The NewsHour with Jim Lehrer

JIM LEHRER: Good evening. I'm Jim Lehrer. On the NewsHour tonight: Our summary of the news; then on its presidential inauguration day, a look at the state of government and life in Afghanistan; a conversation about the United Nations with Brent Scowcroft, member of a commission advocating major U.N. reforms; and reports from outside and inside the U.S. Supreme Court on a legal fight over selling wine.

NEWS SUMMARY

JIM LEHRER: Hamid Karzai was inaugurated president of Afghanistan today. He's the nation's first leader elected by popular vote. Karzai was appointed president after the fall of the Taliban. He won the election in his own right last October. Today, he pledged to restore peace and to end the burgeoning opium trade. We'll have more on this story right after this News Summary. Russia and the United States clashed today over the election in Ukraine. Last week, Ukraine's Supreme Court ordered a new run-off because of fraud. Today, Russia's foreign minister charged the West was trying to influence the outcome. He spoke at a meeting on European security in Bulgaria. U.S. Secretary of State Powell was there as well, and he dismissed the claim.

COLIN POWELL: What we have seen is not anyone interfering in democracy; quite the contrary. What we have seen in recent weeks is the international community coming together to support democracy. Democracymeans free, fair, open elections that are untainted, and that's what the Ukrainians deserve and that's what they're going to get.

JIM LEHRER: Powell went on to voice concerns over human rights in Russia. He also challenged Moscow to withdraw troops from two former republics, Moldova and Georgia, as it has promised to do. Russian President Putin cast doubt today on Iraq's plans for elections next month. He met with Iraqi Prime Minister Allawi in Moscow, and said: "I cannot imagine how elections can be organized under a full occupation by foreign troops " For his part, Allawi told a Swiss newspaper the voting could be done over several weeks to ensure security. Another U.S. soldier was killed by gunmen in Iraq today. Four Iraqis died in separate attacks. And the New York Times reported a CIA warning that security in Iraq is getting worse. It predicted even more violence unless the Iraqi government can strengthen its authority. Separately, the overall U.S. commander in the region told the Washington Post he might reduce his combat force in Iraq next year. Army Gen. John Abizaid said if national elections go well, U.S. troops could shift more to training Iraqi units. U.N. Secretary-General Annan brushed aside calls to resign today. He's under pressure over alleged corruption in the Oil-for-Food Program in Iraq. Several Republicans in Congress have demanded he step down. But today, Annan said he'll carry on with his work, focused on reforming the United Nations. That process began last week with a report on needed changes. And we'll have more on that report later in the program tonight. The U.S. Congress moved into the final phase of revamping the nation's intelligence system today. House Republicans agreed to compromise language yesterday, clearing the way for the vote. Kwame Holman has our report.

KWAME HOLMAN: Late this afternoon, House members entered final debate, preparing to approve the first legislative overhaul of the intelligence community since the terrorist attacks of Sept. 11, 2001. The bill would enact the major recommendations of the Sept. 11 Commission, creating a national intelligence director with budgetary authority over all U.S. intelligence operations, a national counterterrorism center to coordinate intelligence throughout the government, and an independent civil liberties board to review the government's privacy policies. Until today, House Speaker Dennis Hastert had refused to bring the bill up for a vote, fearing a majority of his Republican members would oppose it. The most prominent dissenter was House Armed Services Committee Chairman Duncan Hunter, who said creating a new national intelligence director could interfere with the current chain of command that supplies military intelligence to battlefield commanders. But a last-minute change in the bill's language won Hunter's support, and that of many other House Republicans, who met privately this morning to agree to a vote.

REP. DUNCAN HUNTER: The problem that we had 17 days ago is fixed. I said that I would sign the conference report when the Senate made the change, when the conference made the change and amended the bill and sent it back to us. They've done that, I've reviewed it and it is in there, and I have signed the conference report, and I'm going to vote for the bill.

KWAME HOLMAN: One other powerful committee chairman, Judiciary's James Sensenbrenner, was not persuaded to vote yes. He had been holding out for stronger language on illegal immigration. Senators Joe Lieberman and Susan Collins, two of the main architects of the bill, were responsible for rewriting it to appease Chairman Hunter. This morning, Sen. Lieberman discussed what they did.

