The NewsHour with Jim Lehrer

JUDY WOODRUFF: Good evening. I`m Judy Woodruff.

On the NewsHour tonight: the news of this Wednesday; then, today`s Supreme Court argument on whether states must follow international law, with Marcia Coyle of the National Law Journal; a talk with World Bank President Robert Zoellick, 100 days after he took over the embattled institution; and another in our series of conversations with presidential candidates, tonight, Democrat John Edwards.

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JUDY WOODRUFF: The United Auto Workers went on strike against Chrysler today, but reached a contract agreement hours later. It was the union`s first walkout at Detroit`s number-three automaker in 10 years.

Thousands of workers stopped working at almost 20 plants across the country. Contract talks had stalled over health care, wages and job security.

Late today, the UAW announced a four-year deal addressing those issues, and it called off the strike. The union also announced its members ratified a contract with General Motors; that pact followed a two-day strike against GM last month.

President Bush pressed Democrats today not to put new limits on the surveillance of terror suspects. A temporary law allowing eavesdropping without warrants is due to expire in February. House Democrats want to roll back some of the authority in that measure. But Mr. Bush warned today that "Congress must make a choice."

GEORGE W. BUSH, President of the United States: Will they keep the intelligence gap closed by making this law permanent, or will they limit our ability to collect this intelligence and keep us safe, staying a step ahead of the terrorists who want to attack us? While the House bill is not final, my administration has serious concerns about some of its provisions, and I am hopeful that the deficiencies in the bill can be fixed.

JUDY WOODRUFF: The president also insisted on immunity for telecommunications companies. They are facing lawsuits over claims they aided in surveillance without court orders.

But Democratic leaders insisted first the administration must turn over documents that detail what was done. The chairman of the House Judiciary Committee, Democrat John Conyers, spoke as the panel considered the bill.

REP. JOHN CONYERS (D), Michigan: It isn`t that we don`t want to grant the kind of retroactive immunity. We don`t know what to grant at all.

JUDY WOODRUFF: The committee agreed to protect telecommunications firms from future lawsuits, but not against suits already filed. The Democratic bill could come to a vote in the full House next week. The Senate is working on its own version.

The U.S. Supreme Court today waded into a fight over foreigners on death row. President Bush had ordered Texas to grant a Mexican man new hearings to comply with an international court ruling. The state argued it is not bound by such rulings.

Also today, the court affirmed that New York City must pay private school tuition for a special education student. The city argued that he was ineligible because his parents did not send him to public schools first. We`ll have more on both cases right after the news summary.

Leaders from the president on down warned Congress today to reject a resolution condemning the mass killings of Armenians. Up to 1.5 million Armenians died at the hands of the Ottoman Turks around World War I. A U.S. House Committee voted today to brand the killings "genocide," but President Bush said it would harm relations with Turkey.

And outside the White House, Secretary of State Condoleezza Rice echoed that concern, alongside Defense Secretary Robert Gates.

CONDOLEEZZA RICE, U.S. Secretary of State: This is not to ignore what was a really terrible situation, and we recognize the feelings of those who want to express their concern and their disdain for what happened many years ago. But the passage of this resolution at this time would indeed be very problematic for everything that we`re trying to do in the Middle East, because we are very dependent on a good Turkish strategic ally to help with our efforts.

JUDY WOODRUFF: Secretary Gates said the vote puts at risk the vital help that Turkey provides the U.S. war effort in Iraq. The Turkish government disputes the genocide allegations. It warned that passing the resolution would be a "historic mistake."

Mourners in Iraq today demanded justice in the killings of two women. Their funerals were held in Baghdad. The women, both Armenian Christians, were shot to death yesterday by guards from Unity Resources Group, a security firm owned by Australians and based in Dubai.

The company said the security team opened fire when the women`s car failed to stop. Iraqi officials accused the guards of firing at random. An investigation is under way.

A kidnapped German engineer and four Afghan hostages were released today in central Afghanistan. They had been held by Taliban militants since July. An official in Wardak province said they were exchanged for five imprisoned criminals, including the father of a Taliban commander. Another German engineer was kidnapped at the same time; he was found shot to death days later.

The Nobel Prize in Chemistry went to a German professor today. Gerhard Ertl was honored for his research into chemical reactions on solid surfaces. His work has helped in understanding why the ozone layer is thinning, among other things. Ertl celebrated his win today in Berlin.

GERHARD ERTL, Nobel Prize, Chemistry: This is a coronation of my career as a scientist, something you work on a topic, for decades, and finally you get this kind of recognition. So it`s the highest award you can think of.

JUDY WOODRUFF: Ertl also celebrated his 71st birthday today.

On Wall Street today, the Dow Jones Industrial Average lost more than 85 points to close at 14,078. The Nasdaq rose more than seven points to close at 2,811.

That`s it for the news summary tonight. Now: arguments at the Supreme Court; a new head of the World Bank; and Democrat John Edwards.

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JUDY WOODRUFF: The Supreme Court hears questions about presidential authority. Margaret Warner has our story.

MARGARET WARNER: Today`s arguments at the court pitted the Bush administration and lawyers for a convicted murderer against lawyers for the state of Texas.

The case involves a Mexican man on death row in Texas who was not advised before his trial of his right to contact the Mexican consulate. President Bush ordered the Texas court to review his 1994 conviction, but the state refused.

NewsHour regular Marcia Coyle of the National Law Journal was in the courtroom today, and she joins us once again.

So, Marcia, very strange bedfellows. We`ve got the Bush administration and lawyers for this convicted murderer against the state of Texas. How did this case end up at the Supreme Court?

