August 16, 2001

Egypt's top foreign policy official warned that the Bush administration's ''inaction'' in the Middle East could allow extremists to take hold in moderate Arab countries. This would be a consequence far graver than the administration's apparent fear of risking its prestige with an Israeli-Palestinian peace initiative, said Osama el-Baz, President Hosni Mubarak's national security adviser. In addition to its effect on Arab states, Mr. Baz said in an interview, the United States' approach in the region was helping to weaken the forces of moderation in Israel, where many people were hoping that the Bush administration would take what he called ''a clear-cut position to check the mad spiral of violence.''

Daewoo Motor reports operating profit in July for fourth consecutive month, posting earnings before taxes of $10.4 million on sales of $350.1 million (S)

Emerging markets have lost favor with investors in recent years because of big losses and excessive volatility compared with markets in major industrial countries; leading index of emerging market stocks is off 43.3 percent since 1993, in dollar terms, and 29 percent in last year; last decade is replete with crises that have reduced or erased gains from previous years; AMG Data Services says net outflow so far this year is $1.3 billion, or 6.6 percent, of assets in stock mutual funds dedicated to emerging markets; Richie Prager of Bank of America and Philip Ehrmann of Gartmore Investment Management comment; graph; chart; photos (M)

Dave Anderson Sports of The Times column discusses Tiger Woods's slump in majors following win at Masters; on eve of PGA Championship, Woods appears fallible after disappointing finishes in United State and British Opens; photo (M)

Article on semingly unstoppable market for new architecture and design in California; despite tough building guidelines, much of new work is outspokensly modernist and is transforming city into country's epicenter of modernist design--and provoking soul-searching in community that prides itself on its distinct character; photos (M)