SEN. JOSEPH LIEBERMAN: We sought to do two things: One is to remind everybody that this bill preserves total Defense Department control over tactical military intelligence, the kind that the war fighters most depend on. Secondly, that there was nothing in the bill that would alter the existing chain of command, but we felt that reassurance was appropriate and would subtract not at all from the fundamental reform.

KWAME HOLMAN: Democrats and Republicans also praised President Bush for helping keep the bill moving.

JIM LEHRER: The Senate approved an earlier version of the bill this fall. It's expected to vote on the new language tomorrow. A Pentagon report today blamed commanders at the Air Force Academy for failing to stop assault sexual assaults on female cadets. The Pentagon inspector general said successive leaders did little about the issue for ten years. Nearly 150 women have charged they were assaulted at the school between 1993 and 2003. Many said they were punished or ignored for simply reporting the attacks. U.S. health officials announced today they're buying another four million new doses of flu vaccine from Europe. The first 1.2 million doses will be available this month. The vaccine maker, Glaxosmithkline, will ship another three million doses later. The acting commissioner of the Food and Drug Administration, Dr. Lester Crawford, said the vaccine is "investigational." That means it's not yet licensed in the United States, but he said that should not be cause for alarm.

DR. LESTER CRAWFORD: This vaccine that we are bringing in is not investigational because we have real questions about it. It's investigational because the company elected last year not to enter the U.S. market, so they did not apply for an approval. The public should also know that this vaccine is today being used in 30 other countries around the world.

JIM LEHRER: Also today, the main supplier of flu vaccine for Canada said it will sell its surplus there and not to the United States. ID Biomedical is based in Vancouver. It said it has 1.2 million doses of vaccine left. The U.S. Supreme Court heard arguments today about buying wine directly from out of state; 24 states currently ban those sales. Today's case involved challenges to laws in two of those states, New York and Michigan. The issue involves competing parts of the U.S. Constitution. The stakes involve millions of dollars in alcohol taxes and possibly the survival of hundreds of small wineries. We'll have more on this story later in the program. On Wall Street today, the Dow Jones Industrial Average lost 106 points to close at 10,440. The NASDAQ fell more than 36 points to close at 2,114. And that's it for the News Summary tonight. Now it's on to: The big day in Afghanistan; reforming the U.N.; And the Supreme Court's wine argument.

FOCUS - AFGHANISTAN - FRAGILE DEMOCRACY

JIM LEHRER: The inauguration of Afghanistan's president. Ray Suarez has our story.

RAY SUAREZ: The setting: The former royal palace in Kabul, restored to some of its pre-war splendor. Afghan President Hamid Karzai arrived to a standing ovation before he was sworn in as the first popularly elected leader of this ancient country. The crowd of 600 included more than 150 foreign dignitaries, among them Vice President Cheney, Secretary of Defense Rumsfeld and Lakhdar Brahimi, the U.N. special adviser. (Choir singing) A children's choir sang the Afghan national anthem, and then Karzai placed his right hand on a copy of the Koran, repeating an oath of allegiance read by Afghanistan's chief justice. Karzai then addressed the audience, saying a new chapter had been opened for Afghanistan. He also acknowledged the many challenges facing a country that endured 20 years of occupation and civil war.

PRESIDENT HAMID KARZAI (Translated): The relationship between terrorism and narcotics, however, and the continued threat of extremism in the region and the world at large are a source of continued concern.

RAY SUAREZ: Half of Afghanistan's gross domestic product, $2 billion, comes from the opium trade, and many of the poppy fields are controlled by warlords. And deadly attacks from the Taliban continue, especially in the South and East, on both American and Afghan soldiers. After the ceremony, Vice President Cheney and President Karzai held a joint news conference.

VICE PRESIDENT DICK CHENEY: Now, the tyranny has gone, the terrorist enemy is scattered and the people of Afghanistan are free.

RAY SUAREZ: And Karzai thanked the United States for ousting the Taliban in 2001.

PRESIDENT HAMID KARZAI: Without that help, Afghanistan would be in the hands of terrorists, destroyed, poverty-stricken and without its children going to school and getting an education.

RAY SUAREZ: The day of celebration ended with a dinner hosted by the Afghan foreign ministry.

