The MacNeil/Lehrer NewsHour

MR. MacNeil: Good evening. Leading the news this Wednesday, U.S. and British police uncovered an alleged plot to smuggle nuclear detonators to Iraq, an American missionary was murdered in Lebanon, and U.S. economic growth last year was the smallest in three years. We'll have details in our News Summary in a moment. Jim.

MR. LEHRER: After the News Summary, we look at the Iraq nuclear story [FOCUS - BAGHDAD AND THE BOMB] with Iraqi Ambassador Mohamed Al-Mashat, arms control expert Gary Milhollin, and analyst Phebe Marr. Then Correspondent Paul Solman explains the Japanese stock market [FOCUS - TOKYO TUMBLE], we talk to two interested parties in a broadcasting affirmative action case [FOCUS - CHANNEL OF OPPORTUNITY] that went before the Supreme Court today, attorney Thomas Hart, broadcaster Alan Shurberg. And we close with essayist Clarence Page [ESSAY - SPEAKING OF THE DEVIL] on the devil's comeback.NEWS SUMMARY

MR. MacNeil: An alleged plot to smuggle nuclear weapons detonators to Iraq was stopped today. At least five people were arrested in Britain, including an Iraqi who was picked up at London's Heathrow Airport. British customs officials said 40 of the nuclear triggers were smuggled to London from America aboard a U.S. airliner earlier this week and stored in a cargo shed at Heathrow. Officials said the plan was to send the triggers to Baghdad aboard an Iraqi Airways flight. A U.S. Customs Service spokesman said the U.S. and Britain cooperated in the investigation which lasted 18 months. We'll have more on this story after the News Summary. Jim.

MR. LEHRER: An American missionary was murdered in Lebanon today. William Robinson ran an orphanage in a village near the border with Israel. He was shot to death in his home by three gunmen. His wife and children were not harmed. Several Lebanese groups claimed responsibility. They accused the 56 year old Robinson of trying to set up a Jewish settlement. The State Department said it had warned him several times to leave Lebanon. An American missionary was also killed in the African nation of Liberia. The bodies of Rev. Tom Jackson and his British wife were found in their village. It's an area where there has been heavy fighting between government troops and rebels. The United States and Britain today advised their citizens to leave that region. About 6,000 Americans, most of them missionaries, live in Liberia.

MR. MacNeil: Lithuania bowed to a major Soviet demand today to stop plans to establish its own border guard. Lithuania's President Landsbergis said he took the move to avoid confrontation. Lithuanian officials also told their citizens not to resist if Soviet officials tried to seize their weapons. Meanwhile, Soviet troops continued to search for Lithuanian army deserters after arresting more than 20 of them yesterday. We have a report from Lithuania by Robert Moore of Independent Television News.

MR. MOORE: An outward sense of calm with the Red Army keeping a low profile, but Vilnius remains a torn city, some party buildings controlled by paratroopers, others by the Lithuanians. The parliament was again in session today, but overshadowed by concern for the young deserters snatched back by the military. Others come to the parliamentary building pleading for information about their sons and on where they're being kept. The hunt goes on for the deserters yet to be caught, this captain arriving in Lithuania with a letter demanding the return of the 21 men who've defected from the Baltic fleet. All this comes at a time when journalists are being asked to leave when their visas expire. Lithuanians here fear information will now be tightly controlled. At present there remains an uneasy peace, but it's recognized that in no sense has this political crisis been resolved.

MR. MacNeil: In Washington, Pres. Bush sparred with Republican members of Congress over the administration's restrained response to the Lithuanian situation. After the meeting, House Majority Whip Newt Gingrich said Mr. Bush won.

REP. NEWT GINGRICH, Minority Whip: A number of us raised the question and said that we have to be more aggressive in Lithuania, and the question that came back is what does that mean, and I think when you then turn -- I mean, all of us have an emotional feeling, and I was one of the people who was most aggressively saying we ought to take more action. The question is what does that mean? I felt like I got educated this morning. There was a very legitimate mature professional conversation saying contextually look at all the circumstances right now and be very cautious before you take risks with the lives of the Lithuanian people.

MR. MacNeil: White House Spokesman Marlin Fitzwater told reporters that the administration continues to express its concerns to the Soviets through diplomatic channels, but he said now was not the time to escalate the public rhetoric.

MR. LEHRER: There was more black against black violence in South Africa today. It took place in Natal Province. The government sent hundreds of troops to the area to try to stop it. We have a report from South Africa by Kevin Dunn of Independent Television News.

MR. DUNN: Hurls of smoke hang over the hillside villages of Natal. Dozens of homes were gutted and thousands made homeless after widespread clashes between opposing black gangs, on the one hand conservative supporters of the Incarta movement, on the other the more radical United Democratic Front. The number of casualties was unknown. UDF supporters said the police were helping Incarta and attacking them. Troops have been sent in to try to halt the conflict, but thousands are out on the streets, apparently determined to continue fighting. Meanwhile, NelsonMandela was visiting the township of Seveking, scene of last Monday's shooting by police of unarmed black demonstrators. Mr. Mandela comforted the victims.

MR. MANDELA: I'm going to take some action which is going to show the government that we are very angry with what happened.

MR. DUNN: Mr. Mandela wouldn't comment on what he'd seen and heard, but his organization, the African National Congress, has called for a judicial inquiry into the shootings.

