, which is basically where we are not engaged on a daily basis and where the Iraqis are in the lead and we are providing support."

But Col. Lawrence Wilkerson, former chief of staff for Secretary of State Colin Powell and now an ardent critic of current U.S. policy in Iraq, paints his own version of events to come later this year.

"President Bush and his people will find, about summertime if nothing changes, that troop withdrawals can begin in earnest, and with the Iraqi government doing things better than before, you're going to see the U.S. reposition its forces in the Middle East, with more troops at sea, pre-positioned stocks in places like Kuwait, and exercises like the recent Bright Star with Egypt," predicted Wilkerson. "Regardless of what happens in Iraq afterward, we're gonna say, 'New president, it's your problem.'"

Some predict 2008 could be the year Iraq disintegrates into fragmentation, as Sunnis, Shiites, Kurds and other ethnic groups vie for control. One big question mark is Turkey, which has been conducting occasional raids into northern Iraq in search of outlawed Kurdish rebel groups.

Another question mark is Iran, whose suspended nuclear program has been making headlines of its own recently. The National Intelligence Estimate released in December 2007 that concluded Iran had halted its nuclear-weapons program in 2003 certainly changed the landscape. However, the 140-page report also found that Tehran had previously been working to put together a nuclear bomb and still possessed some of the elements for such a program.

The NIE has dampened Bush's support in the United Nations for harsher sanctions on Tehran, and critics have seized on the report to blast the president for beating the war drums without credible evidence — drawing parallels with Iraq.

But Bush seems to be undeterred. Asked recently for his views on Iran's intentions, the president told Fox News: "I believe they want a weapon, and I believe that they're trying to gain the know-how to make a weapon under the guise of a civilian nuclear program."

No one fears a nuclear Iran more than Israel, the likely target of such bombs, given continual threats by President Mahmoud Ahmadinejad.

"To forestall the threat of a nuclear Iran, Israel should enhance the development of its own indigenous capacities to develop the defense systems which protect the Israeli civilian population and to rely on ourselves," Ephraim Sneh, a top Israeli Labor Party voice on security issues, told the JTA news service last month.

This May marks the 60th anniversary of Israel's establishment, an event that'll be celebrated by Jews around the world and mourned by Palestinians, who are increasingly being torn apart by the two factions vying for control in the West Bank and the Gaza Strip: Fatah and Hamas.

Both Mahmoud Abbas, leader of the Palestinian Authority, and Ehud Olmert, Israel's prime minister, face uncertain futures as relations between the two sides continue to deteriorate in the months following the Annapolis peace conference.

Large-scale Israeli raids into Gaza following Hamas-sponsored rocket attacks on Israeli border towns have pushed Abbas to the brink of resignation, while Olmert of the Kadima party faces allegations of corruption and sharp criticism over his handling of the 2006 war against Hezbollah militants in Lebanon.

Through it all, Israelis and Palestinians will continue negotiating, though little progress is likely unless Israel freezes construction of settlements in the West Bank and the Palestinians dismantle what the Israelis call "terrorist militias." Bush, speaking in the West Bank city of Ramallah during his recent tour of the region, said he's "confident that with the proper help, a state of Palestine will emerge" by the end of 2008.

Petroleum prices hovering around $100 a barrel, meanwhile, will continue to fuel the transfer of hundreds of billions of dollars from the United States, Europe and Japan to oil-exporting nations such as Saudi Arabia, Kuwait, Qatar and the United Arab Emirates. Oil wealth has already transformed the skyline of Dubai, which boasts among other things the still-under-construction Burj Dubai — with 158 stories, already the tallest building on Earth.

SOUTH ASIA

India, the world's largest democracy, occupies only 2.4 percent of Earth's total land area but accounts for 15 percent of its population. With 1.13 billion people, the country is expected to overtake China in population as early as 2045.

Economically, it is doing well, with GDP growing by an annual average of 8.6 percent during the three years the Congress-led United Progressive Alliance (UPA) coalition of Manmohan Singh has been in power. But recent communist protests over a controversial U.S.-Indian deal on civilian nuclear technology is now likely to force early electionsóa development that might not be good for the economy, which is expected to see 7.9 percent GDP growth this year.

Meanwhile, two of the worldís most dangerous countries, Pakistan and Afghanistan, will continue to be dangerous in 2008.

The Dec. 27 assassination of Benazir Bhutto, President Pervez Musharraf's most powerful opponent, has thrown Pakistan into disarray. Although national elections are scheduled for Feb. 18, few expect Musharraf — whom President Bush has called "a loyal ally in fighting terrorists" and "somebody who believes in democracy" — to ensure that those elections will be free and fair.

Bhutto's son, Bilawal Bhutto Zardari, has been named the new leader of the Pakistan People's Party, with his father, Asif Ali Zardari, as co-leader. Meanwhile, opposition leader Nawaz Sharif, a former prime minister, accuses Musharraf of destroying Pakistan, blindly following Washingtonís orders and ordering anti-terror operations that have "drowned the country in blood."

Several observers warn that the Islamic republic, which possesses at least 50 nuclear warheads, could be headed for chaos this year if the elections don't produce stability soon. Musharraf himself faces a loss of credibility in Europe and to a lesser extent the United States, his main benefactor, which is depending on the general to rein in al-Qaeda terrorists along Pakistan's violent border with Afghanistan.

In Afghanistan, the worldís largest opium producer, drugs continue to fuel a Taliban insurgency against the U.S.-backed government of President Hamid Karzai. NATO alone has deployed more than 40,000 troops to fight the rebels, which have waged an increasingly violent campaign in the south of the country.

