The MacNeil/Lehrer NewsHour

INTRO

JIM LEHRER: Good evening. The Senate went along with the House and the President on Lebanon today, and the Beirut airport reopened for business after a month's closedown because of war. But as things continue to look up on Lebanon, they began to look down on U.S. relations with the Soviet Union, particularly following yesterday's blast at President Reagan by Soviet leader Yuri Andropov. Our coverage of both issues tonight includes the French perspective on both from the foreign minister of France, Claude Cheysson. Robin?

ROBERT MacNEIL: Here at home the pilots of Continental Airlines, which has declared bankruptcy, voted to go on strike to protest a pay cut. We examine the plight of thousands of Americans with money invested in another bankrupt compay, Baldwin United, after one of the biggest financial collapses in American history. And we drop in on a business success, the Broadway musical that tonight becomes the longest-running show ever, A Chorus Line.New Cold War

LEHRER: The Senate passed the War Powers compromise on Lebanon today. The vote was 54 to 46, and followed similar action by a similar margin in the House yesterday. It will now go to President Reagan, who has said he will sign it. The compromise originally struck between the White House and the House Democratic leadership gives Mr. Reagan 18 months to keep the Marines in Lebanon as long as their role and number aren't substantially increased. Any major changes would require his going back to Congress for approval. Today's Senate action came amidst further concrete signs the four-day ceasefire in Lebanon was sticking. A Lebanese jetliner landed at the Beirut airport this morning on a flight from Saudi Arabia. The airport had been closed since fighting broke out a month ago, and the reopening was a triumph for the four-man ceasefire committee, which negotiated a deal with the Druse militia to permit it. The Druse had objected to opening the airport on grounds it would be used by Lebanese army airplanes.One of the key negotiators of the overall ceasefire was Prince Bandar of Saudi Arabia. He is in Washington now to assume his new position as the Saudi ambassador to the U.S. This morning he met with President Reagan at the White House, and afterwards spoke to reporters about Lebanese President Amin Gemayel and his role in the still fragile situation there.

Prince BANDAR, Saudi Ambassador to the U.S.: We have confidence in President Gemayel. I personally have confidence in him, and so does my country, that he will try to be a president for all of Lebanon. I really think he's trying hard, just the environment does not work for it. The Lebanese problems are very deep. Let's not minimize the Lebanese Lebanese [sic] problems. And he believes in equal government.He believes in readjusting the social situation in Lebanon. We all will help him in that. And he was sincere when he told me that. I think he will surprise everybody if we give him the right environment.

LEHRER: The Saudi diplomat also said he did not think U.N. forces should enforce the ceasefire in Lebanon, a view shared by the Syrians. Prince Bandar commented that U.N. troops are most effective when used to separate nations, not different factions of the same nation, as in Lebanon. Robin?

MacNEIL: The U.S. and other Western governments today expressed disappointment at the sharp rebuff given President Reagan on arms control yesterday by Soviet leader Yuri Andropov. In a major statement spread all over the front pages of today's Moscow newspapers, Andropov called U.S. policies shortsighted, cynical and suicidal. British Prime Minister Margaret Thatcher, who is visiting Washington, said the Andropov response was very discouraging and disappointing, but she told reporters, after talks with President Reagan, she still hoped for useful negotiations in Geneva.

MARGARET THATCHER, British Prime Minister: It takes two to negotiate, and the President has constantly put forward detailed proposals to the Soviet Union, such is the anxiety of the West genuinely to negotiate disarmament reductions.He has put forward the latest proposals; Mr. Andropov has replied. I hope now that the proposals will be seriously discussed by the Soviet Union at the negotiating table. If they are not successful in reaching zero option, the cruise and Pershing missiles will be deployed by the end of this year. Our nerve is being tested. We must not falter now. That should not be the end of the negotiations. I hope, and it is my earnest belief that they should continue so that, although we were not able to negotiate zero option, we should be able to negotiate the deployment of a lesser number of weapons and the full [unintelligible], provided, again, the Soviets will genuinely negotiate on balance.

MacNEIL: In several Washington appearances, at a Senate Foreign Relations Committee breakfast and a news conference, Mrs. Thatcher made clear that Britain firmly supports the NATO decision to deploy medium-range missiles in Europe this winter if there is no agreement in Geneva. Jim?