MR. LEHRER: The Sandinistas have agreed to turn over control of the army and the police in Nicaragua. The agreement was reached last night with the incoming government of Violeta Chamorra. The agreement says the Contra rebels must be demobilized before the government changes hands. In Washington, States Department Spokeswoman Margaret Tutwiler said the United States was pleased.

MARGARET TUTWILER, State Department: We welcome this accord which is a major step forward for a smooth and peaceful transition. The agreement puts in writing many of the key elements in a full transfer of power, especially civilian control of the military and removal of the armed forces from politics. Likewise, by stipulating that weapons should be in the hands of the armed forces only, the accord lays the groundwork for reclaiming guns recently distributed to civilians.

MR. MacNeil: In economic news, the Commerce Department today reported that the U.S. economy grew by 3 percent last year, the slowest growth since 1986. Final revisions in the Gross National Product showed a fourth quarter gain of 1.1 percent. That was an improvement over earlier estimates. In Tokyo, the dollar climbed against the Japanese yen for the ninth day in a row. It closed at its highest level in three years. That sent prices plunging on the Tokyo Stock Exchange. The Nikkei Average fell over 560 points, a drop of 1.77 percent. The Tokyo Market has been on a rollercoaster lately. It gained nearly 1500 points on Monday.

MR. LEHRER: And we will have a Paul Solman report on the Japanese stock market later in the program. Now it's on to nuclear triggers for Iraq, affirmative action in broadcasting and the comeback of the devil. FOCUS - BAGHDAD AND THE BOMB

MR. MacNeil: We begin tonight with the apparent efforts of the Middle East Nation Iraq to turn itself in to a nuclear power. Today British Security agents with American assistance stopped the shipment of nuclear triggering devices from London to Baghdad. What that means we will discuss with Iraq's Ambassador to the United States and two analysts after this series of reports from Independent Television News in London.

ROBIN WHITE: The operation at Heathrow Airport was carried off ion great secrecy. Customs investigators tipped off by FBI counterparts were watching when a TWA Flight from the United States landed unknowingly carrying electrical parts for nuclear arming devices destined for Iraq. Officers kept watch on one of a number of cargo warehouses and this morning two men were arrested as they checked in to board a flight to Baghdad. A number of items in their baggage now believed to be electrical capacitors are now being examined. In all five people were arrested. The warehouse and the Iraqi Airlines Office in London have also been searched as well as company offices in Surrey.

GEOFFREY ARCHER: The technology behind the nuclear weapon is complex and varied. Some of it Iraq is able to develop itself. Some has to be brought from abroad. The arming device for a nuclear weapons operates the firing mechanism. 40 capacitors used to detonate the trigger were intercepted today. The trigger is made of conventional explosives often in the shape of hemispheres. Inside is the nuclear component when the trigger explodes it compresses the nuclear elements to a critical mass causing nuclear detonation. President Sadat Hussein of Iraq has been trying for more than a decade to develop nuclear weapons although he has always denied it. In 1981 Israeli Planes bombed a reactor Iraq was building outside of Baghdad. Iraq's nuclear weapon plans were set back severely. Recently Iraqi guided missile developments showed themselves more advanced than expected and alarmed the West.

MARTIN NAVIAS, Department of War Studies, Kings College, London: Iraqis are moving towards the deployment of a nuclear capable ballistic missile. These triggers might be used in a nuclear warhead which connected to a missile.

LINDSAY TAYLOR: Within the 1000 kilometer range of the Condor II missile there are places of crucial strategic importance. To the North the Soviet Union but also with in range is the hated enemy of Sadat Hussein Iran whose Capitol Tehran would be an easy target. The Persian Gulf the West's oil supply line is in range as are the Gulf States including Saudi Arabia traditionally friendly to the West. Also within striking distance is Cyprus with its British Base. Most importantly there is Israel. With tragic irony these developments occurred on the day a memorial service was held for Bazoff, the observer journalist who was hung by the Iraqis who accused him of spying.

MR. MacNeil: We get three views now. Mohamed Al-Mashat has been Iraq's Ambassador to the United States since September. Gary Milhollin directs the University of Wisconsin Project on Nuclear Arms Control and is a member of its law school faculty. He has been a part time Administrative Judge at the Nuclear Regulatory Commission and a Consultant on Nuclear Non Proliferation for the Defense Department. Phebe Marr is a Middle East Analyst and a Professor at the National Defense University in Washington. She has worked and taught threw out the Middle East including Iraq and she is the Author of several books on Iraq. Mr. Ambassador what is your Government's explanation of why these devices were being imported to Iraq.

AMB. AL-MASHAT: Well I think today I don't have any official information on the particulars of this episode. All I have heard is what the news media tried to show and some of it, of course, is not a real picture or the whole truth.

MR. MacNeil: Well it is being widely understood as another piece of evidence that your country is trying to develop some kind of nuclear weapon. What is your response to that question?

AMB. AL-MASHAT: Well this is absolutely false contention I am sorry to say that for the following reasons. First we are a signatory to non proliferation treaty. Second all of our peaceful nuclear research facilities are subject to inspection to the National Atomic Energy Agency and it is continuously under such inspection. So how could we develop nuclear weapons when are a signatory to the non proliferation treaty and all the nuclear facilities are under close scrutiny.

MR. MacNeil: The White House said that this discovery today raised concerns again about nuclear proliferation in the Middle East. How do you respond to that situation?

