The Week January 30-February 5

By Christopher John Farley, Kevin Fedarko, Christine Gorman, Jeffery C. Rubin, Alain L. Sanders and Sidney Urquhart

NATION

Vietnam Trade Ban Dropped

President Clinton lifted the 19-year-old trade embargo against Vietnam, opening a potentially lucrative market to U.S. firms. Although he cited Vietnam's cooperation in the search for evidence of the more than 2,000 Americans still missing from the Vietnam War as justification for the move, Clinton's decision disappointed veterans' groups and families of mias. On the other hand, firms such as American Express and United Airlines were thrilled; both announced plans to open for business in Vietnam ASAP. It still remains for the two countries to establish full diplomatic relations.

Health-Care Haggling

President Clinton's health-care plan was dealt a blow when the influential Business Roundtable of 200 of the country's largest firms endorsed a rival plan sponsored by Tennessee Democratic Representative Jim Cooper -- this despite avid lobbying by the White House. The National Governors' Association, meanwhile, came out in favor of health-care reforms similar to those proposed by Cooper's bill, and the 215,000-member U.S. Chamber of Commerce said President Clinton's plan "cannot even be used as a starting point."

White House Releases Budget

White House aides leaked details of the proposed $1.5 trillion budget that President Clinton will send to Congress this week. The plan eliminates more than 100 federal programs, caps or cuts spending in 600 others, and trims 100,000 jobs from the federal payroll. The billions in cuts are necessary to meet congressionally imposed limits on discretionary spending and to increase funds for the President's pet projects: the Head Start program for preschoolers, worker training and highway construction.

In Like Perry

After only one day of hearings, the Senate voted 97-0 to confirm William Perry as Secretary of Defense. He replaces Les Aspin.

Third Time's the Charm?

After a months-long search, President Clinton chose Deval Patrick, 37, to fill the post of Assistant Attorney General in charge of the civil rights division, still vacant a year after Clinton took office. Patrick was previously a partner in a Boston law firm and a litigator with the N.A.A.C.P. Legal Defense and Educational Fund. Two previous candidates, Lani Guinier and John Payton, were scuttled.

Tonya Trouble

The U.S. Figure Skating Association has decided that Tonya Harding must face disciplinary proceedings in the attack on her rival Nancy Kerrigan. The skater need not respond till after the Olympics, but the action could influence the U.S. Olympic Committee's decision on whether she will compete. Earlier, her ex-husband, Jeff Gillooly, pleaded guilty to racketeering in the assault on Kerrigan and said Harding approved the attack in advance. She denies it.

Farrakhan Rebukes?

Under heavy pressure from mainstream black politicians, Louis Farrakhan, head of the Nation of Islam, stripped aide Khalid Abdul Muhammad of his title and rank for making a speech last November that many critics labeled racist and anti-Semitic and that Farrakhan labeled "vile in manner, repugnant, malicious, mean-spirited." But Farrakhan also said he stood by "the truths" in the speech.

Squalor in Chicago

Police officers searching a Chicago apartment for drugs instead found 19 children, ages 1 to 14, scattered among filthy diapers, cockroaches and food ( strewn over the floor. Seven adults were arrested; one was charged with cruelty to a child, the others with contributing to child neglect. Said police officer Patricia Warner, who made the discovery: "It's something you wish you'd never seen."

WORLD

On Again, Off Again

After weeks of setbacks, word came from Switzerland that the Middle East peace talks were back on track. But by week's end squabbles over the terms of Palestinian self-rule in Jericho and the Gaza Strip had once more brought things to a halt. Exasperated by splits between his Foreign and Defense ministries, Israel's Prime Minister Yitzhak Rabin speculated that the present deadlock could last at least another three or four weeks.

Shopping-Day Slaughter

The mortar shell that slammed into Sarajevo's main downtown marketplace last week was timed to kill a maximum number of people: Saturday morning, the peak shopping period. In the worst single incident since violence broke out in the former Yugoslavia, at least 66 people were killed and 200 injured. Only the day before, 10 people died in a shelling in another part of the city. After Saturday's attack, newly installed U.S. Defense Secretary William Perry reiterated President Clinton's statement that the U.S. would not "permit the strangulation of Sarajevo."