LEHRER: Former Secretary of State Henry Kissinger also had something to say today about U.S.-Soviet relations. He said the two superpowers may be headed toward a prolonged period of cooling relations. The principal architect of the Nixon administration's detente policy of eased relations with the Soviets blamed the current problem on the Soviet leadership.

HENRY KISSINGER, central American Commission: I am afraid that the -- largely the Soviet conduct since the airplane shoot-down has shown such rigidities and such suspicions that I'm beginning to wonder whether we may not get into a prolonged period of cooling relations that it may be harder to break out of than I had originally thought. But I think the Soviet handling of the shoot-down exposed rigidities in their system, and it showed a predominance of the military that is quite unusual, and it's never happened before.

LEHRER: Not everyone sees the current state of U.S.-Soviet affairs the same way as Henry Kissinger. A different view comes from Marshall Shulman, who served as a special adviser on Soviet affairs to Secretary of State Vance in the Carter administration. He is director of the W. Averell Harriman Institute for Advanced Study of the Soviet Union at Columbia University in New York City. Dr. Shulman, first, do you agree with the Kissinger prognosis of a prolonged cooling of the U.S.-Soviet relationship?

MARSHALL SHULMAN: Yes, I do, Jim, but it's not anything new. I think this has been the case for quite a long time.

LEHRER: You don't think -- do you agree with Kissinger when he says it was caused by rigidity and suspicion of the Soviet leadership following the shooting down of the airliner?

Mr. SHULMAN: I think it began long before the shooting down of the airliner. Our relations have been in dreadful shape for several years. Now, the shooting down of the airliner did, as he said, show the rigidities, the suspicion, the predominance of the military. I think that's quite correct. But that is not anything new. He may be surprised by it, but he shouldn't have been.

LEHRER: Why shouldn't he have been?

Mr. SHULMAN: It has been the case in recent years that the military have had an increasing influence on military matters in the Soviet Union, and that the Party, in fact, has had less oversight over these matters. And that includes problems that are treated as military but that have political consequences, including Afghanistan and including the shooting down of the Korean plane.

LEHRER: This cooling relationship, is it solely the Soviets' fault, or do you feel that the United States has made its contributions as well?

Mr. SHULMAN: Well, my feeling is that both countries have handled matters very badly. They've been -- I think neither one has shown great rationality in handling the nuclear and military competition. What is interesting about this Andropov statement is not its homily that he gives us on morality or on militarism. Those are scarcely subjects that he's entitled to lecture us about. But it is interesting as an indication of the state of mind of the Soviet leadership, and that should worry us because it has something to say about U.S. policy having effects that are different from what the U.S. expects of them.

LEHRER: Flesh that out. Tell me what you mean. I mean, how does that statement -- what does that statement say to you?

Mr. SHULMAN: Jim, what is interesting about the statement to me is he is saying a little bit like what Margaret Thatcher just said. Our nerves are being tested. He said the U.S. administration thinks that we can be pushed around, that pressure tactics will make us make concessions, and he said the U.S. is mistaken in thinking so. The net effect of what the U.S. di doing now -- planning to build the MX system that will destabilize things, planning the deployments in Europe which will achieve the military balance to which we will react. He said all these, instead of making us more pliant, as the U.S. seems to think, it is going to harden our policy, and we're going to take steps in response to them. He's saying that relations really have broken down. Communications have broken down. And that this is going to lead to a much more dangerous situation in the future.

LEHRER: Do you agree with his assessment?

Mr. SHULMAN: I think what he says is right.

LEHRER: Is dangerous the same word you would use?

Mr. SHULMAN: Yes, I would. One reason why it's dangerous -- two reasons, Jim. One is that the nuclear military competition is going to be a lot more difficult in the future than it has been. We'll both be deploying new systems that are less stable and less verifiable than the systems we now have. And, secondly, because the relations, the communications between the two countries are so bad the risk of miscalculation round local crisis areas like the Middle East, the Persian Gulf is a lot more serious.

LEHRER: Thank you. Robin?

MacNEIL: Now another view from a former State Department official who worked closely with Henry Kissinger.William Hyland is former director of intelligence at the State Department and a deputy assistant on national security to President Nixon. Mr. Hyland is now a senior fellow at the Carnegie Endowment for International Peace, and will soon become editor of Foreign Affairs magazine. Mr. Hyland, how do you think we should read the Andropov response?