AMB. AL-MASHAT: I am very happy that there is such a concern because we are the ones who called for nuclear freeze and for the banning of nuclear weapons in the Middle East and we are very much welcoming any international effort in order to ban the use of nuclear weapons in the area. We are completelyfor it.

MR. MacNeil: So if it is confirmed that these were nuclear triggering devices and they were heading for your country if you are not developing nuclear weapons what would be the purpose of them?

AMB. AL-MASHAT: How can I answer such a question. Let us wait to have the official details and the facts and the official position.

MR. MacNeil: Mr. Milhollin let me ask you this. Do these triggers have any other purpose than to detonate a nuclear weapon?

MR. MILHOLLIN: There is a little confusion of just what is being imported but I think that we can assume that since they were smuggled rather than being imported with the proper certificates over the table and since one of their primary applications is to detonate nuclear weapons that in fact the intention was to put them in to a bomb. Which raises the question of the non proliferation treaty and whether Iraq is adhering to it.

MR. MacNeil: Now you say one of the purposes. Are there other purposes for these devices? Can they be used for other things?

MR. MILHOLLIN: Well if all Iraq was getting a citron which a little electronic element then there are other applications for that. But the nuclear weapon application is so classic that in order to export them the United States insists on documentation of end use and so forth which was not done in this case. If Iraq is getting more than just the critrons, that is if it is getting a device configured to detonate a nuclear weapons which is quite possible then I think the evidence is clearer than it would be otherwise.

MR. MacNeil: The British authorities who revealed this today and the American Customs authorities described them as the triggers for detonators, not detonators, themselves. This is layman's language and if they are that, triggers for detonators for a nuclear weapon, what evidence is that to you that Iraq is trying to make a nuclear weapon?

GARY MILHOLLIN, Nuclear Proliferation Analyst: Well, I think it's very strong evidence, because Iraq is also importing or trying to import machinery to make centrifuges secretly, to enrich uranium up to nuclear weapons grade. Iraq is doing all this importing under the table, that is, without getting the proper permits, without getting, without filing any statements indicating what the end use is, and so since Iraq has chosen to smuggle these devices and import them illegally, I think the burden of proof is on Iraq to show that the intention is benign.

MR. MacNeil: Mr. Ambassador, how do you respond to that?

MOHAMED AL-MASHAT, Ambassador, Iraq: Well, of course, I contest what he is saying because, as I said, our installations are under inspection, so how could we built an atomic bomb when our inspection is under close scrutiny, and then all the licenses, all the importation that we do from the United States, it has to be licensed.

MR. MacNeil: But you're saying, Mr. Milhollin, that there is evidence. What is the evidence that they are doing it under the table, so to speak? You say there's evidence. What is it?

MR. MILHOLLIN: Well, to export these devices, permits are required, and the permits are only granted if there is a statement of the end use, who the end user is and specifically what's going to be done with these objects. None of that was done.

MR. MacNeil: Leaving aside today's incident, which the ambassador doesn't have information about, you said a moment ago there was evidence that Iraq was trying to import centrifuges to produce concentrated plutonium. What is the evidence that that was the case?

MR. MILHOLLIN: Well, the news reports have indicated that Iraq - -

AMB. AL-MASHAT: That's right, news reports.

MR. MILHOLLIN: -- is busily engaged in importing the means to make centrifuges which enrich uranium up to nuclear weapons grade, enriched uranium was used in the Hiroshima bomb. Iraq is also doing that secretly. So I think if you put all that together, the implications are pretty clear, and to that you have to add the fact that Iraq is spending a lot of money to build a big missile and nobody builds big missiles to deliver conventional explosives. They only build big missiles to deliver nuclear warheads.

MR. MacNeil: Mr. Ambassador.

AMB. AL-MASHAT: Well, I am surprised for an academician like our friend to base his judgment on what the news report says. One should have the facts in order to base such a serious judgment, and particularly for an academician, and so this is, one has to have the complete facts in order to arrive to such a conclusion.

MR. MacNeil: Ms. Marr, let's bring you in on this. Do you, as far as you know, is there evidence that you consider reliable that supports the position that Mr. Milhollin has just been taking?

PHEBE MARR, Middle East Analyst: Aside from news reports, I don't have any one way, one way or another, but let me try to put this in some context as to why Iraq might want, need a nuclear capability, missiles and so forth. I think we do have to go into some motive. Iraq has in its view a strategic problem. It needs a long-term deterrent against the potentially revived Iran. After all, it just finished an eight year war. It is a smaller power, 1/3 the size of Iran, 1/3 the population, and frankly, looking ahead on its strategy, I believe it's borrowed some leaps from the Israeli book. I believe that it needs and wants a military deterrent that would prevent a rematch down the pike. I also believe there's a prestige factor there that, in fact, this would give it a good deal of political clout with its Arab neighbors, and there is a good deal of resentment, as you know, among Arab countries that there is only one nuclear power in the Middle East, Israel, so I cannot speak personally for the evidence one way or another, but if it exists, it seems to me that these provide some motives for it.

MR. MacNeil: Yes. Mr. Ambassador, what's your comment on that logic?

AMB. AL-MASHAT: Well, this is of course, she is assuming that we are planning to have an atomic weapon and this is the reasoning for it. But we are calling for a nuclear freeze to ban the whole area from nuclear weapons, that is to say including everybody, including Israel, of course, which, as you know, they have the nuclear weapon and they have the means of delivering. This is, our main concern is to ban it, to ban the manufacture, to ban the storage, to ban the use of it in the area, and this was our official position.