MARCIA COYLE, National Law Journal: It is a fascinating case. The Mexican national on Texas death row is Jose Medellin. And after he was convicted and sentenced to death for participating in a very brutal gang rape and murder of two teenaged girls, he began pursuing his appeals through the Texas courts.

While he was doing that, the government of Mexico brought proceedings against the United States before the International Court of Justice, also known as the World Court, which is the judicial arm of the United Nations. Mexico claimed -- and the World Court ultimately agreed -- that the United States had violated the Vienna Convention on Consular Relations, the treaty that requires the government to notify foreign nationals when they`ve been detained that they have a right to consult their embassies or their consuls.

Medellin, once this ruling came down, went back into court to say, OK, I have this claim. My rights were violated. The Texas court said, Sorry, this international court`s judgment doesn`t have the force of law in Texas courts, and the president`s declaration, that we have to enforce it, he exceeded his authority. Medellin is now before the Supreme Court in the case that was argued today.

MARGARET WARNER: So if we take the plaintiffs -- that is, the administration and this man`s lawyers -- what was their basic argument today?

MARCIA COYLE: OK, there were really two threads on this side. Medellin`s lawyer is saying the Constitution has a supremacy clause; that clause says international treaties are the supreme law of the land. The international court`s judgment here is the law of the land. The United States signed the treaty; Senate ratified it.

The Bush administration`s arguing the president decides whether to comply with treaties. He has the authority as president making foreign policy. He decided to comply; it`s the law of the land.

MARGARET WARNER: So it`s sort of about his executive power, as far as they`re concerned?

MARCIA COYLE: Yes. Yes.

MARGARET WARNER: And now the lawyers for Texas?

MARCIA COYLE: Texas is saying, This is really separation of powers here. The president cannot declare the law of the land. He executes the laws; he doesn`t make the laws. He needed Congress to help him make a law to say, OK, Texas, you have to set aside your own court procedures and give this man a hearing.

MARGARET WARNER: And what`s Texas` argument to Medellin`s lawyers who are saying that, in fact, they just have to obey this World Court rule?

MARCIA COYLE: Texas is also saying, Medellin, what you`re saying is the courts have no role here in interpreting international judgments, so that is unconstitutional, and you cannot just use the supremacy clause. The Supreme Court and our courts have a role in interpreting the treaties.

MARGARET WARNER: Now, how did the justices respond to all this?

MARCIA COYLE: It was fascinating. They were viewing this case through all those different lenses. You had Justices Breyer and Ginsburg, who have a very deep understanding and knowledge of international law, turning to the supremacy clause and the treaties. There are treaties here. They`re supreme law of the land.

You have Chief Justice Roberts and Justice Scalia who, on a court that`s generally very jealous of its own power, saying, "What role is left for the Supreme Court? Are we just supposed to enforce this judgment without examining whether it complies with the Constitution?"

And then you had other justices, like Justice Kennedy, worried about states` rights. Can an international judgment just supplant a state court`s criminal procedures?

MARGARET WARNER: Is this the first time this has ever come up?

MARCIA COYLE: Medellin was actually before the court one other time, and he had raised the violation of the treaty before, but the court never got to the merits, because the Bush administration at that point stepped in and decided to enforce the judgment.

MARGARET WARNER: Now, when the judgment came down from the World Court, the Bush administration was actually very critical of it.

MARCIA COYLE: Yes.

MARGARET WARNER: What is the status of, in fact, that Vienna Convention, that part of it, now?

MARCIA COYLE: This judgment applies only to 51 Mexican nationals on death rows in the United States. Right now, the number has gone down to about 44 in nine states.

The Bush administration agreed to comply with the judgment just for those Mexican nationals. It withdrew from another part of the agreement that said it would be bound by the World Court`s judgments in interpreting this treaty in other cases.

MARGARET WARNER: So what is the status of either a foreign national arrested here now or an American national detained or arrested overseas?

MARCIA COYLE: Well, the truth is, Margaret, that this case has really educated a lot of people in this country about the Vienna Convention on Consular Relations. Local law enforcement officials, who may not have been aware of it for a long time, have received educational materials from the State Department. And I think there is a general intention to comply.

But if the Supreme Court were to decide that the treaty judgment is not enforceable, there could be retaliation by other countries when our nationals are detained abroad. Those countries may say, "Well, if you`re not going to provide access, why should we?"

MARGARET WARNER: And that is one of the Bush administration`s arguments?

MARCIA COYLE: They`re very concerned about how our diplomats and other citizens might be treated abroad if this judgment is not enforced.

MARGARET WARNER: Finally, in a separate case, the court issued a split decision in a special-ed case they heard just last week. What happened there?

MARCIA COYLE: It was an early decision. And usually when we get early decisions, it`s because the case had a problem, a procedural problem, and it washed out. The justices didn`t know until it was argued. But this case was before eight justices. Justice Kennedy had recused himself.

MARGARET WARNER: And just remind us, this was about some parents who sent their child to private school who was disabled...

MARCIA COYLE: That`s right.

MARGARET WARNER: ... who were saying they should nonetheless be reimbursed by the state.

MARCIA COYLE: Exactly. The state of New York was saying, under federal law, you have to try the public school first, if the school can provide the service. The justices just issued a two-sentence order saying, We split 4-4. That means the lower court`s decision is upheld, which means the parents won here, but it sets no precedent for any future cases.

MARGARET WARNER: And we don`t even know how the justices split?