WILLIAM HYLAND: I think I agree it's a tough speech. It shows the rigidity, as Henry Kissinger said. I do not think it is solely because of the aircraft incident. We have been in a period, I think, with the Soviet Union of deteriorating relations since the invasion of Afghanistan. What is discouraging, as Mrs. Thatcher said, is that over the summer it seemed there might be some possibility for improvement. There were release of some dissidents from our embassy in Moscow. There was the signing of the grain agreement. There was some speculation of a summit meeting, possible breakthroughs in arms control, some concessions on economics by the United States in selling pipe-laying equipment. And so this aircraft incident, the Korean Air Line incident, really explodes what seemed to be a slight improvement. But I would agree that the long-term trend has not been favorable. But I would, I think, go back to the Carter period when, to the surprise of some, including President Carter, but to the discouragement of all of us, the Soviet Union did invade Afghanistan, leading to the withdrawal of the SALT treaty and a lot of consequences. So I'm inclined to see this as an episode, but nevertheless a very serious one.

MacNEIL: Reuters News Agency, reporting from Moscow, quotes Western diplomats there as seeing two factors in the Andropov thing. One is anger over the Korean airliner incident and the response of the United States, and the other one is that the Kremlin now accepts the inevitability of the deployment of the Pershing missiles on which Andropov had staked so much of his own new leadership. How does that sound to you?

Mr. HYLAND: I think that -- the second part is quite right, that they must now realize that there is almost nothing that could happen on the negotiating front that would forestall the deployment of some new American missiles. As for Soviet anger, while the statement has that tone, I think we must realize that the Soviet Union has been on the defensive, that they have been caught in a number of very bad misstatements and outright lies, that they have been condemned, and they feel, I think, that they now have to fight back. But what was rather unusual, I thought, was the long silence from Andropov. This is his first major statement in almost four weeks since that incident.So that he came back fighting, in effect, and that's not too surprising because I do think they have felt that they were on the defensive.

MacNEIL: Do you share Margaret Thatcher's hope that now that both sides have had their say, as she put it, that useful negotiations really can begin at Geneva, or do you think there's no hope of any agreement at Geneva?

Mr. HYLAND: I think in the short term there is very little hope, if any. I think both sides now are in for a rather prolonged period of cooling, if not a freeze in relations.The next break in those negotiations may be some distance off, perhaps even after the American elections.

MacNEIL: So what's the prognosis? The missiles then are deployed, at least in some quantities, beginning this winter. What does that do to East-west and Soviet-U.S. relations, and how does it go from there?

Mr. HYLAND: Well, I think it worsens them somewhat, but now that the Russians I think realize that there is no real alternative, I think they will not make as much of an issue as they might have. After all, this deployment is going to be spread out over a five-year period. We are just turning one very important corner, and I suspect realistically the Russians Know that there are still opportunities to cut back this deployment if not stop it. And he made -- Andropov made a rather interesting appeal to the peace movement in Europe at the end of his speech.

MacNEIL: Thank you.Jim?

LEHRER: Yes, Dr. Shulman, how do you read that, about what the Soviets may do as a result of the deployment, assuming -- and all indications are -- that deployment of those missiles is going to go ahead this fall?

Mr. SHULMAN: What Andropov is saying, and as a matter of fact what Brezhnev said long before him, was that if these deployments go forward that they are going to deploy other systems that will also be able to target Western Europe and North America.You know, from the Soviet point of view, this is a much bigger event than I think is appreciated in this country. This is -- this deadline coming up in December, even if the numbers are relatively small, as Bill said, is going to be a major development because they will have to do something. They don't want to be seen as weak, as they have said, and they will have to take some measures, deploy some systems. Then in turn we will react to those systems and say the threat is higher. We will then react to them, and I think the relations then will be much more serious as a result.

LEHRER: You see that happening too, Bill Hyland, that we deploy, they deploy, we deploy, they deploy -- the thing just keeps going on then?

Mr. HYLAND: No, I'm inclined not to see an endless cycle. I think that there's one more cycle that will now come. We deploy something, they counter. I agree with Marshall, they will want to show that they are tough. But at that point, in the middle of an American election, I am inclined to think there may be a pause while the Soviets wait to see the results of those elections.

LEHRER: Dr. Shulman, is there anything the administration could or should do about this situation right now that they're not already doing?

