(FORTUNE Magazine) – SPECIAL REPORT/COVER STORIES 36 WHAT COMES NEXT War taught the U.S. that high-tech weapons can work and the volunteer Army can fight. Now the first step to an enduring peace is a Palestinian settlement. by Lee Smith

45 HOW BUSH DECIDED Once the President concluded that economic sanctions wouldn't work -- and that Iraq wouldn't back down -- his only option was war. by Ann Reilly Dowd

47 THE FATE OF OIL The sacrifices of Desert Storm could yield lasting benefits for oil -- a more rational OPEC and a sensible long-term U.S. energy policy among them. Here's what needs to be done. by Peter Nulty

CORPORATE REPUTATIONS 52 AMERICA'S MOST ADMIRED CORPORATIONS Merck leads the pack for the fifth year running. Philip Morris takes a dive. The judges -- more than 8,000 senior executives, outside directors, and financial analysts were polled -- are putting greater emphasis on product quality and corporate responsibility. by Alison L. Sprout

52 HOW IT WAS DONE

64 HOW ALL 306 COMPANIES RANK

68 HOW COMPANIES RANK IN 32 INDUSTRIES

MANAGING 86 THE ODD ECLIPSE OF A STAR CEO Don Petersen says he quit, but well-informed Ford people differ on precisely what happened. His detractors say that some directors, increasingly unhappy with the CEO's performance and worried about how Ford would be managed in the recession they foresaw, decided he had to go. His supporters insist he jumped. Now Red Poling has the grinding job of guiding Ford as it battles to regain momentum. by Alex Taylor III

MONEY & MARKETS 97 HOW TO HOLD DOWN S&L LOSSES The Resolution Trust Corp., the unwieldy government agency charged with cleaning up the savings and loan mess, isn't working hard enough to prevent your tax dollars from going down the drain. Blame bureaucracy, politics, and a pervasive fear of being ripped off. by Terence P. Pare

CORPORATE PERFORMANCE 110 COMPANIES TO WATCH Promus, a deft player in casinos and hotels, keeps an eye on the main stakes. Also: JWP, a former water utility, has gone national by acquiring companies and absorbing their skills. by Andrew Kupfer

TECHNOLOGY 113 HOT NEW PCs THAT READ YOUR WRITING Hold on to your keyboards, folks. A new machine just demonstrated publicly could well turn out to be as revolutionary as IBM's original PC. Weighing little more than a child's Etch A Sketch, it can read and manipulate handwritten letters, numbers, and drawings, and packs the smarts of a high- powered PC. So quickly has this new genre of computer evolved that the industry hasn't even agreed on a name for it -- but it's going to change the way you work. by Brenton R. Schlender

INNOVATION 124 PRODUCTS TO WATCH Haagen-Dazs's frozen yogurt with no artificial additives, an answering machine you can take on the road, an add-in circuitboard that can turn your PC into a TV, and more. by Stephanie Losee

ASIA 126 CAN THE KOREAS GET TOGETHER? They love each other like brothers -- Cain and Abel. And yet some of the forces that helped unite Germany are sweeping the Cold War's last divided country. With 64 million people and the world's 15th-largest GNP, a united Korea could become an even more potent economic powerhouse than South Korea is now. by Ford S. Worthy

DEPARTMENTS 4 EDITOR'S DESK 8 INDEX 12 NEWS/TRENDS The best cities for stocks, the West rethinks Soviet aid, other Kuwaits, a strategy for the 1990s -- bankruptcy, January as market seer, and more.

23 FORTUNE FORECAST The Gulf war will probably turn out to be less important to the U.S. economic outlook than the five months of anxiety and high oil prices that led up to it. by Todd May Jr.

27 PERSONAL INVESTING How to survive the market's ups and downs for unbeatable long-term returns. by Susan E. Kuhn Also: Drug wholesaler Bergen Brunswig's promising future and some easy steps to safeguard your savings.

135 FORTUNE PEOPLE Jean-Louis Appleseed, a kingpin of baseball cards, Ferruzzi Finanziaria's Ivan the Fragile, and more. by Mark M. Colodny

136 ON THE RISE

139 BOOKS & IDEAS An engaging consultant says our professional lives are about to change much more -- and much faster -- than we suspect. by Richard I. Kirkland Jr.

142 LETTERS TO FORTUNE

145 KEEPING UP Hurray for 60 Minutes, how to hedge against liberals, and other matters. by Daniel Seligman

ABOVE: J. Langevin (Sygma) photographed these M-1 tanks in Saudi Arabia.

COVER: Design by FORTUNE's art department using a SIPA Press photograph.