MARCIA COYLE: No, we don`t. They just say, We divided 4-4. The lower court`s affirmed.

MARGARET WARNER: And, quickly, is it unusual for them to so quickly essentially get rid of a case like this, rather than try to argue with one another and try to build a majority of five on one side or the other?

MARCIA COYLE: Well, I think they do try to do that. Believe it or not, after an argument, they sit right down, and they do discuss it, and they vote. So, obviously, the sides were firm here. The court may get another shot at this issue. There is a pending case that they could take if they wanted to address it.

MARGARET WARNER: Marcia, thanks.

MARCIA COYLE: You`re welcome.

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JUDY WOODRUFF: Now, the short auto workers strike at Chrysler and what`s at stake for both sides. Jeffrey Brown has our update.

JEFFREY BROWN: As strikes go, it was a short one. More than 30,000 auto workers walked off the job at Chrysler at 11:00 a.m. this morning, but by 6:00 p.m., the union reported it had reached a settlement. For the latest, we turn to Warren Brown, the longtime automotive columnist at the Washington Post.

Well, Warren, do we know yet what led to the quick breakthrough?

WARREN BROWN, Washington Post: Yes, Jeff. Frankly speaking, what the Chrysler UAW wanted was pretty much the same pattern that GM had, which is a Voluntary Employment Benefits Association agreement that would shift a lot of the health care costs to a UAW benefits group, but fund it, you know, by the corporation.

The quibbling, as I understand it earlier -- it was actually more than quibbling, if you consider $11 billion -- was over how much money Cerberus Capital Management was going to put into the Chrysler VEBA fund. And apparently there`s been some agreement on that.

Cerberus initially objected to the amount that the Chrysler UAW wanted to go into its beneficiary association fund, primarily because Chrysler is in a pretty bad position, in terms of product. They`re relatively bereft of small cars. The Dodge Ram pickup, there`s more than a 60-day supply. And the Chrysler Sterling, which was supposed to have been a bit of a hit for them, is now relatively flat.

So, actually, on the one hand, Jeff, Chrysler, even though it didn`t welcome the strike, and if the strike had gone on for a few days it would not have really hurt them so badly, because that way they can draw down their inventories of vehicles that they have overstocked now because of slow sales, but the question now remains: Is the amount of money that Cerberus Capital Management is agreeing, apparently, to put into the Chrysler UAW VEBA fund, is that going to do more than placate the UAW?

By that, I mean, is it going to hurt any product development plans sorely needed by Chrysler? So that remains to be seen.

JEFFREY BROWN: Well, let me ask you about that. Health care clearly one of the sticking points, and the one you suggest they overcame tonight. The job issue was another one that there had been a lot of talk about, and Chrysler`s desire, apparently, to move more jobs offshore to make more of its products overseas.

WARREN BROWN: Well, you know, these job security -- so-called job security clauses, they`re really, to me, not really very realistic. They`re kind of amelioratory things, you know, things to kind of like placate the current anxiety.

But the bottom line is that, as long as you have anywhere from, you know, a $2,000 to almost $3,000 price gap, production cost price cap, between what Chrysler is making and what Toyota is making, the consumer is the person setting the pattern. It`s not GM that`s setting the pattern. It`s not the UAW that`s setting the pattern. It`s the consumer setting the pattern.

And by that I mean, if you would look at Big Three market share in the U.S. market, say back in 1998, it was 71.2 percent. Now, it is down to 51.3 percent. That has nothing to do with outsourcing; that has everything to do with consumer choice in the U.S. market.

And it`s consumer choice that`s going to decide all of this, which basically means that, if Cerberus Capital Management, Chrysler LLC has to outsource -- and believe me, they will -- you know, they will try to do as much of it is as they possibly can.

JEFFREY BROWN: You`ve mentioned Cerberus now. This is the private equity firm. This was a real new player in this industry, in these talks. Was this looked at as a kind of first test for whatever new model they want to bring to this industry?

WARREN BROWN: Well, yes, as a matter of fact. And still, we don`t have all of the details yet, but, you know, the cynical thinking, if that`s what you want to look at it as being, is that Cerberus Capital Management has been known pretty much for buying, breaking up, selling off the parts, regardless of, you know, union sentiments.

And the question was, you know, how much money were they willing to lose in a strike, should it go long, before they resorted to that pretty much traditional strategy for Cerberus Capital Management? Which is why I suspect, I don`t know, but it`s just my personal feeling, having looked at this, is that both the GM strike and the Chrysler strike were essentially theatrical.

It was basically the union leadership`s way of selling something to the rank-and-file union members, "Look, we fought as hard as we possibly could fight for you, in what essentially is an impossible situation, again, primarily because of what consumer demand is doing to the market. And this is what we`ve got."

And so, you know, that`s my take on it. Whether or not, you know, that is accurate, I`m fairly certain somebody from the UAW will have something else to say about it.

JEFFREY BROWN: Well, let me ask you briefly. I mean, you`ve mentioned GM and it`s an interesting day in the industry because, just also late today, the GM and UAW announced it had voted and ratified the contract with GM.

WARREN BROWN: Precisely.

JEFFREY BROWN: When you look at that one, what jumps out at you as the key thing, especially looking forward now, with both these companies having gone through negotiations?

WARREN BROWN: Well, you know, GM is really on a role. The media hasn`t really caught up to the fact that GM is on a role right now, but when you look at GM`s product portfolio and everything else, GM really is beginning to turn out some really great products right now.

