In many parts of the world, particularly in the US and in Europe, it is common for columnists to start the year with comments about how issues are expected to pan out in the future. Today, being New Year's Day, I shall attempt to do the same.

The past year has been turbulent -- full of gory headlines and natural disasters. In terms of economic performance however, 2004 has been great for developing countries. In fact, the world economy has grown faster in the last twelve months than at any other time in the past 20 years. It has been an interesting mix.

This upturn in the economic trend is expected to continue throughout this year. It will, however, most likely be greatly influenced by two significant players -- the US and China. These two countries in their own way will impact on the global economy as well as global security.

The emphasis within the international matrix will, however, more likely than not, continue to be dominated by fundamental existing sources of instability -- Palestine, Iraq, Iran, North Korea, the issue of Kashmir, China's uneasy relations with independent-minded Taiwan, and the continuing "war on terror." Added to this political landscape will be other important unresolved questions related to environment, trade, aid, international debt, and sustainable development.

One could be cynical and state that it will be old wine in a new bottle. This would, however, not be completely true. There will hopefully be a difference and a movement forward.

My optimism stems from the fact that the US presidential election is over and out of the way. This also encourages me to think that there might be greater flexibility on the part of US, both in terms of posture and approach. President Bush is only the fourth US president to have been re-elected since the 1950s. What we are looking at is a president who might be prepared to define himself for posterity.

George Bush came to Washington in 2001 as a "compassionate conservative." At that time he promised to bring in not only a new style of politics but also to usher in a strong foreign policy. The events of 9/11 put a twist on his ambitions. Unfortunately, his efforts both at home and abroad made him a divisive president. The recent US presidential election bears witness to that. His reliance on conservatism and moral values might have endeared him to middle America, but at the same time, it has opened him up to charges of unilateralism and inflexibility.

President Bush has made a few changes in his Cabinet. He has also suggested a more hands-on approach with regard to several questions which affect American interests both at home and abroad. This, in my opinion, has opened a few windows of opportunity.

The conclusion of the presidential election in Afghanistan has created a new dynamic. The transformation aimed at legitimising events in Afghanistan is over. Completing a similar pseudo-process in Iraq this month could not only be a source of great relief, but also a spring-board for other ambitions in the region.

Bush however knows that the political evolution might be affected through haste. His team will advise him to be careful and not undertake any sharp reduction of US presence. There will, in all probability, be repatriation of some armed forces representation from Iraq but the level will still remain high till the end of the third quarter of this year. The Pentagon and the White House, both realise, that decreasing troops in great numbers immediately after the election might mean abandoning Iraq and that country's natural resources to further chaos.

Bush has already found out that ousting Saddam was the easy part. He now understands that rebuilding countries is much harder.

I believe that the new US administration will appreciate this time around the hard fact that the president can only get what he wants with some co-operation from the Europeans. They also have to realise that showing contempt for multilateral organisations does not help in the long run. With a bit of luck, they will probably also recognize that the neo-conservative dream of bringing democracy to the Middle East will fail if the festering Palestinian issue is not resolved.

It would be helpful in this regard if the US took heed of the recent comments made by the Saudi Foreign Minister Prince Saud al Faisal. The prince said that the Arab world understood US security guarantees to Israel, but could not comprehend how Washington's backing for regional democracy did not extend to restraining Israel in the Palestinian territories with regard to policies and actions that were contrary to international legality. Positive action on the Palestinian issue would greatly enhance US moral standing in the Middle East. Arafat's departure from the scene might introduce a more conciliatory approach. This will be the first year of his second term and an opportunity to prove that the US values stability in the Middle East. Any step in this direction will meet with support from both the EU as well as his friend Tony Blair.

After a record year for voters in 2004, the most important election in 2005 will probably take place in Britain in a few months. Tony Blair is almost certain to win a third term despite his unpopularity over the Iraq war. He has to thank his Chancellor of the Exchequer for that. The sustained economic growth in that country, as opposed to the economic vagaries in Europe will ensure a Labour victory. A re-elected, confident Blair, in charge of the presidency of the G-8, from the beginning of this year, will, I believe, take that extra step to persuade Bush towards a more active multilateral engagement, in areas like-reduction of extreme poverty by half by 2015, re-evaluation of action undertaken for millions of AIDS sufferers, their access to anti-retroviral drugs and effective measures to combat climate change.