MR. MacNeil: Mr. Milhollin, the ambassador has made that point several times and also said that all their facilities are open to the Atomic Energy Agency Commission inspection. How do you come back on that?

MR. MILHOLLIN: Well, the facilities they have declared are open to inspection, but I think that there are facilities in Iraq which are operating right now without being under inspection, and I think these crytrons were designed to go into a bomb that would be made with uranium produced at a facility that was not open for inspection, and I guess I would even go so far as to say that since these were smuggled and since these have such a clear nuclear weapon application, I think that it's probably a violation of the treaty. The treaty obliges a member, a non-nuclear weapons state, not to import nuclear explosive devices. And I think we have a case here where a bomb part has been imported.

MR. MacNeil: Mr. Ambassador.

AMB. AL-MASHAT: Well, again, he is using his judgment on just mere assumption. When you open your country to inspection all over the country, when you are signatory to non-proliferation treaty, whereas I said Israel is neither signatory to the non-proliferation nor they permit anybody to inspect them, so this is the proof that we have no intention to develop any nuclear bomb. The nuclear research that was attacked by Israel in 1981 was a peaceful nuclear research center and was subject to inspection continuously not only by the international agency, but by the French inspector as well.

MR. MacNeil: Do the, is that the opinion in atomic energy circles in this country, Mr. Milhollin?

MR. MILHOLLIN: No, the opinion in most circles that I know about is that the purpose in building the reactor was to make bombs, that although the reactor was supposed to be under inspection, most people assume that the inspection would not have lasted very long and that Iraq would have tried to avoid full application of inspection in such a way as to divert material. In fact, after it was attacked, the Iraqis publicly asked for help from the whole Arab world to their effort to make the bomb. So I think that was pretty clear indication of what their purposes were.

MR. MacNeil: Respond to that, Mr. Ambassador.

AMB. AL-MASHAT: Of course, I contest that. I'm very surprised that he is raising such a question. We have certainly asked the help to in order to rebuild our peaceful nuclear center which once more was under close scrutiny, so when you are the victim of an aggression and then that will cause tremendous damage, and even the National Atomic Energy Agency verified all the steps that we have taken in building that center so I am sorry to contest what he is saying, because his argument is based on assumption, not on facts.

MR. MacNeil: Mr. Ambassador, what about the other point Mr. Milhollin's made, that it is, as further evidence of his contention that you are developing a long range rocket, in addition to the medium range rocket whose range we saw illustrated in that earlier report, you have recently tested a 70 ton three stage rocket?

AMB. AL-MASHAT: We are very proud of that. This is very true. It is our Iraqi scientists developed the rockets, but I would like to remind you we have suffered eight years of aggression by Iran. In 1981, our nuclear center was attacked by Israel, so we have to defend ourself, we have to have some kind of deterrent, and I would like also to remind you that those rockets played a major role in ending that ferocious war and aggression. And had it not been for Iraq to stand in the face of avalanche of Khomeini, all of the Gulf would have been threatened and the sea route as well as oil route would have been threatened and had it not been for Iraq or had Iraq caved in, you would have been forced to send American boys to defend your interest in that area. So we have to have some kind of difference. Our policy is for peace and stability and in order to have peace and stability, it is only normal and natural that you have to be strong and to have some kind of difference in order to deter the future aggressor from attacking your country.

MR. MacNeil: Ms. Marr, is the anxiety that the White House expressed today about nuclear proliferation in the Middle East, and particularly with reference to Iraq in this case, the allegations about Iraq, is that shared by the Arab community in the Middle East, or is it just, is it just Israel's and the United States' worry?

MS. MARR: No. I think not only nuclear proliferation but weapons proliferation is, anxiety about that is widely shared, and I might add anxiety about the military build-up in Iraq as well, but I have to admit that there are mixed feelings about that. Many of the Gulf states for example are still concerned over Iran, the unpredictability of Iran, potential future aggression in Iran, and they do see Iraq as something of a bulwark against it. Nevertheless, the kind of events we see occurring in Iraq is of concern to them. The arms race is increasing. Countries such as Saudi Arabia feel they also have to take steps to protect themselves against two stronger Northern neighbors, and I think the proliferation of any kind needs to be of concern to all of us.

MR. MacNeil: Mr. Milhollin, are other countries as avid to stop the proliferation in the Middle East as the United States and Britain apparently are, or are there others that are abetting it?

MR. MILHOLLIN: I think we have a problem with Germany and China. The Germans have, German companies have helped Iraq a great deal in its effort to build a long range missile. German companies have also, as I said before, helped Iraq in its efforts to enrich uranium. The Chinese apparently are interested in Iraq and the Chinese have discussed the possibility of exporting long range missiles, nuclear capable missiles, to a number of Middle Eastern states, Syria, Libya, and also Iraq. Also, I think there's a concern about the possibility that Germany may help Iran complete some reactors, so we're looking at a worldwide supply problem.

MR. MacNeil: Well, Mr. Ambassador, thank you very much for joining us tonight, Mr. Milhollin, and Ms. Marr.

AMB. AL-MASHAT: Could I make one comment? Could I make one comment?

MR. MacNeil: Could you make it very briefly, sir.

AMB. AL-MASHAT: Yes, because she said military build-up. She forgot that the military build-up took place during the threat to our very existence with Iran in aggression against Iraq. There's no military -- we are for peace. We wanted to develop our country. We have the means and we have the resources.

