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(London, January 18, 2007) — In this week's issue, on newsstands from Friday January 19, on the eve of the annual gathering at Davos, TIME Europe publishes a special report on the delicate state of the global economy — from the threat of weaker U.S. growth to hopes that the strength of Asia and Europe will save the day.

"As 2007 gets underway, [an] uneasy mixture of confidence and incredulity seems to be a global phenomenon. Economists, bankers and policymakers have long argues about the extent to which the world economy remains dependent on America, and the issue will loom large at this year's World economic Forum in the Swiss mountains resort of Davos in late January. The U.S. constitutes about 28% of global gross domestic product as measured in dollars, and it accounted for one fifth of worldwide growth between 2000 and 2006. So the big question is: if America's growth doesn't pick up significantly, can other countries make up the shortfall? That question has taken on fresh urgency as the once hot housing market has cooled, putting a chill on the rest of the domestic economy. U.S. GDP growth dropped 2% in the third quarter, less than half the blistering 5.6% rate of the first three months of 2006. The prospect of a continuing slowdown has sent shivers of concern from Bangkok to Bordeaux," writes TIME Senior Business Writer, Peter Gumbel.

Also in TIME Europe's special cover package:

INTERVIEW WITH PETER MANDELSON: The WTO suspended its so-called Doha Round last July because of disagreements between the U.S. and the E.U. over subsidies to their farmers, while countries from Australia to India complain that the ways both giants use such supports are a major trade distortion. There's not much time left for a new deal, since the special "fast-track" authority to negotiate trade agreements expires at the end of June. "There is a wide appreciation among all the players that we are in the endgame. I think everyone realizes what a serious situation we are in. There is a shared sense of urgency about this, although it is partly for reasons to do with the electoral calendar in both the U.S. and Europe," Mandelson told TIME's Leo Cendrowicz.

A BRIDGE OVER TROUBLED WATER: The relationship between China and the U.S. may be the world's most important, but it's fraught with tensions. Can Hank Paulson bring the two countries together, asks TIME's Bill Powell?

AT THE CENTRE OF THE WORLD: Defying predictions of its demise, a resurgent Hong Kong has become the indispensable hub of global trade, says Michael Schuman.

PLUS… Marc Faber and Josef Joffe on the risks ahead; why firms planting trees for cash is not all good news for the planet; and why the Goldilocks economy may be a fairy tale.

INSIDE TIME

10 QUESTIONS: REP. JOHN MURTHA: "WE CAN'T SUSTAIN THIS SURGE."
Representative John Murtha, tells TIME, "We can't sustain this surge. You can deploy the people, but you can't sustain it." On January 24, Representative Murtha will appear before the Senate Foreign Relations Committee to testify about his plan for Iraq. "I'm going to lay out what I think can be done and what can't be done for the war," he says. "I'm going to look back at some of the mistakes they made and then build a case on readiness. I think it's just like everything else: you have to build a case for what you want to do."

TIME REPORTS: BIPARTISAN FRONT ON IRAQ POTENTIALLY LEADING TO MOST SERIOUS CONFRONTATION BETWEEN A PRESIDENT AND CONGRESS SINCE VIETNAM
TIME's Karen Tumulty and Massimo Calabresi report that President Bush's "surge" plan "has the potential to lead to the most serious foreign policy confrontation between a President and Congress since the Vietnam War." Many Republicans tell TIME they are frustrated because Bush has not done a better job of selling his plan. TIME reports they are already looking past the President's plan, worrying about the long-term damage they could suffer even after Bush is out of office, much as the "Vietnam syndrome" has for decades haunted Democrats.

JOE KLEIN: ROCKY MOUNTAIN REGION JUST MAY HOLD THE KEY TO WINNING THE WHITE HOUSE IN 2008
TIME's Joe Klein reports, "Something strange and tangy is happening in the Rocky Mountains. The Democratic Party is being reborn, with a raft of colorful candidates who have won the hearts of independents and moderate Republican voters…. At a time when political pomp and blab have come to seem prohibitively pompous and bloviational, Rocky Mountain politics is fresh and innovative and fun. It might not be a bad idea for Hillary and Barack and the rest to pause for a moment before the big show starts and take a look at what's happening just west of Iowa, in an electorally overlooked region of the country that just may hold the key to winning the White House in 2008."

RICHARD CORLISS: SUNDANCE, ONCE DARING NOW "JUST A DIFFERENT SORT OF SAME"
TIME's film critic Richard Corliss writes that while everybody who's anybody in movies is at Sundance this week, "indie movies are getting as predictable as Hollywood's." The festival, he writes, "used to be a daring, occasionally dazzling alternative to Hollywood; now, it's just a different sort of same."

The January 29 issue of TIME Europe is on newsstands from Friday January 19. The full stories are also available online at www.time.com