More Deaths and a Warning

A U.S. Marine convoy fired into a crowded Mogadishu street, killing eight Somalis. The Americans blamed snipers, but Somali witnesses insisted that the crowd was peacefully waiting in line for free food. With American troops pulling out by March 31, the U.N. Security Council voted Friday to scale back the troubled operation and exhorted Somalis to get serious about forming a government.

Adams' Visit Causes a Stir

A tremor was sent through U.S.-British relations when Gerry Adams, leader of Sinn Fein, the political wing of the Irish Republican Army, was granted a 48- hour visa to visit New York City. There he attended a conference on Northern Ireland and met with groups of supporters. British officials, who opposed President Clinton's decision to allow Adams' visit, were angered that Adams had not explicitly called for an end to I.R.A. violence. Adams repeated his demand that British officials clarify their joint declaration with the Irish government, which promises the I.R.A. a seat at the negotiating table if it lays down its arms.

Playing Hardball with Russia

Against a background of increasing concern in the West that Russian reform is moving in the wrong direction, the head of the International Monetary Fund announced that his agency would not back away from the stiff conditions it has sought for the release of more aid to Russia. As an IMF team arrived in Moscow, Michel Camdessus warned that the economic changes necessary to unlock $1.5 billion in aid "may not be easy."

Hosokawa as Survivor

Japanese Prime Minister Morihiro Hosokawa confronted his third crisis in less than three weeks and abandoned a tax-reform plan that threatened to topple his shaky coalition. At issue: a new 7% national welfare sales tax intended to offset lower income taxes. The crisis could undermine efforts to finalize a $137.6 billion economic-stimulus package, part of an effort to reduce Japan's huge trade surplus with the U.S. Hosokawa wants to present the package to Clinton at their summit meeting in Washington this week.

Traveler's Advisory: Egypt

The Islamic Group, linked to a rash of 1993 killings, promised "extremely ferocious and strong" actions and warned foreigners to leave Egypt immediately for their own safety. That threat was a response to a Cairo police raid in which seven suspected radicals were killed. Last Friday unidentified gunmen killed a witness scheduled to identify suspects in the attempted murder of the Prime Minister.

Mackerel Wars

Furious French fishermen, protesting cheap imports from South America, Russia and Eastern Europe, went on a fish-throwing rampage in supermarkets across the country. More than 100 policemen, protesters and bystanders were injured in the melees. The 12-nation European Union has decided to set minimum prices for some fish, and may also impose stricter controls on non-E.U. fish imports.

BUSINESS

A Tumble for Wall Street

The Dow Jones industrials -- nudging toward an unprecedented 4000 mark -- plunged nearly 100 points Friday after the announcement by Federal Reserve Chairman Alan Greenspan that the Fed would raise interest rates. It was the biggest one-day drop for the stock market in more than two years.

Paramount Wants Viacom

After more than four months of stormy courtship, the two rivals for the hand of Paramount submitted their sweetest proposals last week. In the end it all came down to cash as Viacom's offer of $107 per share for 50.1% of Paramount beat out the $103 bid from QVC. Paramount chairman Martin Davis said shareholders would have until Feb. 14 (Valentine's Day) to decide.

SCIENCE

Frankenchips?

Scientists at the Naval Research Laboratory in Washington report that they have found a way to grow individual nerve cells from rats onto computer chips. Eventually, they hope to coax the cells into linking up with each other. That feat could lead to the development of "biochips," which might be used to test memory-enhancing drugs or detect the presence of chemical weapons such as nerve gas.

Big Brother Chips?

The Clinton Administration has decided to foster use of "Clipper Chips" in government communications equipment, thus allowing the FBI et al. to eavesdrop on computerized messages. The FBI reportedly is also investigating increased use of "sniffer" programs, which steal passwords and access to private data on the Internet.

Lost City Found in Mexico

Archaeologists have discovered the ruins of a vast city on the Gulf coast of Mexico. Known as El Pital, the pre-Columbian seaport flourished more than 1,500 years ago -- centuries before the Aztecs conquered the central Mexican highlands -- and may have had as many as 20,000 inhabitants.

THE ARTS & MEDIA

Networks' Clean-Air Plan

Television and cable industry leaders accepted the appointment of an outside monitor who would scrutinize their shows for unacceptable violence and issue an annual report card on compliance. The announcement was hailed by Illinois Senator Paul Simon, a leader of the anti-smut-and-violen ce movement in Congress.