January 12, 1991

There is no dearth of intrepid economists who forecast that the recession will be brief and mild, as these things go. In fact, that is the predominant view of leading analysts. But economic predictions, which are inherently risky, are particularly hazardous now, with new cracks showing in the nation's financial structure and increasing fear of war in the Persian Gulf. The conventional view of economic forecasters and the White House is that the worst is already over and that the economy will begin to recover in the spring or summer.

New York Panel Urges Small School Districts A legislative commission says New York City's system of decentralized schools, 20 years old and plagued by corruption, should be retained. But it suggests creating smaller districts, giving more power to schools and expanding the Board of Education to nine members. Page 27. Noriega Trial Delayed Again Trying to resolve numerous complexities, a Federal judge postponed the deposed Panamanian dictator's drug- trafficking trial until June. Page 11. Second Bridge Dismissal The day after he ousted an official who had warned of bridge hazards, New York's transportation chief announced another dismissal. Page 27. Murder Charge for Officer A rookie officer was charged with murdering a man who had tried to steal the officer's car outside his Brooklyn home. Page 27.

Iraqi Leader Warns Of Plan for Holy War President Saddam Hussein told a conference of Islamic leaders that he was preparing for a holy war against the American-led military alliance in the Persian Gulf that could be averted only if greater priority was given to solving the Palestinian issue. Mr. Hussein spoke of war preparations, of cleansing the Arab lands of what he called corruption and of liberating Palestinians. He made no reference to the impending arrival of the United Nations Secretary General, Javier Perez de Cuellar, seeking an 11th-hour commitment from Iraq to withdraw from Kuwait. Page 9. Bush Asking Israel To Stay Out of Conflict President Bush sent a high-level mission to inform Israel that the United States would try to protect it from Iraqi attack should war erupt and to urge Israel to stay out of the conflict. Deputy Secretary of State Lawrence Eagleburger left for Israel, accompanied by Pentagon and State Department officials. Mr. Bush previously urged Israel not to undertake any pre-emptive action against Iraq, a request that Israeli officials have said they will honor. Page 8.

Soviet Army troops using tanks and live ammunition today stormed the Lithuanian press center and a building occupied by the Lithuanian civilian militia, sharply escalating Moscow's campaign against this rebellious republic. The dramatic midday show of force reportedly left seven people hurt, including an unarmed civilian guard shot in the face by an enraged army colonel who sprayed the press building with machine gun fire after being doused by a firehose.

After a second day of sober debate, Congress appears ready to vote over the weekend to give President Bush the authority to go to war against Iraq. A solid margin of support is expected in the House, where votes are scheduled by early Saturday afternoon, but the outlook in the Senate is for only a bare victory. Voting there is scheduled to be held on Saturday as well.