August and September were up months for GM, in terms of sales. In terms of what the contract, you know, does for GM, it allows them to continue that role. It also reduces something like $2,000 in the production cost gap between GM and Toyota, the per-car production cost gap.

I mean, GM was down, and Toyota was over about, you know, $3,000 versus Toyota. Now, you know, Toyota still has about an $800 advantage. GM is going to have to find some kind of a way to reduce that gap, because, as I said, consumers are controlling this market.

And consumers are essentially selfish. They don`t look for the union label. They look for the best deal. And that is something that everybody now realizes. And if that means that there`s going to be some outsourcing to bring consumers the best deal, then that is what everybody is going to do, agreement or no agreement.

JEFFREY BROWN: All right. And the next negotiation, we`ll be watching as the UAW starts talking with Ford. Warren Brown from the Washington Post, thanks very much.

WARREN BROWN: Take care.

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JUDY WOODRUFF: Now, the World Bank and its new president on the hot seat. Gwen Ifill begins with some background.

GWEN IFILL: Robert Zoellick`s first 100 days at the World Bank were spent overcoming the final 100 days of his predecessor, Paul Wolfowitz. His first task: to calm the waters at the world`s largest poverty-fighting institution.

ROBERT ZOELLICK, President, World Bank: The purpose of the World Bank is not about charity. The United States has been a strong supporter of the World Bank since its inception. The bank`s reliance on markets, investments, sound policies, good governance, and partnerships for self- help are in keeping with the values that Americans esteem.

GWEN IFILL: Wolfowitz, one of the architects of the war in Iraq, ruffled feathers at the bank with a hard-charging campaign against corruption and graft. He also was accused of conflict of interest for arranging for his then-girlfriend to move from the bank to a senior position at the State Department.

Zoellick arrived in June. Since then, the 54-year-old former deputy secretary of state and U.S. trade representative has traveled to Asia and Africa, seeking to restore confidence in the bank`s mission.

Founded in 1944 to rebuild a destroyed Europe, the World Bank now lends $24 billion a year to countries in Africa, Asia and Latin America.

Speaking in Washington at the National Press Club today, Zoellick said the bank`s chief goal is to embrace globalization, without leaving the "bottom billion" of the world`s poorest behind.

And Robert Zoellick joins us now.

Welcome.

ROBERT ZOELLICK, President, World Bank: Thank you, Gwen.

GWEN IFILL: Shortly after you took office, as I just said, you said that one of your chief goals was to "calm the waters" at the World Bank. A hundred days later, have you accomplished that?

ROBERT ZOELLICK: Well, I suppose that`s for others to judge, but I`ve been very pleased. I think people have helped me a lot, in terms of learning the issues and trying to steer a course for the future. And what I think we`ve been able to do over the past couple of months is to both sort of get things back on track, but also, importantly, chart a course for the future.

So this speech that I gave today was to set out six strategic themes. I worked with the board over the past couple of months to get a record contribution of $3.5 billion to a fund for the poorest countries, called IDA. And that`s more than doubled what we did last time.

And we also cut some of our loan prices for the borrowing countries. So we`ve shown some action at the same time that we`re mapping out a course for the future, and at the same time, as you mentioned, the difficult issues of corruption and governance. We`ve had Paul Volcker present a report, which we`re now going to follow up on.

And one last thing, I was just very delighted, in the past week or so, I was able to draw to the bank someone who had been here for 21 years, but then was the finance minister in Nigeria and made a great mark, Ngozi Okonjo-Iweala. And so that`s a combination of things that I hope gets us moving again.

GWEN IFILL: You mentioned the Paul Volcker report, in which he said there were severe strains on the World Bank and, in fact, that perhaps everyone there wasn`t on board in trying to get to the bottom of these corruption issues. What do you say to that?

ROBERT ZOELLICK: Well, I think it`s been no secret that dealing with the issue of corruption is a very tough one, because, at the start, our projects have got to have full integrity, because we`re involving money of taxpayers and bondholders and others, and we have to make sure that that money is well-spent.

I think there`s a good sense in the bank that corruption steals, most of all, from the poor. It`s the powerless who really have no recourse in dealing with these things.

And one of the problems that I discovered was there was an internal investigatory unit that was doing very good work, and this is what Paul Volcker identified. But some of the connection or the follow-up with the rest of the institution wasn`t, and still isn`t, what it needs to be.

So I really haven`t encountered people shying away from the issue, although it`s never easy to deal with these topics with partner countries. But there`s no doubt that we have to continue to stress it, because it`s the core of development to have good governance.

GWEN IFILL: But how do you balance out the needs of countries who are home to the world`s poorest people against the sometimes-plundering behavior of the people who lead them, when it is their internal politics, after all, that`s driving so much of it?

ROBERT ZOELLICK: Well, I`ll give you a good example. Shortly after the Volcker report came out, I went up to the U.N. and announced an initiative that we`ve developed to help recover stolen assets. And so this is an issue for leaders, whether some of the former leaders of Nigeria or Marcos in the Philippines or others, that have taken away billions from these countries.

And part of the challenge is to help developing countries be able to use international legal rights to be able to get at them, but also it`s a challenge for developed countries, because some of them, frankly, didn`t make it easy to get after the funds.

There`s now an international treaty that allows people to cut through a lot of the red tape, and so we`re serving as an intermediary in this process. That`s one step.

The other thing is, frankly, the best thing you can do to beat corruption is to have transparent processes within countries. People don`t like to see their own money misspent. So we try to work with governments to make sure that their budgets are transparent, that their policies are clear for people.