Turning to East Asia, events will be shaped by both China and Japan. They will continue to be catalysts in the economic sphere. Their robust performance will activate and act as an engine of growth not only for themselves but also for their neighbours in Asean and South Asia.

China's stature in the region will also be further boosted by the recent evolution of events in Taiwan. The defeat of the independence-leaning alliance of the Taiwanese president Chen Shui-bian in the recent polls, should, for the moment, stay further deterioration of ties between Taiwan and China and reduce tension in this area.

The world will also seen a resurgent Japan. Leaner Japan has gained economic weight in 2004 and their military involvement in Iraq has encouraged them to push for a permanent seat on the UN Security Council. Recent structural reforms in banking will also ensure that the most damaging symptom of Japan's economic ills, deflation, will ease further. Prime Minister Koizumi's support rating might have plunged to 37 per cent, but that will not affect the gradual normalisation of its monetary policies. This is important, given the fact that Japan is the world's second biggest economic power-house.

In South Asia, India will continue to dominate the scene. Its ruling alliance, led by the Congress party, will however, in all likelihood, face obstacles. To stimulate investment, India will need to reduce its huge fiscal deficit, further improve public services, overhaul restrictive labour laws, bring more private capital into state owned businesses and reduce bureaucratic intervention. All these steps might turn out to be more difficult than expected -- given the fact that the left-leaning partners in government might oppose many of the reforms.

India will also have to seriously address the issue of peace with Pakistan. The forthcoming Saarc Summit to be held in Dhaka might help as a confidence building measure between these two countries. A second round of "composite dialogue" between their foreign ministers is expected later on in May or June, but evidence of a movement forward will be required to sustain the process. Otherwise, Pakistani President Pervez Musharraf might be under increasing pressure at home to review his proposals. One must not overlook the fact here that his foreign policy commitments appear to be in conflict with his domestic political compulsions. This in turn, as The Economist has noted, might "risk throwing away the best chance in a generation of a settlement" on Kashmir.

India and Bangladesh will also probably initiate comprehensive discussion about the complex issue of the Indian River Linking Project which could result in great human and ecological disasters for both downstream Bangladesh and upstream India. A recently concluded international seminar in Dhaka has pointed out how the project would affect Bangladesh's agricultural and industrial productivity and other sectors like forestry and fishery. We are talking here of hundreds of millions of people across the divide and that raises the urgency threshold for both countries. India, being a co-riparian and a partner in the South Asian development process, has to understand that any unilateral action on its part can only promote instability and misunderstanding.

2005 might be a year of opportunities for Bangladesh. The government, if it is concerned, could take some bold decisions. The coming year may yet see the eventual separation of the judiciary from the executive, establishment of a National Human Rights Commission and the Office of the Ombudsman. These are precious building blocks for effective governance. The present government has been promising these steps for some time. What is required is political will -- and that must be found.

The political arena will most certainly quicken further with more intensive action by the opposition. This will take place both in the streets and also in the Jatiyo Sangsad. Disaffection will grow unless deterioration in law and order and the price spiral can be controlled. This year will see the general population monitoring domestic factors with greater care. This will include unpopular facets like politicization of the bureaucracy and the judiciary. Corruption will also come under focus ahead of the completion of the term of office of the present government in October 2006.

Another issue is expected to dominate national attention in the coming months -- that of the character of the next caretaker government. This constitutional arrangement appears to have been tampered with already through unnecessary amendments. Various other factors have also crept in and stirred controversy. Appointment of a new Chief Election Commissioner might add to the debate.

In the meantime, political parties associated with the Opposition will also be carefully following the organisational steps being undertaken by the ruling Alliance in anticipation of the next general elections. Reports have indicated that ruling party activists are being advised to ascertain at the grass roots level the opinion of the general population with regard to the fulfillment of BNP election pledges. This is an interesting approach. One presumes that the opposition will also initiate similar action to prepare their subsequent manifesto ahead of the general election. This will generate seriousness and maturity in the political process and make 2005 an interesting and fascinating year.

One can also only hope that the recent visit of the former Prime Minister of Malaysia would encourage the present government to approach economic diplomacy and their look-East policy in a bipartisan spirit. This will be seen as a factor of stability and encourage investors to come to this country. They will then be assured of the safety of their potential investment against possible expropriation or nationalisation by a future administration.

Muhammad Zamir is a former Secretary and Ambassador.