With most of the corporate world hunkering down in hopes of weathering a giant economic storm, Andrew Liveris and the other executives at Dow Chemical Co. might wish they could do the same.

No such luck. The Dow chairman and his colleagues are instead scrambling to execute a corporate makeover that reached a critical stage at the worst possible moment. At the heart of the challenge are two major deals, the first one counted upon to help fund the second, both signed when the world looked different: a $17.4 billion joint venture with Petrochemical Industries Co. of Kuwait that Kuwaiti political authorities scuttled just before closing late last month, and Dow's $18 billion acquisition of Rohm and Haas Co., scheduled to close shortly after this article went to press but now likely to be delayed.

Liveris and Dow begin the New Year with an agenda, outlined in a statement on Jan. 6, that would be formidable even in much better times. The transformational strategy, meant to move Dow away from commodity chemicals and into specialty products such as those Rohm and Haas makes, remains in place. Dow is pursuing legal action against the Kuwaitis, beginning what could be a long battle with a company that's a partner in several joint ventures and with a country whose sovereign wealth fund is putting up $1 billion to help finance the Rohm and Haas purchase.

Financing that acquisition without overburdening Dow with debt is the overriding goal. To make up for the $7 billion or more the uncompleted K-Dow joint venture was meant to contribute, Liveris plans to move on two fronts. He says he'll find another JV partner for the plastics unit that would have been spun into K-Dow. And he wants to accelerate a restructuring plan aimed at cutting 11% of Dow's workforce, dropping plants and perhaps divesting numerous units.

All these measures will take time. In interviews given to The Wall Street Journal and others after releasing the Jan. 6 statement, Liveris said Dow might delay closing the Rohm and Haas purchase, choosing to pay a "ticking fee" of about $100 million per month written into the contract. On the matter of whether he might seek a price break, however, he was mum.

Dow said it was shocked by the decision of Kuwait's Supreme Petroleum Council to overrule state-owned Petrochemical Industries Co. and scrap the deal on Dec. 29. In some ways it's not hard to see why. Dow's relationships in Kuwait are deep, and this JV -- which would have married Dow's commodity plastics business with the Middle Eastern country's low-cost petroleum feedstocks -- followed a pattern set in existing Dow-Kuwaiti partnerships producing petrochemicals, resins and ethylene glycol.

But political sentiment against the deal had apparently been building in the National Assembly for a while, against a backdrop of plummeting energy prices and Dow's own falling stock price. Dow and Kuwait had already announced a scaling back of the deal's value earlier in December.

How the legal fight will play out is hard to gauge. A battle between entities based in Michigan and the Middle East over a venture that was to be legally domiciled in the Netherlands, the suit could take years to resolve. Liveris said in an interview with The Wall Street Journal last week it would be "quite a shame" for it to go to trial without a settlement.

But the Kuwaitis so far show no signs of backing down, with Commerce and Industry Minister Ahmad Baqer telling a Middle Eastern news service that the state "has undertaken all necessary measures to counter" Dow's case. Though Dow appears to have a shot at receiving a $2.5 billion compensation payment, and also says it would still like to close the deal, disagreement between politicians and petroleum officials in Kuwait could make a quick resolution difficult.

That leaves Dow looking for alternatives for its plastics business.

Dow, which did not return calls seeking comment, says it had multiple parties interested in teaming with the business. Liveris has said he expects to have a replacement deal "within months." The company has not said who it was talking to, but with speed a necessity many believe it might turn first to partners from its impressive stable of joint ventures.

Petroliam Nasional Bhd., or Petronas, Malaysia's state-owned oil and gas giant, already works with Dow on a Kuala Lumpur venture that makes ethylene, propylene and related products. Some industry analysts also cite Russia, where Dow in September broke ground on a polyurethane systems manufacturing facility as part of a joint venture with Scientific Manufacturing Co. Izolan Ltd., as a possible source of investors in plastics.

Analysts also mentioned the United Arab Emirates, where Dow has some production facilities as part of other ventures, but fewer formal ties.

Dow plans a massive chemicals and plastics production complex in Ras Tanura, Saudi Arabia, with Saudi Arabian Oil Co. But it is unclear whether Western antitrust regulators would look favorably on the Saudis investing in Dow's sprawling plastics business, given that Saudi Basic Industries Corp. already owns a large plastics operations acquired from General Electric Co. in 2007 for $11.6 billion.

Meanwhile, Rohm and Haas is waiting, with antitrust approval believed to be close and a deadline to avoid late-closing penalties looming. Analysts including Credit Suisse Group's John McNulty have speculated Dow is trying to lower the $78 per share price on the agreement, perhaps hoping Rohm management privately agrees with analysts who say the company might be valued at as little as $35 per share on its own in this economic climate.

Dow officials have made clear they still want Rohm and Haas, which they have long coveted and which became available earlier this year because the controlling Haas family decided it had to diversify its holdings. Moreover, the merger agreement requires Dow to pay its target $750 million even if federal regulators block the deal, and perhaps significantly more now if it walks for reasons other than regulatory and triggers a lawsuit.

Dow also must be mindful of its lenders, who so far have been surprisingly steadfast in their commitment for $13 billion in bridge loans secured when the Rohm and Haas deal was announced. The 18-bank syndicate providing the one-year bridge could be drawn to fund the Rohm deal, but doing so would leave the company with debts exceeding its now-depressed market cap and could make both lenders and shareholders nervous.

Tapping the full line would also shred Dow's credit rating and jeopardize a dividend that has not been reduced or interrupted since 1912, an action Liveris promised not to take as recently as last month.

So Dow needs cash to pay for Rohm, and needs it quicker than any settlement with the Kuwaitis or an expedited new joint venture could provide.

The company in September retained J.P. Morgan to shop its Clear Lake acrylic acid and esters operations in Texas in hopes of mitigating potential antitrust concerns related to the Rohm deal. Those businesses, with unnamed assets Dow said in early December would be put on the block, are still for sale.

But analysts say Dow is unlikely to make much from divestitures. The "vast majority" of what it said was earmarked for divestiture in early December, the company said, appeared destined for joint ventures rather than sale on the open market. Even on the open market, interest will likely be tepid, given the global slowdown in chemicals and a lack of financing available for potential private equity buyers.

It has been a difficult couple of years for Liveris, who in April 2007 had to fire two executives for holding a series of secret meetings with investment bankers and investors about a leveraged buyout without the CEO or board's knowledge.

Liveris, who has been chairman since 2006 and CEO since 2004, has persuasively advocated the transformation strategy, but he has yet to really deliver on it. This January, with the Kuwait joint venture under way and the Rohm deal complete, was to have been a major turning point for Dow.

The vision still seems viable. But achieving it under current conditions will be no small feat.