RAY SUAREZ: For more on the situation in Afghanistan and the challenges it faces, we get two views: Assem Akram was born in Afghanistan and was active in the resistance against the Soviet Union. He held various positions in the Afghan foreign ministry during the early 1990s and has written extensively about that country. Dennis Kux had a 39-year career in the U.S. Foreign Service where he focused on South Asia. He's now a senior scholar at the Woodrow Wilson International Center for Scholars.

And, Ambassador Kux, how significant is it that Afghanistan has sworn in a freely elected president?

DENNIS KUX: I think it's very significant. Afghanistan is on a long march, and this is an important step on that march. They've had to overcome a whole series of obstacles since the defeat of the Taliban, and each time they have been able to do it. First it was to get a transitional government, then it was to get a constitution, then it was to hold presidential elections. And these are very difficult. In the beginning it didn't look like it was going to happen effectively because of trouble, because of unrest, because of militia, the Taliban and so forth. And they got through this very remarkably, very peacefully. Eight million people voted, and they have, for the first time, an elected president. So it's a big step. But there are still many more steps, many obstacles ahead of them.

RAY SUAREZ: Assem Akram, do you see it the same way?

ASSEM AKRAM: No, because I see that three years have passed by and we do not have any security in Afghanistan; the Taliban are still existing; Mullah Omar has not been caught and the different steps the ambassador was referring to were set up at the time of the Bonn agreement in December 2001. And yes, it has been implemented step by step, every time later than expected or later than scheduled and always on the cheap. Let's just take as an example the last presidential elections. There is only one month of campaigning, but there was no real campaigning because out of the 17 candidates, 16 or 15 of them had absolutely no means to travel outside Kabul to campaign. The media was in the hands mainly of the government. So, in a sense, Karzai was the only one to be a recognizable figureoutside Kabul in the provinces and yes people did vote; there was some sense of security during that time. But we cannot say it was very, very... would I say very democratic.

DENNIS KUX: I would have to disagree with that. If you look at the vote, it wasn't Karzai getting 98 percent of the vote or 90 percent of the vote and a few other people getting some crumbs. You had people on an ethnic basis basically as the politics of Afghanistan is, campaigning fairly vigorously and getting a lot of votes. You had Hanuni getting I believe 16 percent of the vote namely in the Tajik area; Dolstum 10 percent in the Uzbek area. Mohaki in the Azare area; and you had Karzai getting 55 percent of the vote, mainly in the Pashtun areas, but interestingly enough, also in some of the mixed areas and in the urban areas. So I don't think it is fair and I don't think it is correct to say that this was, you know, a non-democratic old style election.

RAY SUAREZ: Let me ask Assem Akram. Are you suggesting that President Karzai after this election was still less than legitimate?

ASSEM AKRAM: He doesn't have all the legitimacy that he should have because there was no real campaigning. There was no parliament elected. The parliamentary elections have been postponed for April, supposedly for technical reasons because they were not able to organize both at the same time. So you have Karzai being elected as president up to April without any parliament so he is going to rule by himself, which is kind of exceptional in a country. And at the same time what the ambassador said is that yes, people did vote on an ethnic background, but didn't know anything about the programs of any of the candidates because there was no real campaign. And that doesn't make it a very democratic and interesting. Yes there was elections but the result is not exactly what one would expect about... to happen.

RAY SUAREZ: Ambassador Kux -

DENNIS KUX: On the parliamentary elections, I think it was wise that they moved ahead and separated the parliamentary from the presidential elections because what you want to have happen in Afghanistan is something that seems to be fair, and with all respect, I think these elections and they were accepted by the losers as being fair and so they're going to have the parliamentary elections. They're very complicated. They're more complicated than the presidential because it's not just the parliamentary elections. You've also got provincial councils and you've got district councils and you've got to decide on what the boundaries of the constituencies and the organization is very difficult.

RAY SUAREZ: But Assem Akram was suggesting that the new president can rule almost by decree. He still hasn't declared a cabinet. There has been no legislature elected. Does the president need to make sure these things are in place very quickly in order to ensure he is not ruling by decree?