MR. MacNeil: All right. Your point is --

AMB. AL-MASHAT: The standard of our living --

MR. MacNeil: Your point is understood. Thank you for joining and Mr. Milhollin, Ms. Marr, thank you very much. Jim.

MR. LEHRER: Still to come on the Newshour tonight, the Japanese stock market, affirmative action in broadcasting, and Essayist Clarence Page. FOCUS - TOKYO TUMBLE

MR. LEHRER: Now the rise and fall of the Japanese stock market. Since late last year, the market has declined almost 25 percent, its stocks losing something like $1 trillion in value. But there's a puzzle, why the major losses in Tokyo have barely sent a ripple through our stock market or the world economy. Our business correspondent, Paul Solman, has an answer.

MR. SOLMAN: We begin with some Japanese stock footage as we try to answer the question investors everywhere have been asking lately, what in the world is going on here? Well, for context, let's go back a few years. We shot this footage in 1987 for a story on the Japanese market. It began by following a door-to-door stockbroker from Nomura, the world's largest broker.

JAPANESE BROKER: [Speaking through Interpreter] A new product just came out this month and I came by to show it to you.

MR. SOLMAN: Brokers like this medisan were beginning to hear a new kind of question from their customers.

CUSTOMER: [Speaking through Interpreter] What kind of profit do you expect it to make?

MR. SOLMAN: After years of putting up with the tiny rate of interest paid by her Japanese bank, the Japanese investor had finally begun to look for a better return.

JAPANESE BROKER: [Speaking through Interpreter] So how does it sound? You make more than twice what you would make with your money in the bank. Would you like to purchase some?

CUSTOMER: [Speaking through Interpreter] Yes.

JAPANESE BROKER: Thank you. How much will you invest today?

CUSTOMER: Six hundred thousand yen.

MR. SOLMAN: $4,000 in crisp new bank notes. All over Japan, investors like this one were withdrawing their money from the bank and putting it into the Japanese stock market. Why? Because finally they were being promised a fat and fast return on their investment. Remember, this was the economy called Japan, Incorporated, a whole nation functioning as a business. Workers got low wages. Bank depositors earned low interest. Everyone sacrificed for the corporate good. But investing in the stock market was the beginning of something new. The Japanese finally wanted to cash in their economic miracle and the stock market seemed the best way to make a killing. Sound familiar? Well, it's exactly how the free wheeling American stock market, really how any free market operates, and the freer it gets, the more short-term and speculative its investors tend to become. Now we think of such behavior as guintessentially and unfortunately American, but eventually you'll find it anywhere they play the market. You could look at our investor back here in 1987 as an early clue to Japan's new direction.

INVESTOR: [Speaking through Interpreter] Among people of our generation, of 10 people there are 8 who hold stock.

MR. SOLMAN: This woman and her friends were beginning to lose interest in making financial sacrifices for Japan, Incorporated. The younger generation, once it began to save money, figured to be even more eager for quick returns. So increasingly, Japanese investors jumped on board the Japanese stock market. And as more jumped on, the higher the market went, the higher it went, the more they looked at it through rose-colored glasses, figuring it couldn't go down since it hadn't for years. Of course, this is how any speculative fad gets started. And once it does, investors tend to get caught up in the euphoria, however irrational. It's especially true of relatively inexperienced investors such as the Japanese, who gave giant brokerage houses like Nomura all the more incentive to sell them Japanese stocks. [Japanese Television Commercial] As this Nomura ad from the mid '80s suggests, rational investing with its numbers and equations can be pretty confusing, so investors were invited to avoid the puzzle altogether and put their trust in their friendly broker. And so the speculative bubble grew. By the beginning of this year, Japan's market representing an economy barely half America's in size had inflated to nearly twice America's in price. By rational standards, the Japanese market was simply out of whack. Now rational, when it comes to investing, generally means figuring the return or yield on your money. So let's compare some currently popular investments. For example, if you buy 10 year U.S. government bonds, you get about 8 1/2 percent these days. If you buy 10 year bonds from Germany, you get a yield in the same neighborhood, roughly 8.8 percent. Even Japanese bonds are yielding more than 7 percent these days. And what about the U.S. stock market? Well, the stock market, as you Rukeyeser buffs know, measures return with a ratio, price to earnings or P/E. In the U.S. stock market, that's a price to earnings ratio of about 13 to 1 at the moment. That's a $1 return on a $13 investment or about an 8 percent yield, and 8 percent is right in line with the returns of the other investments on the table. Then there's the Japanese stock market. Before its slide, it was selling at a price to earnings ratio of 65 to 1. That's a yield of less than 2 percent. There were rationales for the low yields which we'll spare you because no matter how you fiddled with these numbers, you couldn't bring the Japanese market back into line with most other investments. Of course, investors can continue to make money regardless of the yield if their stocks continue to climb in price. And that's what had been happening in Japan. The question was, would it continue? Anxiously, investors had begun to watch the market minute by minute just like their short- term American counterparts because if the bubble was about to burst, the sooner they sold, the better. In a sense, it's all part of the same syndrome. The Japanese have been getting used to the good life, leaving their kids with sitters to play tennis, even learning the hoolah. [Japanese TV Commercial] As another stock brokerage ad suggests, leisure is finally in, but it's hard to pay for leisure like this with low returns on your investments. So since the beginning of the year, the formerly long-term Japanese investors have been trading on a hair trigger like manic Americans. We lampoon such behavior in our movies as typical of our short-term volatile culture. But, in fact, it's typical of market culture, which increasingly dominates the world economy from Wall Street to Japan. There remains one puzzling question. If the world economy is now so inter-connected, why has there been no chain reaction? Why haven't the U.S. and other markets followed Tokyo down, as so many of us business journalists have warned for so many years? Well, one answer can be inferred from this Nomura recruiting tape.