But then I also do believe we also continue to have to focus on our own behavior. There`s no room for stealing money from the poor; that`s for sure.

GWEN IFILL: Well, let me ask you about another part of the world, which is what you call the middle-income countries, some of whom are great beneficiaries from the World Bank, China, India, Brazil. There are some people who say that they don`t really need to be getting the money that they`re getting, the aid that they`re getting from the World Bank, because they have their own resources. What do you say to that?

ROBERT ZOELLICK: Well, the first thing is it turns out that about 70 percent of the poor -- measured as, say, under two dollars a day -- are in China, India, and these middle-income countries that are served by the World Bank. So if we`re going to get at the problems of the poor, we have to deal with those countries.

But, second, there are problems like climate change, where if you just look at the situation in China, in 2005, the Chinese were building new coal-fired energy plants, about one every two days, with, say, 100 megawatts. So if we`re going to get issues like climate change and energy in the developing world, we`re going to have to work with those countries.

And, third, you know, as everybody can see, the Chinas and Indias of the world, their issues don`t stop at their borders. They`re increasingly players in Africa. And it`s my sense and experience from my government service that we`re most likely to be able to work with them on some of those challenges, like corruption in governance in third countries, if we`re working with them in their own country.

And so one of the things that I find ironic about this question or criticism is that, if you look at the world of diplomacy or trade, which I just was in for the past six or seven years, everybody`s trying to figure out, how do you fit in these countries? How do you make sure that the Indias, the Brazils, the Chinas become what I refer to as China`s responsible stakeholders? So it would be a mistake to push them out of the structure here.

GWEN IFILL: Can I ask you also about this, what we see as a great growth in nongovernmental organizations, private foundations, people like Bill Gates, who are going abroad and spending billions of their own dollars in trying to address some of the problems which traditionally the World Bank has been the one to take on? How do you coordinate with those organizations, or do you coordinate with them?

ROBERT ZOELLICK: Well, we have to, Gwen. I just had a conversation on Friday with one of the heads of the units of the Gates Foundation, and we`re doing some very interesting projects with them on everything from trying to create a new green revolution in Africa for agriculture, to using technology to help with microfinance.

So you`re right. I think one of the challenges for the World Bank is that, you know, we`re no longer this behemoth institution that it was created 60 years ago to steer reconstruction development. We have to change to the changes in the world.

And what people in this field call the aid architecture is fragmented. So you have funds that focus on HIV-AIDS and malaria, and that helps organize money. You`ve got foundations. You`ve got private sector. I find people in the private business community that want to help on these things.

So our role at the World Bank is, in part, to provide financing, but increasingly it`s to use the knowledge and experience that we`ve gained and the cutting-edge work to try to coordinate some of these efforts.

So you mentioned I was in East Asia. I was in Cambodia in August. We are a rather modest financial player among many others, but we play a key role in trying to work with the country to coordinate these efforts.

Because one of the challenges is, if you`re a small country and you`ve got 50, 60, 70 donors, how do you make sure that they all fit together? We believe national ownership is vital if you`re really going to make the success of these projects deliverable, and we play that role.

GWEN IFILL: But if you are a nation such as China, with resources, or you are an organization, a private organization with lots of funds, why coordinate with the World Bank when to do that you then also have to buy into the strings that may be attached?

ROBERT ZOELLICK: Well, you know, part of the challenge is you`ve got great diversity out there. So the way that you operate with China is a totally different way than you`re going to operate with Cote d`Ivoire, and Ghana is different than a country that is, say, coming out of some conflict situation, like we deal with in southern Sudan.

So of course we have to customize our services. But it`s interesting. Take a country like China. Increasingly, what they are using the bank for is this knowledge and experience in things like some of the environmental issues. So as they realize they`ve got to combine growth with environmental safety, they have projects with us that deal with, say, the challenges of urban growth in an environmentally sound way.

And there`s other projects we might deal in the health area. The Chinese health system has basically collapsed.

So many people refer to the World Bank partly as a knowledge and learning institution. And part of our challenge is, how do we combine that with services that are faster, better, and cheaper, so that we customize this work and be a player in a network of services?

GWEN IFILL: You say that`s what you would like to see happen. Do you have any indication or any feedback from these organizations or these nations that they want you to take on that role?

ROBERT ZOELLICK: Oh, yes, that`s the key point, Gwen, is that we have to become much more sensitive to them as clients and partners. So it`s no longer a world where we sort of sit here in Washington and people come and say, you know, "Can we have a loan for this project or that project?"

You know, one of the things that we just announced in the past week was trying to help set up local currency bond funds. So this isn`t using dollars or pounds or euros or others. These are helping people create securities markets with their own local currencies.

And we`re using some of the innovative financial tools that, frankly, I`ve been working on with Wall Street for the past year or so, and trying to adapt them to their needs. And there`s a very strong audience on that.

So, again, part of the point is, you know, when people think of the World Bank, they often -- they think about it in it`s a sort of way of reconstructing Europe and Japan or some of the development projects of the `60s. It`s a transformed environment.

We have a private sector side, IFC, that is very innovative and creative, and it adds about another $8 billion or $9 billion of services a year to the ones that you mentioned. We`ve got IDA for the poorest countries, and that deals with grants and concessionary loans.

And then we`ve got the traditional IBRD lending, and we also have some called MIGA, which does risk insurance. And part of our challenge is, how do we connect these together so that the whole is greater than the sum of its parts?

And it goes back to your first question. There`s a lot of potential here. But the institution had some troubled times. I found that, as we focused on these challenges, people are coming together.