DENNIS KUX: Well, I think he needs toe have a legitimacy and to have a stable polity in Afghanistan which is the goal. Excuse me a second. These elections have to take place in a reasonable time. My guess is they won't take place. They won't be able to organize them sufficiently by April. But my guess is that they would have them by the summer or the fall, and it's a very difficult complicated process. It is important that it happens fairly.

ASSEM AKRAM: First of all, I mean from Bonn at the time of the Bonn Agreement where something exceptional happened, the first cabinet that was set up was a coalition cabinet based on ethnic background of the members of the cabinet. This isa very, very, I would say important mistake that was committed at the time because Afghanistan, it has different ethnic groups, it has never been divided based on those ethnic lines. You had the example of what happened in Lebanon during '70s, the civil war that happened because of those ethnic partitions that were existing where the power was shared at the top. That's not what we want. We want all Afghans to be able to vote. We want to take into account the different ethnic groups but not divide power based on that. Mr. Karzai take as his two running mates, Khalil Khalidi was an ethnic Azare and the brother of former, I would say Afghan Massoud who is a Tajik. So you have the Azare, the Pashtun Karzai and the Tajik to appeal to these different groups. But Mr. Khalil is heading a group of party that in a sense he is a warlord, he has militiamen with him. So when Mr. Karzai says we want to get rid of the warlords, that's not exactly what is happening, and at the same time regarding the elections, the northern alliance were somehow having some problems with Mr. Karzai lately because he rejected Gen. Fahim, his defense minister as his running mate. They're not going to be very happy by the fact that elections are going to be delayed because they feel that they have been somehow left on the side.

RAY SUAREZ: You heard the suggestion that a country that's buying to build a national identity is also at the same time putting together an ethnic patchwork government.

DENNIS KUX: You're doing both at the same time; Afghanistan is full of contradictions in a way. And, you know, when you talk about ethnic politics in Afghanistan, look at Chicago, look at New York. You know, in democratic politics, you've got to represent the different areas. And in Afghanistan, in parts of Afghanistan, it's Tajik. And they need to be represented and but you want to have good people. And Karzai I think is trying to do this. He does want to get rid of the warlords. They're our trouble. There is instability. But it is a gradual process. And if you look over time, they have made progress.

RAY SUAREZ: Let me turn from the nitty-gritty of putting together a working government to the daily life of Afghans. Are rank and file Afghans better off today, are they safer today than they were in the summer of 2001, before the invasion?

DENNIS KUX: They're better off, yes, they are safer in a very broad sense because you don't have the terror, if you will, of a Taliban present. I mean you had a police state with an extreme religious faction. And that was --

ASSEM AKRAM: We're backing to civil war right now.

DENNIS KUX: Oh, I don't agree. We are not backing into civil war. It is so much better now than it was before after 2001.

ASSEM AKRAM: Allow me, sir. The Taliban had put in place a dictatorial government that, of course nobody can agree with. But at the same time, there was some type of security. You could travel from one side of the country to the other side without being bothered otherwise than for religious purposes because it was autocracy with very, very I would say odd --

RAY SUAREZ: So you might be bothered about your beard but not killed.

ASSEM AKRAM: Exactly. Where is right and wrong -

DENNIS KUX: And you couldn't go to school.

ASSEM AKRAM: Right. Of course, of course.

DENNIS KUX: There were a lot of bad things happening.

ASSEM AKRAM: Right now -

DENNIS KUX: And if you were bin Laden, you could go around and do the awful things that he did.

ASSEM AKRAM: But right now, right now, you do have a sense of freedom. People have it. It's better than it was before from that point of view, but at the same time, if you are a woman and you are free to go to school, but you can't go to school because your own security is threatened, you are free to go to work but you can't go there because you have been threatened or somebody has thrown some leaflets in the school saying that no one can get there, and there is nobody from the government in that area. Let's not forget the Karzai government is just in Kabul.

DENNIS KUX: No, they're outside.

RAY SUAREZ: Is he wrong about that, they're just in Kabul.

DENNIS KUX: A year or so ago that would have been right, but it is gradually changing. You are having these national institutions slowly developing.

RAY SUAREZ: Which ones?