SPOKESMAN: [Nomura Recruiting Tape] The Nomura man must always set his sites high and seek out challenge. He must approach his work with an aggressive attitude.

MR. SOLMAN: As the Japanese market has plunged, salesmen like this have become increasingly reluctant to push Japanese stocks to their big accounts. But they are now able to offer the wide range of investments we're used to in the U.S. And when the once patient small investor now wants to bail out of the Japanese market, even the traditional medisan will be right there with an American, German, or even Japanese alternative. In other words, economic inter-dependence doesn't necessarily mean that world markets move in lock step. In this case, Japanese investors seem to have taken their money out of the Japanese stock market and simply put it elsewhere in search of better returns, and that, as we end this report with American stock footage, is the kind of economic behavior that investors in any stock market if left to their own devices eventually seem to adopt. FOCUS - CHANNEL OF OPPORTUNITY

MR. LEHRER: Now the continuing debate over affirmative action. It came again before the U.S. Supreme Court today in two cases, one from Connecticut, the other from Florida. The justices heard arguments about two federal government programs aimed at increasing minority ownership of radio and television stations. We'll have our own debate right after this backgrounder by Correspondent Tom Bearden.

MR. BEARDEN: There are nearly 9,000 radio and TV stations in the United States. Only a little more than 2 percent are owned by minorities. A generation ago that number was even smaller. In the 1970s, the Federal Communications Commission, the government body that gives out broadcast licenses, set out to change that with a series of affirmative action programs. Once their right to do that would have been broad, almost unchallenged. But two major Supreme Court cases changed that. In a 1986 case involving Michigan schoolteachers, the court placed some limits on affirmative action programs in hirings and layoffs. In 1989, a Richmond, Virginia, program giving public works contracts to minority-owned firms was also struck down as being too broadly drawn. Partly because of those rulings, two of the FCC's own affirmative action programs are now before the Supreme Court. One case involves a minority-owned TV station in Hartford, Connecticut, WHCT. The owner, Astroline Communications, got its license under the so-called distress sale policy which lets the station's previous owner sell at a loss to a minority firm when faced with losing his license.

RICHARD RAMIREZ, Astroline Communications Company: 75 percent of the broadcast licenses or somewhere in that degree were issued prior to the mid 1960s. It's cited in some of the briefs there. If we recognize that the best broadcast licenses, the most valuable licenses in both radio and television were given out when Rosa Parks was still sitting in the back of the bus, when Martin Luther King was leading cities, marches in this city, how can you fail to recognize that a societal discrimination, a societal failure to have minorities represented in our broadcast medium?

MR. BEARDEN: Another firm, Shurberg Broadcasting, challenged the sale, claiming it wasn't fair to non-minority applicants. Shurberg won its case in federal appeals court and that case was one of two that reached the high court today.

HARRY COLE, Shurberg Broadcasting Lawyer: To hand out government benefits based on race is what's improper. Why shouldn't you get it? Why shouldn't you get it? Why shouldn't I get it? Why, why is there some racial component which makes it important to give valuable government licenses to one person as opposed to another? If there has been some discrimination, some active discrimination in the broadcast licensing process, then conceivably a victim of that discrimination could obtain relief under the appropriate anti- discrimination laws. But that doesn't mean that there is any kind of reparations which is owed.

MR. BEARDEN: The other case involves a new license application for a TV station in Orlando, Florida, that's not on the air yet. The owner, Rainbow Broadcasting, got the license under the FCC's policy of giving preference to minority owners when a minority company and a non-minority company are seeking the same license. The loser, a non-minority firm called Metro Broadcasting, challenged the case, just as in Hartford. But this time they lost when they got to the appeals court. That case was also heard by the high court today.

MR. LEHRER: Now to our debate. Alan Shurberg tried to buy the Hartford television station that went ahead to the firm Astroline Communications -- went instead to Astroline Communications, whose general manager is Hispanic. Thomas Hart, formerly a lawyer for Astroline Communications, has lobbied Congress and the FCC in favor of the affirmative action policies the court is considering today. Mr. Hart, what difference does minority ownership make of a broadcasting station? Why is it a good thing?

THOMAS HART, Lawyer: Well, the courts, Congress, and the Federal Communications Commission have recognized minority ownership as in the public interest because it diversifies programming throughout the country. It's important for minorities to be understood by non- minorities. It's important for minorities to understand their own culture. It's part of our democratic system for cultures to express themselves in diverse viewpoints. And that is what this minority ownership policy seeks to achieve. It's the diversity of viewpoint that is at the core of this issue.

MR. LEHRER: Do you contest that point, Mr. Shurberg?

ALAN SHURBERG, Shurberg Broadcasting: We haven't contested at all the fact that minorities should be involved in broadcasting. If I may set up the premise of both cases, the --

MR. LEHRER: We'll get to the cases in a moment. Just answer his general point, it is good for America to have minority ownership of broadcast stations.