Mr. SHULMAN: Yes. Let me go back just a bit if I may, Jim, to one aspect of the Andropov speech that relates to what you said a moment ago. And it relates a bit to what Kissinger said. What Andropov is saying is the time of debates in the Soviet Union about the American administration is over, that if we have had discussions -- and I think they did -- of uncertainty about how to deal with the U.S. administration, about whether it might, for reasons of the election or because of other domestic political considerations, that it might move toward improved relations, how should they deal with it? And my impression is, when I was over there in May-June, was that they were indeed debating that. What he's saying now is, "We don't have any hope anymore that the U.S. is serious about these negotiations. We now think that the U.S. is bent on a crusade, and the purpose of that crusade it to bring down the Soviet system." So the prospects of productive negotiations now, I think, are considerably lower.

LEHRER: Is your analysis of that equally -- is it also that grim, Bill Hyland?

Mr. HYLAND: I would agree with Marshall that the debate in the Soviet Union has probably now ended as a result of the Korean Air Line incident. There is a strong suggestion in his -- in Andropov's speech that that is in fact the case. But I think we ought to bear in mind, at least, that this is similar in some degree to what happened in 1960 with the shoot-down of the U-2 and the collapse of the Eisenhower summit. And after that, when Kennedy came into office, they did resume diplomacy. It wasn't very successful. But my point, I guess, is that I don't think we should read this as a major turning point, that there's still some distance.

LEHRER: Finally, let me ask you, Bill Hyland, what I asked Marshall Shuman a moment ago. Would you use the word dangerous to describe -- I mean, us ordinary folks wondering what this all means, is this a dangerous time or is this just a period of people talking bad to one another, or what? What would you -- how would you describe it?

Mr. HYLAND: I would be reluctant to use dangerous yet. I would say very difficult, which may not be far from dangerous. But I think dangerous implies that we may be moving toward some kind of physical confrontation, and I don't think either side sees it in quite that hue yet.

LEHRER: Gentlement, both of you, thank you very much. Robin?

MacNEIL: For a further look at how the U.S.-Soviet equation is seen in Western Europe, we'll have an interview with French Foreign Minister Claude Cheysson later in the program. We'll be back with domestic news in a moment.

[Video postcard -- Pine Island, New York]

LEHRER: The storm in the U.S. airline industry blew worse today. Union officials voted in Houston this morning to call a pilots' strike against Continental Airlines. Afterward, also in Houston, representatives of union pilots on the nation's 46 major airlines moved toward a decision to call an industry-wide sympathy strike. The president of the national union said the purpose would be to send a message to the government and public that the airlines are in deep financial trouble.

Capt. HENRY DUFFY, president, Airline Pilots Association: If the government does not recognize the plight of this industry, as is evidenced by the Continentals and the Easterns and theBraniffs and the other airlines that are troubled out there, then I think the pilots of this country are willing to do anything up to and including a disruption of service in order to bring their attention to it.

REPORTER: When are you going to get a reaction from the government? How are you going to know their position on this?

Capt. DUFFY: Well, I've been in touch with the leaders of Congress and the administration continually to point this out. As a matter of fact, when we testified at the deregulation hearings in April, we told the industry that this was -- the Congress that this was going to happen. Unfortunately, we have become very good prophets. Exactly what we said was going to happen is happening. The airlines are going down one by one. It's going to affect safety in this industry. We are trying to say stop right now, let's take some action to correct it. It is a government responsibility. It's a matter of public interest. That's where the Congress ought to be involved, and if we have to do something like disrupt service in order to gain attention, then reluctantly we will do it.

LEHRER: After Duffy spoke he went back inside to his executive board meeting. The executive committee did authorize a strike. It will now go to the membership of all the pilots' unions in the country for an up-or-down vote on whether or not to call the national shutdown, which would only last one or two days and would be scheduled with plenty of advance notice. The strike against Continental will go into effect at 3:00 a.m. Eastern time Saturday, and is for the duration. It was called in reaction to the company's weekend decision to seek reorganization in bankruptcy court. Continental resumed flights over some of its routes Tuesday with pilots and other personnel working at drastically reduced wages. A company spokesman said today that the airline will continue to fly because, strike call or not, there were plenty of pilots available. Two other airline developments: financially troubled Republic Airlines announced it had reached an agreement with its union employees for a 15% cut in pay, and the holding company of TWA said it was considering selling off its money-losing airline. Robin? Baldwin -- United Bankruptcy

