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COVER STORY

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s,Israeli forè~scon~nueto pound Lebanon and Gaza in retaliation for kidnappings of its soldiers, the region stands on ,t~ebrink of awiderconflagration.

Many think the hostilities have 'a1ready spread, with Iran pulling

strings from afar. Are Israel and the United States ready for this .

proxywar? Page 16

MIDDLEEAST: Lookingat the warwithin

the war in Lebanon 16

lNDIA:Invesi:igatorsfocus on a new,

.deacllyalliance : , 26

CHINA:Rights activists are turning to

.

Christianity , : 32

EUROPE: Is Eastern Europelosing its

best andbrightest? : 36

BUSINESS: GM's Rick Wagoner defends

bis leadership 42

GLOBAL INVESTOR: Stephen S. Roach on

tackling inflation 47

DESIGN:The year's dozen best examples

of smart design 48

THEATER: PlaywrightThm Stbppard

returns to bis roots 56

MOVIES: Saille pointed, and needed, 'advicefor M. Night Shyamalan 58

Ifj

MUMBAI:TERRORISTS STRIKEINDIA'SFINANCIALHEART

DEPARTMENTS

PERISCOPE 4

PERSPECTIVES 5

WORLD VIEW.., , 15

THE GOODLlFE 61

THE LASTWORD : 64

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CUVER: Photograph Adnan Hajj-REUTERS. Inset: Atul Loke-PANOS.

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Vol. CXlVIII, No.4. July 24, 2006@2006bYNEWSWEEK,lnc.,251WesI57IhSlreel, New York, NY10019. Prinled by'Roto Smeets, Weert, Netherlands. Alirights reserved. Registered althe PostOffice asa newspa-

~er. Copyrighl underthe International Copyright Convention. Copyright reserved underthe Pan American Convention. Registered in the Philippines Patenl Office. ln the U.S.A.: .Postmaster: send address ch?nges

e EWSWEEKINTERNATIONAl, 251 West 57th Street, New York, NY10019; periodical postage paidat New York, N.Y., and at additional mailing offices. NEWSWEEK INTERNATIONAL is written andedited forawordWide au (n~e.andISpublished weekly, except occasionallylWo issues are comblned inlO one expanded Issue whlch counls as IWOsubscrlpl/on copies, in Ihe U.K. tly NEWSWEEK,lnc.(ISSN 0163- 7053). To °;,rl;JI~

l~~~mum ord.errequired: 500 copies) orrequesl permission to republish a NEWSWEEKarticle please cali 1-212-445-4870 or fax 1-212-445-5764. Dir. Resp.ltalia Marco Provasi; rappr.IMDsri""~

03 20°162 Mllano; auto Trib. MI N. 453 deI 12/06/87 sped. Abb. Post. 45% art. 2 comma 20/b leue 23/12/96 n. 662 Milano; Repr. pour la France: E.M.D. France S. A., B.P.1029-59011 UII . Bei. .3?03.02. Le Direcleur de la Publication: Alan F. Bone-C.P.P.A.P. No. 0708 C 83393. Ce numéro comprend un encart de deux pages (abonnement) situé entre les folios 2 el 55. Ed,leur resp:

glque.Freddy Degroux, Youth&.MediaUnk, DeWittestraat 2.B-2600Berchem~ '

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NEWSWEER: JULY 24, 2006

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