MR. SHURBERG: If one accepts the premise that a particular minority or minorities as an aggregate have a particular viewpoint, then certainly minority ownership viewed as a separate component is a good thing. But in order to do that, you're actually engaging in racism. For instance, if you are to say that there's such a thing as a black viewpoint, are we to assume that all blacks are anti-semitic because of the rhetoric of Jesse Jackson or Congressman Gus Savitch or Louis Farrakhan? I would submit that there is no such thing as the black perspective. There are -- just as there are conservatives, as white America, as others would like to describe it, there is no such thing as a perspective based on the color of one's blood, and I think Justice Scalia actually put it quite well when he said today that one --

MR. LEHRER: He said this during the oral arguments?

MR. SHURBERG: Yes, he did. I mean, again, over and over, he came down to the basic premise that these policies were based on one's blood, that there is no distinction between a black person and a white person.

MR. LEHRER: Do you dispute that, Mr. Hart?

MR. HART: Absolutely. Let's talk, Jim, briefly about the Oscars that were on just last week where you had major films being presented. Clearly, Spike Lee as a black man in producing "Do the Right Thing" created a film that was reflective of his background, his experience in New York City. Reflect that against the production that won movie of the year, "Driving Miss Daisy". That portrayed blacks in a different type of a role based on the experience of a white director and writer that produced that film. You cannot say that all blacks think alike. That's true, Mr. Shurberg is correct. But you can assume that the black experience is a little different than the white experience in this country and it has been for the last 200 years. Consequently, when blacks are in control, either as managers or more importantly in this case owners, they will be able to express their viewpoints differently and it will show on television.

MR. LEHRER: Do you dispute that?

MR. SHURBERG: Even if because of time limitations, we concede a black problem, for lack of a better word, that the blacks have been treated poorly in this country, these two cases dealt with people with Hispanic surnames. This was the sole justification for awarding the minority preference. Now certainly the arguments of slavery and segregation laws cannot apply. You can't say that there has been discrimination to minorities and then use a broad brush to sweep in Asians, people with Hispanic names, people from Spain. Literally, these are what the FCC policies allow and claim to be disadvantaged minorities.

MR. LEHRER: Let's go to that, not necessarily to the specifics under these cases, but to the premise under these cases, Mr. Hart. Lay out your argument as to why a preference should be given to a racial minority on any grounds as it relates to a license of a radio or a television station.

MR. HART: It has been set out in the briefs in the court that are pending. There are really two justifications for the incentive, as I call it. One is this theory of diversity which is important in the rubric of the first amendment and broadcast regulation in this country since its inception. Second point is that --

MR. LEHRER: In other words, if you leave it to the course of natural events, there will never be enough minority ownership so there needs to be a preference process, is that what you're saying?

MR. HART: Well, particularly in light of the fact that for the first 27 years of broadcast regulation, blacks were not even given an opportunity to be involved in the broadcast industry at all. We did not start in broadcasting as an equal. We caught up to it and we're still way way behind. Only 2 percent or so of the nation's 10,000 broadcast licenses are owned by minorities. There is clear reason for that and that is the second justification for the policies is the systematic and pervasive discrimination that has occurred within the broadcast industry and without, just general society discrimination. And those two factors justify a slight, ever slight preference or incentive for minorities. Think about in this case where there are only 38 distress sales that have occurred in the last 12 years. We've really only increased minority ownership by 1, maybe 1 1/2 percent, in the last 12 years. That impact is very slight on the non-minority community, but it is a step and it helps disseminate information through the air waves so people can understand cultures in this society.

MR. LEHRER: Do you oppose any preferences at all based on race?

MR. SHURBERG: Yes. In the short answer, yes, but the premise has to be that there has been identifiable discrimination. Now the FCC, which was the inventor of these policies and was the actual quasi- court, if you will, the administrative agency that implemented them, has specifically indicated to the Supreme Court that they were not designed as remedial efforts, in layman's terms, if you will, that the purpose was not to remedy past discrimination, it was not to remedy societal discrimination. The FCC had determined that they have some broad public interest mandate, first, as I mentioned before, premised on the notion that minorities will program for minorities or that minorities will program on a particular viewpoint. But, again, conceding away the discrimination, as much as you'd like to talk about it, as much as it may be a problem in this country, if the governmental agency, itself, is specifically discounting that as a basis for the policies, themselves, then what you're saying is that you're asking the government for a license to discriminate based on the color of your skin for a social purpose.

MR. LEHRER: In other words, you see affirmative action in a general term, affirmative action in a specific term, as it relates to giving an edge on broadcast licenses as discrimination?

MR. SHURBERG: There's no question that it's discrimination.

MR. LEHRER: Who does it discriminate against?

MR. SHURBERG: It discriminates anyone not of color, anyone who is not designated a minority by the FCC. In fact, in this particular case, the supposed minority, in fact, wasn't even legitimate, as we claimed to the court and as we claimed to the FCC.

MR. LEHRER: But you claim that in this case, in your case in Connecticut, that you were discriminated against, is that correct?

MR. SHURBERG: Sure, absolutely. White people were absolutely excluded from invoking the minority distress sale policy, or put another way, white people need not apply because of a policy that on its face excludes people because of the color of their skin.

MR. LEHRER: Now, Mr. Hart, you don't, you don't dispute the fact that this is discrimination, but you think it's justified, is that correct?