MacNEIL: Our next major topic tonight is also about business and bankruptcy, in fact, one of the largest financial collapses in American history. On Monday, Baldwin-United filed for bankruptcy. The company that began making pianos more than a century ago had moved in recent years into the insurance business and became a victim of overexpansion.Baldwin-United was selling a type of insurance called the single-premium, deferred annuity. It was a retirement plan and tax shelter. The investor paid the entire premium up front and would get his money back with interest years later, usually on retirement. Brokerage firms sold the annuities as safe, conservative investments, and earned larger than normal commissions. By last May 165,000 policies had been sold with a face value of $3.7 billion. Then Baldwin was submerged in financial troubles and thousand of annuity holders feared they might never get their money back. Now some policy holders are suing the stockbrokers who sold them the annuities. One such suit has been filed by Jim Shook, a Detroit businessman who bought $2 million worth of the Baldwin-United annuities.

JAMES SHOOK, policyholder: My partners and I sold our -- we got into this situation, my partners and I sold our business in 1982, and we had some sums of money to invest into a safe situation. It was our life savings, and we wanted to make sure that it would be safe. That was our main concern.We are engineers and manufacturing people, and we're not experts in the investment field. So we approached -- mainly Ben had approached us through a friend, and we told him of our situation, and he said, "Don't worry about it. We'll check into it for you," and he recommended a whole-life insurance policy through National Investors, which is located in Arkansas, which we found out later is a subsidiary of Baldwin-United. That's how we go into this.

REPORTER: Do you think that you will ever get your money back?

Mr. SHOOK: My partners and I at this time don't think we're going to get any money back. We're so upset and confused because of the -- all the papers and articles on Baldwin-United. Now they've gone bankrupt. Our life savings, our children's college, our retirement, my family, my partner's family. It's all gone. It's completely gone. We don't know anything. There's too many stories, and they've gone bankrupt. We feel it's zero.

MacNEIL: Last May ailing Baldwin-United hired a specialist in reviving troubled companies. He is Victor Palmieri, who masterminded the recovery from bankruptcy of the Penn Central Railroad. Mr. Palmieri, will Mr. Shook and people like him get their money back?

VICTOR PALMIERI: Sure. I think Mr. Shook is understandably apprehensive. There has been so much had news about the company. When I came in it was -- it was truly chaotic. I think I'm satisfied now that the insurance regulators have come up with a plan that in fact is going to get Mr. Shook back not only the principle, not only the amount he invested; it's going to get him back interest on his investment. And he has a chance of getting a market rate of interest on that investment.

MacNEIL: When?

Mr. PALMIERI: The plan calls for a 3 1/2-year work-out, and it's based on the fact that those companies have together -- there are six companies, and together they have $3 billion of readily marketable securities. They also have about $700 million of what are called "affiliate securities," Baldwin-United securities. Now, what's going to happen --

MacNEIL: We should explain that. That's because when Baldwin-United sold these annuities, they put $3 billion, am I right, of the proceeds, as insurance companies normally do, into other securities, and they put $700 million into -- invested in their own -- in their own activities.

Mr. PALMIERI: That's correct. That's correct. And the fact is that if all the policyholders were to demand all their money back now, there would be a difficulty because of that $700 million, which is not immediately liquid. But under the plan the regulators had developed, as I've said, it's a fact that the policyholders really will get back their investment. Mr. Shook should be listening. I hope he's hearing this. And not only will they get that, but the plan will get them at least 5 1/2% on their investment, and to the extent that those affiliate securities are revived through the bankruptcy of Baldwin-United, through the plan that will be admininstered there by the court, they could get up to a full market rate of interest.

MacNEIL: Suppose somebody like Mr. Shook says, "I feel so burned and I'm so nervous I just don't trust what Baldwin-United says, even under its new management. I want my money now?" What happens?

Mr. PALMIERI: Well, as I said, if everybody said they wanted their money now, there would be a problem because the affiliate securities are not readily marketable. They have to be worked out. They have to be liquified over a period of time. But even without those securities, under the plan the regulators have come up with in Arkansas and Indiana, Mr. Shook and all the other policyholders are going to get back their principle plus a minimum rate of interest.At a minimum that are going to get that back. So that there is a lot of confusion out in the marketplace now. A lot of people, feeling understandably that they are going to lose their whole investment. That really is not true. The regulators have come up with a good plan, and we only went into bankruptcy after it became absolutely clear that they had that plan. We've been buying time waiting for the regulators to announce their plan. They've announced it. We have now taken the company into bankruptcy, and the creditors understand. The unsecured creditors understand that they're not going to get paid off until the policyholders get paid off. That's been my objective from the start, and I believe we're going to accomplish that objective.