DENNIS KUX: The army. The army, for example, the army is now 18,000. And it's growing at the rate of 10,000 a year. Yes, it would be nice if it could grow faster but you want quality, not quantity. You want something that's functioning. The police training; the police were sort of nowhere. They have now trained about 20,000 police. The target is some 50,000 police and then some 12,000 border guards. It all takes time. And what you have here is sort of a balancing act. You've got the international forces there. There are 27,000, 18,000 American, 9,000 from NATO. And you have very important, which deals with what you're talking about, demobilization, demilitarization happening.

RAY SUAREZ: We've got to go after a quick reply.

ASSEM AKRAM: A quick reply is that he is referring to the international forces. There two are types of forces. The one that remains mandated by the United Nations Security Council and they're under international enforcement for Afghanistan. And you have the U.S. forces that have no legal mandate in Afghanistan right now.

DENNIS KUX: I would disagree with that. But I think that the process is improving. We are moving forward. There were some 50,000 militias....

RAY SUAREZ: We are not where we need to be, but gentlemen, we'll leave it there.

DENNIS KUX: Very good. A pleasure.

FOCUS- U.N. THREATS, ETC.

JIM LEHRER: Next, updating the United Nations, and to Margaret Warner.

MARGARET WARNER: Late last year, with the U.N. deeply split over the Iraq War, Secretary-General Kofi Annan named a high-level panel to consider how to remake the world body to more effectively combat the threats of the 21st century. The panel's report was released last week. It laid out 101 recommendations, from expanding and overhauling the Security Council to weeding out corruption and dead wood within the organization. As for the contentious issue of military force, the panel did not propose expanding the grounds for pre-emptive military action under the U.N. charter. It recognized new dangers in the world that might require preventive war, but only if authorized by the Security Council. The only American on the panel was retired Gen. Brent Scowcroft, who served as national security adviser to the first President Bush, and he joins us now.

Welcome, Gen. Scowcroft.

BRENT SCOWCROFT: Thank you, Margaret.

MARGARET WARNER: Let's start with what provoked this report. How dysfunctional is the U.N.? Is it so dysfunctional that it really needs to be dramatically revamped?

BRENT SCOWCROFT: I think it's not so much dysfunctional than it is that the charter itself, the members and the procedures were geared for a world which is vastly different. In 1945, when the U.N. was formed, interstate war was the issue of conflict. Now, that is really receding. There are very few of those around. Instead, it's internal wars; it's terrorism. It's caused this kind of turmoil, a very different kind of war. In 1945, there were 51 members. There are now 191. Everything is different. The members of the Security Council represented power in 1945, and, of course, the defeated powers-- Germany and Japan-- were nowhere to be seen. So it is really an attempt to bring the U.N. up so that it can deal with peace and security in 2004, rather than in 1945.

MARGARET WARNER: Let's go right to the issue that so split the council, and that was the use of military force. Now, your panel recognizes, as you just implied, that there are all these new kinds of threats-- internal wars, weapons of mass destruction, proliferation, terrorism, and so on-- and yet, as I read it, you did not expand or change at all the definition of what would constitute a legitimate reason for a state to act unilaterally militarily. Why not?

BRENT SCOWCROFT: Not exactly. What we did not change is Article 51, and that's self- defense. There are two ways you use force: Self-defense, or under Chapter 7 of the U.N. authorization. And there really was... we didn't change Article 51 in self-defense, but we expanded self-defense to include preemption, which, of course, was a word never heard of in 1945. So we did recognize preemption. What we did is to try to divide preemption from prevention in terms of states being... acting unilaterally.

MARGARET WARNER: So, boiling it down, under your recommendations, is there any more latitude for a state to act unilaterally?

BRENT SCOWCROFT: Let me put it a little differently. I think the U.N. took a step in the direction of U.S. interests, and it recognized that the use of force in this very complex, vague sort of world in who the actors are and so on, means that self-defense has to be somewhat more broadly defined than before.

MARGARET WARNER: Is the report also trying to put a little more onus or a little more pressure-- that's the wrong word-- but on the Security Council to be more forward-leaning in what it's willing to do in terms of authorizing force?

BRENT SCOWCROFT: Yes, it is. It says that the Security Council needs to be more active, really, more preventive. Now that is less in terms of interstate war than the kinds of conflicts we see now: States that are failing; states that are under stress; and states in conflict and then states reconstructing after conflict. And what the panel did is recommend a whole new organization that dealt with this whole spectrum of conflict, so that you try on one end to prevent states from falling into these internal conflicts that are so difficult and then help them get out.