MR. HART: It's very slight. I don't really consider it to be discrimination, because look at the way the distress sale policy works. It's a voluntary program opted by the seller of the license. He can sell it to a minority or he can go through the Federal Communications hearing process and possibly keep the license, himself. He makes that choice. The private industry representative, the licensee makes the choice voluntarily whether to sell to a minority or not. That's very important. It's not a setaside. You're not imposing a burden on the industry or on minorities or on non- minorities. If there is any curtailment of rights, it's very slight. Mr. Shurberg could have applied for the license before Astroline bought it. He chose not to. More importantly, he can apply for it in 1988, and he did not, against Astroline as a license renewal. As you know, Jim, the licenses come up every seven years, so he can apply again seven years later, so he has a regular opportunity to compete for this license, and everybody does. That's part of our system of government regulation of broadcasting.

MR. LEHRER: He's right about that, is he, Mr. Shurberg?

MR. SHURBERG: Well, not actually. Again, any discrimination, I don't care if you want to call it slight or preferential treatment, plus factors as opposed to exclusionary, what you're saying is that all the legitimate goals of the civil rights leaders in the past which fought for a color blind society are erased. What they're looking for is black racism or minority racism. What they're trying to say is that, look, it's really not too bad, not too many people are going to fight it, if they do, it goes to the Supreme Court, it takes six years, it has nice components to it and therefore, we'll kind of fuzz over in the legal analysis, and in the final result, people will generally find it acceptable.

MR. LEHRER: Black racism, Mr. Hart?

MR. HART: Oh, no way, not at all. It benefits non-minorities more than it does minorities. As the National Bar Association pointed out in their brief, there are a number of reasons why this policy is in support of the public interest. Non-minorities benefit a great deal from the distress sale policy and the comparative enhancement.

MR. LEHRER: All right. We have to leave it there. Gentlemen, thank you both very much. We'll see what the court does.

MR. SHURBERG: Thank you.

MR. HART: Thank you. ESSAY - SPEAKING OF THE DEVIL

MR. MacNeil: We close tonight with an essay. Clarence Page, columnist for the Chicago Tribune, has some devilish thoughts.

MR. PAGE: Who's responsible for Fidel Castro's refusal to let his people vote, for Jim Baker fleecing his flock, for Rob Lowe putting himself into one too many movies, or the Trumps constantly being the Trumps? How do you explain all the mischief, deceit and cruelty in the world? Who's to blame?

ACTOR: ["Saturday Night Live" Segment] Who could it be? Who could it be? I just can't imagine who. Couldit be Satan?

MR. PAGE: Could it be Satan? Don't laugh. He's not just the concern of prim little church ladies anymore. After years of de- emphasis and downgrading buffeted by a secular society and Vatican II, the devil is making a comeback. New York's John Cardinal O'Connor recently blamed the devil for a rise in diabolically instigated violence in the land. In fact, during the past year, he said, priests in the New York archdiocese had performed two successful exorcisms. Exorcism? The mere mention of the word brings to mind horrific scenes, violent and depraved acts like those portrayed in the Hollywood movie "The Exorcist". [SCENE FROM "THE EXORCIST"]

MR. PAGE: Or for that matter, on stage at some heavy metal rock concerts like those of Ozzie Osborn, whom the cardinal signaled out for a special condemnation. The cardinal raised eyebrows by raising the devil. What the devil is he doing, bemused observers asked. Whatever possessed him? But as it turns out, Cardinal O'Connor was only following church doctrine. After years of leaving references to Satan out of baptism and priesthood rituals, he never quite disappeared and new versions of canon law leave him in. In our secular society, the devil is showing up in what's being called pop Satanism in youthful babblings in the occult, in the beams of popular rock groups like Black Sabbath or In Excess. Are they singing to the devil inside of us all? [ROCK GROUP SINGING]

MR. PAGE: Satan is showing up in the more serious and sometimes deadly Satanic youth cults, and the suspect in the fire that killed 87 people in an after hours New York social club this week said he lit the fire because the devil got into him. We shouldn't be surprised. Satan's presence in human history is too strong to be easily dismissed. Since mid-evil times he has gone by many names, Satan, Old Nick, Beelzebub, Lucifer, Old Scratch, The Bad Man. But by whatever name, he's always been there, just as humanity has looked to a higher deity, a force of goodness and order and spirituality, so have we looked to the opposite force, the embodiment of evil, and chaos and the mundane. The Ayatollah Khomeini called America the great Satan. Louis Farrakhan refers to whites as wicked like devils. Pres. Reagan called the Soviets the evil empire. Jim and Tammy Bakker blamed their troubles on the devil's deceptions. Demonic metaphors provide powerful symbols for today's leaders, but you must be careful where you use them. Speak of the devil in the wrong company and someone might think you're daft, eccentric, possessed. [SCENE FROM "THE LEGEND"]

MR. PAGE: The devil you say? Even in a literal and scientific age, there is still room for symbols powerful enough to help us understand the great forces that rock the world and change our lives. It is in the battle between the forces of good and evil, of God and the devil, that we find the essential moral questions of humankind, questions that persist in our modern age, and in our endless search for answers, as we try to keep the devil's work from becoming our own. I'm Clarence Page. ESSAY

MR. LEHRER: Again, the major stories of this Wednesday, British and American authorities uncovered an alleged plot to smuggle nuclear detonators into Iraq and an American missionary was murdered in Lebanon. Good night, Robin.

MR. MacNeil: Good night, Jim. That's the Newshour tonight and we'll be back tomorrow night. I'm Robert MacNeil. Good night.