MacNEIL: Thank you. Jim?

LEHRER: Mr. Shook, the Detroit businessman who is suing over the Baldwin-United bankruptcy, is represented in the case by Al Addis, an attorney in Troy, Michigan. He is with us tonight from public station WTVS in Detroit. Mr. Addis, you just heard that if Mr. Shook will just be patient he will get his money back. Does that make you feel better?

AL ADDIS: Well, I'm sure that it'll make Mr. Shook and his two partners feel better and all the other annuity holders throughout the United States that find themselves in this extremely precarious position, but I think Mr. Palmieri is asking a great deal of these people. They first invested in these single-premium annuities, or whole-life insurance policies, with the idea that they were an extremely safe investment and that that was told to them time and time again. Obviously they are somewhat concerned that that's not the case, that they have heard all kinds of reports. They have already lost substantial money, and so far my clients have not been advised of any reorganization plan or official reorganization plan, and we'd have to see it to see what that entails.

LEHRER: Well, what do you think of what Mr. Palmieri just laid out: it would take 3 1/2 years, I guess that's about 42 months, and not only would -- according to Mr. Palmieri, not only would Mr. Shook get his money back, he would also get some profit or some interest back. Does that sound good?

Mr. ADDIS: Well, it sounds better than anything I have heard, but then again, and in all respect to Mr. Palmieri, who comes into this thing after the tragedy has occurred, I would not expect him to say much different --

LEHRER: You don't believe it, right?

Mr. ADDIS: I do not believe it.

LEHRER: Why not?

Mr. ADDIS: I don't believe it because the research that we have done when our client's plight first came to our view indicates that many of the assets held by Baldwin-United may be overvalued, and many of those assets were those held by those insurance companies. I think that 100% in 3 1/2 years would be wonderful, but our research and the people that we have talked to do not back that up.

LEHRER: Now, you are suing -- you, Mr. Shook and his partners, and you represent them, are suing not Baldwin-United, but you're suing some stockbrokers, correct?

Mr. ADDIS: That is correct.

LEHRER: Why? Why the stockbrokers?

Mr. ADDIS: We have sued the stockbrokers on the theory that they are involved in the sale of securities, insurance policies or annuities, and there'll probably be a legal battle over just exactly what these things are. But our theory is that they owed a duty to investigate more fully the condition of Baldwin-United and just how secure these investments were before putting their people into them. After that, information was available quite some time ago -- two stock brokerages, and on the financial street, if you will -- suggesting that maybe Baldwin-United was not such a safe investment for these people or these insurance companies. We think at that time they had a duty not to continue to tell them how safe they were, but to tell them to get out as fast as they could and protect, in this case, what they had worked for all their lives.

LEHRER: Is it your position that your clients are victims of fraud, victims of mismanagement, victims of bad times, or what?

Mr. ADDIS: I think we're going to have to discover during the discovery process of the lawsuit just what this amounts to. We have made allegations in our lawsuit that charge negligence, that charge conspiracy, that suggest that there may have been some fraud involved. And we're going to look into that before we make any wild accusations, but I think it's going to be an interesting discovery process because it is somewhat surprising to me and, I'm sure, to the people who bought this that something that was sold to them so strongly as so safe, almost guaranteed, or guaranteed, in some cases, has literally evaporated on them, and now they're asked to wait and hold their breath and hope for the best.

LEHRER: Thank you. Robin?

MacNEIL: Mr. Palmieri, first of all, Mr. Addis doesn't believe you because he says his research shows that many of Baldwin-United's assets that you mentioned are overvalued.

Mr. PALMIERI: Mr. Addis is confused. The point is that under the plan developed by the regulators, and incidentally, he doesn't have to believe me. He can believe the actuary, Stanley Tulin, of Philadelphia, probably one of the most distinguished actuaries in the country, will tell him that under that plan, without resort to Baldwin securities at all, they're going to get their investment back simply by virtue of the re-investment of the $3 billion in marketable securities they have. So he's confused about that, plus all interest credited to their account before the companies went into rehabilitation -- that's July 13 of this year -- will in fact be returned to them under the plan.

MacNEIL: Are you saying that you've got $3 billion that you can invest.You don't have $3.7 billion, but if you invest the $3 billion for 42 months or thereabouts you'll have the equivalent of $3.7 --

Mr. PALMIERI: Exactly. Exactly.