MARGARET WARNER: Let's take a situation right now, I think, people on almost all sides say is very frustrating and that's Iran and its apparent attempts to acquire at least the technology for nuclear weapons. What is it in which you all recommended that would make the U.N. better able to deal effectively with that potential threat?

BRENT SCOWCROFT: The panel dealt specifically with the problem of nuclear proliferation, and it said that the non-proliferation treaty is in some danger now because it did not anticipate what is now the predominant or really the only feasible way to get to a nuclear weapon, and that is by enriching uranium or by reprocessing spent nuclear power fuel and getting plutonium. And the panel recommends specifically that states... that we move towards states not being able to enrich uranium.

MARGARET WARNER: Let me ask you about a couple other specifics. There is so much in the report, as we said, but expanding the Security Council. Now you all came up with a couple of different recommendations. But in neither one would any of these new members have the veto. The veto would remain with the permanent five World War II powers. Why, first of all, and secondly, how much meaning would it have to a Germany or a Japan or an India to be a member of the Security Council if they didn't have the veto?

BRENT SCOWCROFT: What we tried to do was two things: To make the Security Council more representative of power in the world of 2004 than 1945, but at the same time not reduce its ability to act. Any time you add members who have veto, you limit the ability to act. It was just that simple. And there was no serious debate within the panel about the veto. There were some who said, you know, it would be nice if we didn't have a veto. But nobody thought that was a realistic....

MARGARET WARNER: Eliminate it for everybody.

BRENT SCOWCROFT: Yeah.

MARGARET WARNER: Now, another issue you addressed was sort of mismanagement and corruption. You didn't address the Oil-for-Food scandal, particularly, but this larger issue. How bad is it, the mismanagement and corruption?

BRENT SCOWCROFT: Well, we didn't address the corruption side. The management... it's a cumbersome bureaucracy, and we proposed doing something that mentioned to make the Security Council more effective in being able to manage lesser conflicts, also, to improve the control of the secretary-general over the secretariat. And we made some progress there, not as much as would I have liked.

MARGARET WARNER: Speaking of the secretary-general, now he has ambitious plans to try to spearhead this, get the U.N. to really consider it, enact a lot of these recommendations. But as you know, because of the Oil-for-Food scandal, there are Republicans in the Senate and the House calling for his resignation. Do you think he can effectively push and promote this set of recommendations with this hanging over his head?

BRENT SCOWCROFT: Well, I hope so. I think the conjunction is very unfortunate because I think the true story about the Oil-for-Food and so on and the role of the secretary-general is a bit confused right now. But I think that this panel report... the members of the panel are broadly representative of every view of the United Nations membership. It's a very broad panel. And yet we came together on about 98-99 percent of the issues, and that gives me a lot of encouragement-- I was pessimistic when we first started-- that we can take some useful steps, not revolutionary steps, to improve the effectiveness of the United Nations. And that is a great benefit to the United States.

MARGARET WARNER: A report was commissioned to make the U.N. more relevant for the 21st century. But we have just seen this Bush administration has expressed a preference sometimes for just simply acting -- putting together ad hoc coalitions. It's less cumbersome, it's less trouble. They can act more efficiently and effectively. What is the argument for why the U.S. needs the U.N.?

BRENT SCOWCROFT: Really the U.S. needs the U.N. because this is a world where the nation state and national boundaries don't mean the same, again, that they did in 1945. Boundaries are porous. Information flows over, environmental problems, conflicts, terrorism is no respecter of national boundaries. To fight terrorism, you have to have help. You have to have friends and support around. The U.N. is an organization which you can mobilize for terrorism if you go about it in the right way. You've got the advantage.

MARGARET WARNER: Gen. Brent Scowcroft, thanks.

BRENT SCOWCROFT: Nice to be with you.

JIM LEHRER: Still to come on the NewsHour tonight: Wine at the Supreme Court.

FOCUS - WINE SHIPMENTS

JIM LEHRER: And finally tonight, a case of wine at the Supreme Court. Elizabeth Brackett of WTTW-Chicago begins with some background.