"I expect to see yet another year of explosive growth in poppy, and I think that will again complicate the security sector," said Gen. Dan McNeill, commander of NATO's International Security Assistance Force, in comments to Agence France-Presse. "When I see a poppy field, I see it turning into money and then into IEDs [improvised explosive devices] and Kalashnikovs. It poisons the youth of Afghanistan."

In 2007, the bloodiest year for Afghanistan since Taliban fanatics were ousted in 2001, more than 6,000 people were killed throughout the war-torn nation. Most were Taliban rebels, though that number also includes about 1,000 Afghan civilians, 1,000 members of Afghan security personnel, and 220 foreign soldiers.

In overcrowded Bangladesh, home to 140 million people, the army-backed interim government is vowing to hold free and fair elections by December 2008, amid an anti-corruption drive that has ensnared former Prime Ministers Sheikh Hasina Wajed and Khaleda Zia, among others. But it's doubtful those elections will take place, and violent protests are likely to ensue as a result. The same is true in Nepal, where Maoist rebels have long been locked in a battle with the government in Kathmandu.

The rebel war in Sri Lanka continues unabated, with a Jan. 20 attack by government troops leaving 41 Tamil Tigers dead in northern Jaffna province and elsewhere. It is unlikely that any sort of ceasefire between the rebels and the government of populist President Mahinda Rajapakse will hold up through 2008. And in Burma (Myanmar), there is little prospect that the military junta in Rangoon will loosen its stranglehold on the country, despite last year's promising sparks of defiance by legions of Buddhist monks.

The one exception to all this chaos is the tiny Himalayan mountain kingdom of Bhutan, which is also expected to hold parliamentary elections later this yearóthe first-ever such elections for this kingdom of 700,000 people. Interestingly, Bhutan has banned anyone without a university degree from running, a move that bars more than two-thirds of the country's current, unelected assembly.

ASIA / PACIFIC

2008, the Year of the Rat, will undoubtedly be China's year, capped by August's Summer Olympics in Beijing — and locally by the completion of a sprawling new Chinese Embassy in Washington, which will rank among the largest diplomatic missions on Earth.

This year, according to the Economist, China, with 1.33 billion inhabitants and a GDP of $3.9 trillion, will inject more wealth into the world economy than any other country — as much as the United States, India and Japan combined. Its projected GDP growth rate of 10.1 percent makes it the fourth fastest-growing country in the world.

Among other things, China this year will become the world's top exporter, displacing Germany from that spot. It will also become the number-two importer after the United States while becoming the third-biggest economy in the world, after the United States and Japan.

In 2008, predicts the magazine, China will also overtake the United States as the country with the largest number of Internet users. E-commerce will become an integral part of the booming Chinese economy, with more than 1 million Internet entrepreneurs starting up businesses. China's Industrial and Commerce Bank (ICBC) has already overtaken Citigroup as the world's biggest bank by market value, and it's only a matter of time before China's total stock-market capitalization exceeds that of America's.

The main event of 2008, of course, is the Beijing Summer Olympics. Still half a year away, the games have already managed to focus the world's attention not only on China's economic successes but also on its dismal environmental record, continuing human rights violations and ongoing Chinese support for repressive regimes like Burma, Sudan and North Korea — although the threat of nuclear proliferation from Pyongyang may actually subside this year if the North Korean regime of Kim Jong-il signs a disarmament deal as expected.

In recent years, China has used its so-called "soft power" to increase Chinese influence in Asia, Africa and Latin America. Over the past decade, China has emerged as a global actor in regions where it's been absent for decades, relying on a combination of growing international aid, more sophisticated public diplomacy, and promotion of Chinese culture while downplaying its military strength and economic might to achieve this objective (see also January 2007 issue of The Washington Diplomat).

For example, China is now the biggest aid donor in three Southeast Asian countries: Cambodia, Laos and the Philippines. It has also become a leading trade partner of Brazil, a major investor in Cuba, and has increased its visibility in the Caribbean and Africa, where it hopes to woo the few countries that still maintain diplomatic relations with Taiwan to switch their loyalty to Beijing. Last month, the impoverished African nation of Malawi became the latest country to jump ship, announcing on Jan. 14 that "we have decided to switch from Taiwan to mainland China after careful consideration of the benefits that we will be getting from mainland China."

Relations with China will figure prominently in Taiwan itself, where presidential elections are scheduled for March 22. The two major candidates are Frank Hsieh of the ruling Democratic Progressive Party (DPP) and Ma Ying-jeou of the opposition Kuomintang (KMT).

In January, the KMT — which favors closer political and economic ties with mainland China — overwhelmingly won legislative elections, taking 86 of 113 seats in Taiwan's parliament. This makes a KMT victory in March more likely and could signal a thawing of the chill across the Taiwan Straits. It's also possible that direct flights between Taipei and mainland China could begin later this year. A KMT-led government is expected to focus on fighting corruption and raising Taiwan's economic growth (currently at 4.6 percent) toward the rest of Asia.

Economic performance in Southeast Asia will continue to be impressive, led by communist Vietnam (projected 8.1 percent growth in 2008), Indonesia (6.4 percent), Malaysia (5.8 percent), Philippines (5.6 percent) and Singapore (5.1 percent), the last of which is working on a free trade agreement with China that's likely to be signed before year's end.

Indonesia, the world's most populous Muslim nation, has recently seen outbreaks of anti-Christian violence, though the influence of radical fundamentalism is still quite limited. Indeed, a form of "soft Islam" is on the rise, reports the Economist, with secular political parties attracting voters by forming Islamic, but not Islamist, wings well ahead of Indonesia's 2009 presidential and parliamentary elections. In the Philippines, however, a bloody Islamist insurgency continues in spite of anti-terrorist legislation introduced in 2007, which could spell trouble ahead for President Gloria Macapagal-Arroyo.

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