MacNEIL: Does that satisfy you, Mr. Addis?

Mr. ADDIS: Well, I think you have to understand that my clients and the other investors similarly situated in fact invested this money expecting a rate of 13%, and 12% at the absolute least. Now they're told if they wait five years, at which time I assume they can't touch any of their principle, which of course is grossly unfair and puts them in a very precarious position -- now they're told that if they wait they might see 5 1/2%. And I think you can understand that after everything that's happened, they really don't choose to believe that.

MacNEIL: Let me go to Mr. Addis' other point. Do you believe, Mr. Palmieri, as somebody wasn't running the company when it got into this trouble, that the stockbrokers who were selling these annuities had a duty to investigate the economic health of Baldwin-United more than they did?

Mr. PALMIERI: Well, it's not one of my jobs to sit as a court of inquiry or a jury in this matter. My job is to clear up confusion, and Mr. Addis is badly confused. And I think it must cause his client a lot of apprehension. For instance, under the plan the regulators have announced, there will be what's called a policy loan option. People who badly need their money, or want 75% of their money, can take out a policy loan. They will have a very advantageous policy loan. The interest rate on it net will be 7%. So all policyholders under the option announced by Arkansas and Indiana will be able to draw out 75% on a policy loan. They'll be able to annuitize at another rate, and in fact I believe -- I believe that they're going to get not simply the minimum rates that have been announced. In fact, what's been promised is a market rate.The stockholders and the creditors or Baldwin-United really can get nothing -- the unsecured creditors can get nothing until these policyholders have recovered a market rate of interest on their investment throughout the time of the plan, which is 42 months. So I'm sure if Mr. Addis will give me a call I can clear up the problem. I think -- I think his client will feel a lot better when he understands what these regulators have done, because they have a good plan, and these policyholders come first.

MacNEIL: We're going to leave it to that phone call, Mr. Addis, because we have to end this here. But we'll be picking the subject up later. Jim?

Mr. ADDIS: I'll be sure to call.

MacNEIL: Thank you.

LEHRER: Three brief updates. That 12-year-old girl in Tennessee will continue to receive cancer treatments, despite her father's objection on religious grounds. The Tennessee Supreme Court today refused to hear an appeal of a lower court ruling last week in Knoxville. The judge there ordered the girl to a Knoxville hospital for treatment of a tumor on her leg. Her father, who believes only God can heal the sick, indicated he may now take his appeal to the U.S. Supreme Court. Also, on the James Watt matter, declared closed yesterday by the White House, today a conservative Republican congressman said President Reagan and his aides are deluding themselves. Newt Gingrich of Georgia held a news conference to say he had written a letter to Mr. Reagan deploring the Interior Secretary's saying a commission was made up of "a black, a woman, two Jews and a cripple." And he predicted anti-Watt resolutions now before the House and Senate will pass.

Rep. NEWT GINGRICH, (R) Georgia: It is incredibly destructive for the Republican Party and its president to be seen as accepting behavior which implies the legitimate discrimination against millions of Americans, and which implies a language and attitude which are destructive of millions of Americans.And, quite candidly, in the long run to not fire Mr. Watt is to accept that behavior. People will not understand the idea that you can engage in this kind of conversation as a member of the Cabinet and all that happens is you get a letter than says, "Gee, you shouldn't do that in the future." People expect action, and I think ultimately the person they judge is not the Secretary of the Interior; it is the President of the United States.

LEHRER: And a year ago this week one of our film crews was in southwest Minnesota on a farm foreclosure story. They were there near the town of Westbrook reporting the anger of farmers facing the takeover of their farms by banks holding mortgages, mortgages on which payments were delinquent. Local farmers joined together to plan a fight against banks that were threatening to foreclose.

SPEAKER: -- and take that hard-line stand and say no farmers are going to lose their farm, no farmers are going to lose their equipment, and we're going to make sure that that happens because we're going to go out there like we did the Hansons, make sure nobody bids at the auction. We're going to go out like they've done in Canada, and stop banks from repossessing equipment. And, you know, we're right in doing that because it's not farmers' fault.

LEHRER: Today, just 40 miles away, near the town of Tyler, Minnesota, frustration like that apparently took an ugly tragic turn. Two men, the president and loan officer of a local bank, were shot to death. They had been lured to a nearby farm on which the bank had foreclosed four years ago. Local police launched a massive manhunt for the killers, described as armed and dangerous and driving a white pickup truck. That truck is registered to the former owner of the farm.