ELIZABETH BRACKETT: In Michigan on a sales call, Paul Dean enjoys browsing through the wines in a tasting room at St. Julian's winery. But if Dean finds a wine he likes, he can't have it shipped back home to Ohio. That's because in Ohio, Michigan and 22 other states, it's illegal for consumers to receive alcohol shipped from out of state.

PAUL DEAN: I'm always interested in uniquely crafted wines, usually sample them on site, but do not have the opportunity to order either through mail or delivery by that means.

ELIZABETH BRACKETT: Winemaking has been the family business at St. Julian for 85 years. Vineyards in the sandy soil on Lake Michigan's eastern shore boast a wide variety of grapes, from merlots to pinot gris. St. Julian ships lots of wine to Michigan consumers. Third generation owner Dave Braganini says the ability to ship wine to all states would definitely increase the bottom line, though he says it is the smaller wineries that are really impacted by the ban on direct- to-consumer shipments.

DAVE BRAGANINI: If you're tiny and starting out, it's the difference between making you or breaking you. So if a consumer comes to your winery, likes the wine and goes home and wants to order some because they can't find it, it severely impedes anybody's ability to sell wine if you're starting out.

SPOKESPERSON: This is an excellent, dry red wine.

ELIZABETH BRACKETT: Declaring their support for free trade, Michigan wine consumers sued the state of Michigan. The consumers wanted to buy wine over the Internet and have out of state wineries ship wine to them. And they won. The 6th Circuit Federal Appeals Court found Michigan's liquor laws unconstitutional because they violated the commerce clause. The consumers' attorney, Robert Epstein, a wine lover himself, says the commerce clause protects free trade by prohibiting discrimination between in-state and out of state businesses.

ROBERT EPSTEIN: The case is based on discrimination. The discrimination is specifically between Michigan wineries that can ship intrastate and out of state wineries that are forbidden from shipping to Michigan consumers.

ELIZABETH BRACKETT: But the state of Michigan says the 21st Amendment, the amendment that repealed prohibition, gives the state the right to make laws to control the transporting and the importing of liquor in their state. Michigan's liquor control commissioner, Nida Samona, says the 21st Amendment trumps the commerce clause and clearly gives Michigan the ability to control liquor coming into the state. Without that ability, Samona says, the state would lose liquor tax revenues and would be unable to prevent minors from buying liquor.

NIDA SAMONA: My position is that there should be no interstate, no Internet sale of wine or any alcoholic beverage because we cannot control it, we do not regulate it, we do not know whose hands it's going into. We have young people under the age of 21 that are allowed to get onto the Internet-- which is as common in our household today as a telephone is-- and to order any type of alcohol.

ELIZABETH BRACKETT: Now all liquor sold in Michigan, as in most states, flows through wholesalers who warehouse and distribute it. If the Supreme Court rules in favor of the wine consumers, the wholesalers would be cut out of the loop for interstate wine shipments. The president of the Michigan Beer and Wine Wholesalers Association worries that it wouldn't stop there.

MICHAEL LASHBROOK: The 6th Circuit decision that we're appealing to the Supreme Court clearly would render null and void our laws that control the importation and sale of all alcohol, liquor, wine, beer to consumers in Michigan. It just... it's not about a few cases of fine wine. This is about the integrity of alcohol regulation. I think that they will look very carefully at the facts of this case and base the decision wholly on wine and not on the so-called slippery slope argument of the wholesalers and the state of Michigan.

ELIZABETH BRACKETT: Liquor retailers also have a stake in shipping wine directly to consumers. This suburban Chicago liquor store has lost two-thirds of its wine club members as more states made direct-to-consumer shipments a crime. The wineries, wine consumers, wholesalers and the state do agree on one argument: The economic stakes are high for all.

JIM LEHRER: Jeffrey Brown takes it from there.

JEFFREY BROWN: This morning, the Supreme Court heard arguments in the wine case. As usual, Jan Crawford Greenburg of the Chicago Tribune was there, and she joins me now.

Jan, welcome. The sale of wine, at least on its face, does not seem like a major constitutional issue. And yet this has gotten a lot of attention. What makes it an interesting case?