GWEN IFILL: Robert Zoellick, president of the World Bank, thank you very much for joining us.

ROBERT ZOELLICK: You bet, Gwen. Thank you.

(BREAK)

JUDY WOODRUFF: Finally, the next of our conversations with Democratic and Republican presidential nomination candidates who are competing in the primary contests. Tonight, Ray Suarez talks with Democrat John Edwards, former senator from North Carolina and 2004 vice presidential candidate.

RAY SUAREZ: Senator Edwards, welcome back to the NewsHour.

FORMER SEN. JOHN EDWARDS (D), Presidential Candidate: Thanks for having me.

RAY SUAREZ: You said, "Poverty in America is the cause of my life." First of all, what does that mean? And, second of all, what can the president of the United States do to alleviate poverty?

JOHN EDWARDS: Well, I think it`s the great moral issue facing us inside the United States. The war in Iraq is, obviously, a big issue. But having 37 million people, by the federal government`s definition, who wake up every day worried about feeding and clothing their children is not OK.

And I think we as a nation have a responsibility to do something about it, and I think it says something about our character, what we`re willing to do about it.

The question of, what does the president have to do with it? The president has a lot to do with it. The president can lead on this issue. The president can bring the plight of millions of Americans who are struggling to the attention of the rest of America, much as did the situation in New Orleans after the hurricane hit in New Orleans, and we saw the Lower Ninth Ward and the struggles that people were going through there.

So there are lots of things that can be done. The president can lead on raising the minimum wage, expansion of the earned income tax credit, changing the laws to strengthen the rights of unions to organize in the workplace, pushing national legislation to get rid of or at least regulate predatory payday lenders, changing what I think is a dysfunctional national housing policy that feeds the cycle of poverty.

We have people waiting five, seven, eight years for a Section 1 housing voucher -- Section 8, excuse me, housing voucher. And the result of that is they`re either homeless or they`re living in shelters. I think we ought to have at least a million new Section 8 housing vouchers. And I think we need to restructure the bureaucracy with inside HUD.

And then, also, I think that we have millions of kids who want to go to college, and it`s become increasingly difficult for them to go to college. So my idea is called College for Everyone, where we pay for the tuition and books for young people who are willing to work when they`re in college. So we make it easier. We knock down some of those obstacles.

And I think that on a different front, but a more difficult front, there are clearly societal, cultural components to the cycle of poverty in this country. And the president can at least use the bully pulpit to talk about it, to bring people together to address those issues.

RAY SUAREZ: But as a presidential candidate, you`re talking to a country, an electorate, where the vast majority of people are not poor.

JOHN EDWARDS: That`s correct.

RAY SUAREZ: And you`re asking them to care, and you`re asking them, in effect, to go somewhere with you in order to change it. Is the country in 2007, 2008, in that kind of mood to listen to that message?

JOHN EDWARDS: Well, it`s going to be the message, whether they listen or not, because I do believe deeply in it. I don`t think poverty is the only issue facing the country. I think the middle class is struggling dramatically. We`re becoming a country made up of a few rich people and everybody else.

People are having trouble paying for their health insurance, their gasoline, their college tuition, which we spoke about a few minutes ago. Their income is not going up and the cost of everything that they have to spend money on is, in fact, going up.

But I don`t think we can ignore, because somehow they`re supposed to be forgotten and invisible, the millions of people who, in fact, live in poverty every day in this country.

And I`ll go one step further: I actually believe that it is time for the president -- and I would do this as president -- to ask Americans to be patriotic about things other than war, to say, "We`re in this together. What we do together matters. And you have to be willing to sacrifice."

I mean, if you want your country to be what it`s capable of being, then whether it`s on energy conservation, whether it`s on reaching out and helping your fellow Americans who are struggling, that collectively we are powerful, and what we do as a national community really matters.

RAY SUAREZ: I`m sure you`ve heard the critiques, the quibbles about a rich guy talking about poverty.

JOHN EDWARDS: No, I can`t even imagine what you`re talking about.

(LAUGHTER)

RAY SUAREZ: What do you make of that? Do people just not want to hear it?

JOHN EDWARDS: No, no. I think people are naturally cynical, and it`s understandable. I mean, they`ve had politicians deceiving them for a long time, and it`s not surprising to me at all that people would be cynical of somebody who`s done well, like myself, talking about these issues.

But it is at the core of why I`m running for president, to speak for the kind of people that I come from and grew up with. You know, I come from nothing. I mean, we didn`t have anything when I was young. My father had to borrow money to get me and my mother out of the hospital. And we lived in mill villages when we were growing up.

And I worked my way through college, and I`ve been lucky in my life. I`ve worked hard, but I`ve also been very lucky, extremely lucky. And I don`t apologize for it. I`m proud of what I`ve been able to do.

But what drives me every day is for those kind of chances to be there for everybody. I don`t believe in the genetic lottery; I don`t think it should be that your children`s destiny is controlled by the family they`re born into, or where they live, or the color of their skin. That`s not America. That`s not what America should be, at least.

RAY SUAREZ: Well, as someone who has done well, you know the difference of how different kinds of income are treated by the tax code.

JOHN EDWARDS: Yes, I do.

RAY SUAREZ: Have we gotten to a place where working for wages is actually an inferior way of making money?

JOHN EDWARDS: Our tax code treats it as inferior, because my perception is that we value wealth over work. We treat wealth income much better than we treat work income.

Warren Buffett actually says it better than me, and he makes a lot more money than me and most Americans, and he says that he`s paying a lower tax rate, because most of his income is capital gains -- and the rate is 15 percent -- he`s paying a lower tax rate than most Americans pay on their work income, and than his secretary, in some cases, is paying on his or her work income.

That`s not right. I mean, there`s something wrong about that, which is why I propose for people who make over $250,000 a year that the capital gains rate be raised from 15 percent to 28 percent.

RAY SUAREZ: Now, Americans are aspirational, and that`s one of the reasons why it`s been difficult in our history to have class-based politics. A lot of the people who would be helped by that kind of tax increase, say, "No, no, I want to be that rich person some day."

JOHN EDWARDS: Oh, yes.

RAY SUAREZ: "So don`t tax the rich."

JOHN EDWARDS: Well, I`m aspirational. I believe in aspiration. I believe in an America where people can come from nothing and do great things. I mean, that`s the heart and soul of what this country is.

But I think those of us -- and that includes me -- those of us who have been lucky, who`ve been successful, I didn`t get here by myself. My country was there every step of the way for me, every step of the way, whether it was borrowing money for college, going to a state university, both for undergraduate and graduate school. There`s not been a single place in my life where I did it alone. My country was always there for me.

And I think those of us who`ve taken advantage of the extraordinary opportunities that can exist in America, we have some responsibility to give something back. And we don`t want to pull the ladder up behind -- at least I speak for myself, I don`t want to pull the ladder up behind me.

RAY SUAREZ: You`re no longer a member of the Senate, but recently, in the last several days, the Senate voted to term Iran`s Revolutionary Guards a terrorist organization. Would you have voted the same way? And do you think the Senate, the administration is sharpening their knives for Iran now?

JOHN EDWARDS: I think they very well could be. I would definitely have not voted yes for that; I would have voted no. I think it`s a mistake, given the president`s saber-rattling on Iran, to give him an inch. And he`s proven in the past that, if you give him an inch, he`ll take a mile.

And declaring the Iranian Revolutionary Guard a terrorist organization I believe is -- or could be, I don`t want to exaggerate -- could be the first step of giving Bush the authority to move militarily on Iran. And I know that there were -- I have to give credit to some members of the Senate, even though it was a lopsided vote, Senator Biden, who`s running for president, Senator Dodd, who`s running for president, voted no. I think that`s the right position.

I think we have to learn our lessons from the past. Senator Clinton is totally entitled to her position on this, but she vote yes, and we just have a different view about it. I mean, I respect her view, but mine is very different.

I think what worries me is, are we going to, six months from now, a year from now, if Bush invades Iran, are we going to hear once again, "If only I`d known then what I know now"?

I mean, I learned a lesson, a very important lesson from my vote on Iraq: I was wrong to vote for this war in Iraq. And I`ve taken responsibility for that and been very clear about it. But the lesson to be learned from it is you cannot give this president this kind of authority, and you can`t even move in that direction, because it`s extraordinarily dangerous.

RAY SUAREZ: So how should the United States, how would the United States, if you were president, respond to an Iran where recently the president said, "The debate over our nuclear program is over"?

JOHN EDWARDS: Well, I think there`s a very clear path for America on Iran. I mean, what we have is a president, Ahmadinejad, who is bellicose and dangerous. But there is a divide between this president and much of his people.

And if you look at the Iranian people, there are a lot of moderates in Iran. They marched on the streets of Tehran for America after September the 11th. This president ran in Iran on the theory that he would strengthen their economy in Iran, lift up the poor, strengthen the middle class. None of that has happened; there`s been no serious economic reform.

And the result was, a little less than a year ago, in the council elections nationwide, his candidates got beaten badly. So I think he is significantly unpopular and has lost political support in his own country.

The reason that matters is because, even though America has no economic leverage with the Iranians, the Europeans do, and the European banking system does. We should be working with the Europeans to, in my view, put a proposal of sticks and carrots on the table.

The carrots are, "Give up your nuclear weapons, give up your nuclear ambitions, and America, the Europeans, we will help you with your economy," at least in some way similar to what you`ve seen happen in North Korea. "If you don`t, there will be severe economic sanctions."

It seems to me, we want to drive the wedge deeper between a dangerous and bellicose leader and a people who at least have the potential to move in the opposite direction.

RAY SUAREZ: Let`s turn to Iran`s next-door neighbor, Iraq. Earlier in this series of candidate interviews, we`ve had everything from "get them all out and get them all out right away," American troops, that is, to other candidates who are talking, using the metaphor of Korea, where, after 50 years, there are still tens of thousands of American troops. Where on that broad continuum do you fall?

JOHN EDWARDS: I fall in the place of, as president, I would get our combat troops out of Iraq, period. I`d do it over a period of nine or ten months. And I would do all the other things that go with it, which is engaging the other countries in the region, including Iran, who you just spoke about, making a serious effort to get the Sunni and Shia leadership to reach some political compromise, which is the bedrock for any kind of stability in Iraq, in my judgment.

But I think the combat troops need to be out of Iraq. Now, I want to be really honest about something. I think there`s too much political rhetoric around this. As long as we have an embassy in Baghdad, unless it`s going to be unlike any embassy in the world, it has to be protected.

So there will be some troops in Iraq just for the purposes -- a small number -- for the purposes of protecting the embassy. Those are not combat troops. In my administration, they would not be engaged in combat missions.

Now, there`s a difference -- this is another choice voters have -- there`s a difference between my position and Senator Clinton`s position on this. She would, in her words, continue combat missions against terrorists.