JAN CRAWFORD GREENBURG: Well, as we saw in the previous piece, the stakes are high because there's big money involved. The $21 billion industry, it affects thousands and thousands of wineries across the country. The number of these wineries has tripled in the last ten to 20 years. So they want to be able to open up new markets. They say these little wineries can't even get their products on the shelves nationally. The states have their own argument about the minors and being able to collect taxes. The wholesalers say it would undermine laws in 50 states across the country. So we have practical concerns. But then we have these sweeping constitutional issues, the power of the federal government, the power of congress, versus power of the states. We have these two provisions, constitutional provisions running into each other. We've got the commerce clause, which gives Congress the power to regulate commerce. The framers thought that was very important because they wanted a national economy. They don't want states coming at you with hodgepodge laws, discriminating against out of state businesses. Then we have the 21st Amendment on the other hand that gives states the power to regulate alcohol, the end of prohibition. Those are at odds and those are big sweeping constitutional issues which obviously, as we see, have real world consequences.

JEFFREY BROWN: So the two sides came to court today, each armed with its piece of the constitution. So how did the arguments play out?

JAN CRAWFORD GREENBURG: Well, a lawyer for the wineries and particularly some of the smaller wineries, one in Virginia, argued first. And he said that these state laws discriminate against out of state wine producers, and that the commerce clause is clear, that states cannot pass those kinds of discriminatory laws. That's a core concern of the commerce clause regardless of what the 21st Amendment says. States simply can't do this. It's discrimination.

JEFFREY BROWN: That goes back to early, the very beginning of the Constitution, right?

JAN CRAWFORD GREENBURG: Right. And regardless what the 21st Amendment says, we can't have these kinds of discriminatory laws by the states. Now, of course, a lawyer for the state of Michigan, a lawyer for the state of New York, made the other point. They said look, the 21st Amendment is really clear. It came after. It's later and it says states can regulate the sale of liquor. They can control the way that liquor is imported across their state lines. And there are many good reasons that states would want to do this, for example, in this case, as we discussed and as they mentioned today, they're worried about the sale of alcohol to minors. They're worried about being able to collect taxes and revenues on the sale. But as the lawyers for the state of Michigan argued today, at the end of the day, that doesn't even matter. States, according to the 21 Amendment, could pass this legislation even if they were trying solely to protect wineries within their borders. They could discriminate.

JEFFREY BROWN: All right. So the Justices are there, and they have these two competing provisions. What stood out in their questioning today?

JAN CRAWFORD GREENBURG: This is a really interesting argument because these Justices didn't line up like we think they do. You know, we hear a lot about this being a closely divided court, 5-4 on the contentious issues. We get the five more conservative Justices often joining together to scale back federal powers, certainly in recent years giving states greater authority. So a lot of people went into the case today thinking it might shake out like that. We also know this is a court that the conservatives emphasized looking at the words of the Constitution. The words of the Constitution, in this case, at least the 21 Amendment are clear: States can regulate. So, you know, we went in thinking okay, the conservatives may side with the states here. But what happens here? Justice Atonin Scalia right out of the box suggested by his questions that he is very skeptical of the states arguments, very disturbed the states are discriminating, that the commerce clause does not envision that kind of discrimination, that that's why the framers thought

we needed a commerce clause for the national economy. We have Justice Scalia, I think, indicating with his questions, that he is on the side of the wineries. We have Justice Stephens, the more liberal justice, some of his questions, some of the things he has written in the past on this issue, suggesting he may come down on the side of the states here. So it may not shake out like some of these cases have in the past 5-4, the five conservative, the four more liberal Justices.

JEFFREY BROWN: All right. And the decision by the spring, I guess, huh?

JAN CRAWFORD GREENBURG: We'll expect something by the end of their term in June. I don't think this one is going to be unanimous.

JEFFREY BROWN: Interesting case out of a case of wine. Jan Crawford Greenburg, thanks again.

JAN CRAWFORD GREENBURG: You're welcome.

RECAP

JIM LEHRER: Again, the other major developments of this day. Hamid Karzai was inaugurated president of Afghanistan, the first elected by popular vote. And the U.S. Congress moved toward final approval of a sweeping intelligence bill. We'll see you online and again here tomorrow evening. I'm Jim Lehrer. Thank you and good night.