My concern about that is, number one, if we keep combat troops stationed in Iraq, I think they have a target painted on their forehead. Second, I think it continues the perception that America is still occupying Iraq, which I think is the wrong perception for America to be projecting.

So my view and my difference with Senator Clinton on this is she would continue combat troops and combat missions over a long term. I would not.

RAY SUAREZ: You`ve written most recently about restoring America`s reputation. Well, what do you think has happened to America`s reputation, and what would restoring it consist of?

JOHN EDWARDS: I think it`s been destroyed. I think America`s reputation in the world has literally been destroyed. The devastation of the last seven years is almost -- it`s literally unprecedented.

And there are a lot of components to reversing that. The way I think about it is to reverse the bad, and then actually do some good. Reversing the bad means ending the war in Iraq; it means closing Guantanamo. The idea that the United States of America would hold anybody against their will without at least the right to some kind of hearing is un-American.

We should not be operating secret prisons; we should not be engaging in anything approaching torture or condoning torture; we should not have any additional spying -- illegal, in my judgment -- spying on the American people.

Those things are un-American. They need to be stopped, and they will be stopped when I`m president.

But beyond that, the world needs to see America as a force for good again. Today, they see us as bullying, selfish, at war with the Muslim world. That has to change. And so I think there are lots of things we can do to change it.

Instead of spending $500 billion in Iraq, if we spent $3 billion, $3.5 billion a year to help lead an international effort to make education available to 100 million children in the world who have no education, in Africa, in the Muslim world, in Latin America. We can make a huge dent in stopping the spread of disease if sanitation, clean drinking water, were pushed by America at relatively low cost. I mean, I`ve seen from my own work in Africa what an enormous difference that can make.

Economic development, using micro-lending, micro-finance, I mean, it`s very clear to me that America, over time -- it wouldn`t happen quickly -- but over time could shift the perception that exists in the world today of America as a bullying, selfish country, only interested in expansion of our power, to us once again being the source and the light for opportunity and hope for the rest of the world.

RAY SUAREZ: Other politicians looking over these last seven years would say, instead, that sometimes America has to go it alone and has to think about its own security before it thinks about being popular. Why is it important to identify America`s reputation in shreds to talk about working with other countries? Weren`t there values over this past era, since 9/11, that sort of supersede that?

JOHN EDWARDS: No, I don`t think so. I think that, if you think about this instead of just in the short term, I mean, what we`ve had in the last seven years, among other things, is a foreign policy of convenience. You`ve seen it most recently in the administration suggesting that we do a $20 billion arms deal with the Saudis. Enormous mistake, enormous mistake.

The idea is it creates a hedge against Iran and their nuclear program. But the Iranians spend $4 billion or $5 billion a year on conventional weapons. We do a $20 billion arms deal with the Saudis, they`re going to accelerate their nuclear program, exactly the opposite of what we want to see.

So my view is, we have to deal with short-term threats, and I will do that as president, which means finding al-Qaida, bin Laden, et cetera, wherever they`re plotting against America and its allies, and stopping them, using every tool available to us for that purpose.

But we also have to understand that, over the long term, we want most of the world to see America as a force for good. We want to isolate the extremists and the radicals. We want to isolate those who promote violence against their neighbors. And the way to isolate them is for most of the world to see America as a country that`s actually interested in what happens to humanity as a whole, not just in our own selfish interest.

RAY SUAREZ: Now, four years ago, you ran a national campaign, and doing it is grueling work, a multi-year process. And here you are, doing it again. Why did you make that decision to take on a thing that really is tough work?

JOHN EDWARDS: Well, the most -- actually the most -- Elizabeth and I made the decision together with our family at the end of 2006. But, actually, the most crucial moment for us came in a hospital room in which the world now knows about, in March of 2007, where, when Elizabeth`s cancer returned, we had to make a decision about what to do.

She was remarkable, not surprising to anybody. But we made the choice that this is the cause of our lives. You know, all the things that you and I have talked about during the course of this conversation, this is what our lives are about. This is what we will spend our lives doing. And we could not walk away from it.

And it is -- it is hard, and it is challenging, particularly if you`re us. Elizabeth`s doing great, by the way, incredibly well, which is encouraging. But, you know, we have a daughter who`s in law school. We have two young children, Emma Claire and Jack, who are at home. I mean, it presents huge hardships for the family.

But I want to -- when I leave this Earth, I want to feel like I`ve done absolutely everything that`s humanly possible to help the kind of people that I grew up with and the people in America and around the world that are struggling to just have the same kind of chances that I`ve had.

RAY SUAREZ: And running for president is how to do that?

JOHN EDWARDS: It`s one way to do it; it`s not the only way to do it. But it is one way to do it. And, in fact, when I made my decision, that is what it was about, whether there were other ways to serve that would be more effective than this. And I came to the conclusion on balance that this was the most effective way to serve my country.

RAY SUAREZ: Senator Edwards, thanks for joining us.

JOHN EDWARDS: Thank you so much for having me.

JUDY WOODRUFF: For more on John Edwards, you can visit our Vote 2008 Web site at PBS.org. All of our candidate interviews and campaign updates are also available there.

(BREAK)

JUDY WOODRUFF: Again, the major developments of the day.

The United Auto Workers went on strike against Chrysler, but hours later it announced a tentative contract and called off the walkout.

President Bush pressed Democrats not to put new limits on surveillance of terror suspects.

And the Nobel Prize in Chemistry went to a German professor. His research has helped in understanding of why the Earth`s ozone layer is thinning.

We`ll see you online and again here tomorrow evening. I`m Judy Woodruff. Thank you, and good night.