And we'll be back in a moment after another of our moving picture postcards.

[Video postcard -- Camden, Maine]

LEHRER: We now go to Henry Kissinger, part II.Earlier we quoted the former secretary of state on U.S.-Soviet relations. Those remarks were made at a Washington news conference originally called to talk about Central America. The point of the press conference was to announce that the Kissinger Commission, the bipartisan panel set up to study U.S. policy in Central America, will travel to the region. The group will spend seven days visiting six countries, including Nicaragua and El Salvador. Kissinger sounded an optimistic note today when he talked about getting the various commission members to agree on recommendations for U.S.-Central America policy.

Mr. KISSINGER: When I took this assignment I thought it was a suicide mission, and I thought the odds of coming to a significant agreement were very low.But, judging the mood of the commission, I'm really very impressed by the genuinely non-partisan way in which it has been approached and the gravity with which people consider the problem. And I'm optimistic that on major areas we will come -- we will achieve -- I think unanimity is really less important than bipartisanship. So I believe that we will have a consensus on major areas of the problem.

LEHRER: Even if the commissioners don't scrap among themselves, they may be close to some fighting. Anti-government guerrillas are carrying on a heavy campaign against government outposts in El Salvador, and rebels are doing the same in Nicaragua. Robin? Claude Cheysson Interview

MacNEIL: This week heads of government and senior officials from many coutnries have been passing through New York for the meeting of the United Nations General Assembly. One country whose views often coincide but sometimes conflict with the United States is France. For a different perspective on U.S.-Soviet arms talks and other current issues, we have the French foreign minister, Claude Cheysson. Mr. Cheysson, how do you read the Andropov robuff to Mr. Reagan yesterday?

CLAUDE CHEYSSON: I think Mrs. Thatcher said it earlier. They are testing our nerves. To me that's obvious. What I've already heard as comments I agree with, so I'll come to one point which wasn't made. It do not understand why the Soviets have decided to change objective just now in their fight to avoid -- to prevent deployment. For three or four months they tried to be as nice, as gentle, as appeasing as possible. They multiplied offers. They were less substantial than they said, but still they were something. And then suddenly they take an attitude as if they had now concluded that it won't work, that they will not prevent deployment through an action of the people. Just think --

MacNEIL: The people in Western Europe.

For. Min. CHEYSSON: Through the people in Western Europe. Just think what a success it would have been to them if deployment had been made impossible by the people themselves in Germany. That would have been still a better success than to have another decision taken by government, and that's what they tried. And the buildup is still going on. Peace movements: 400,000 are going to demonstrate in Bonn and what, and time when they changed too, when they show even to the most convinced pacifist what they are, what tone they can use.I find it difficult to understand.

MacNEIL: You mean through Korean airliner incident?

For. Min. CHEYSSON: Well, about the Korean airliner tragedy. Very interesting that it took them five days before they decided what they would do after the tragedy. For five days undoubtedly they hesitated.Would they try and say, "Too bad, awful"? No. They decided after five days to turn it into a demonstration of their determination. "No one will enter our airspace. That's how we are." The new tone. Why did they do it just now is difficult for me to understand.

MacNEIL: You heard the discussion earlier, and the prognosis for East-West relations. Do you think they are entering a dangerous stage, or is this just a phase that's going to pass and we can enter into constructive discussions with them? What do you think?

For. Min. CHEYSSON: I'm sorry to tell journalists, even a great journalist as you, things don't change overnight. You can't pretend there is something new every week, no. The Soviets haven't changed --

MacNEIL: We'd be out of business if we could, but --

For. Min. CHEYSSON: True. True. There is no more danger today than yesterday; there is no less danger, either. The Soviets know exactly what they do and what they will not do.

MacNEIL: Does France still think that the deployment as agreed by NATO this winter, starting in Germany, Italy and Britain, is correct if there's no agreement in Geneva?

For. Min. CHEYSSON: We do not have to pass judgment. We are an old part in the decision, as you know, but we know its facts. SS-20s are threatening a part of Europe which has no response. This is a fact that no one can deny, that no one can deny. There must be a response. In order that deterrents can work, there must be a balance. If there is imbalance somewhere, then unclear become dangerous. When you have balance, nuclear is not dangerous. Nuclear is then the weapon of peace. That's what we feel. But there must be balance, and there is no balance in the European compartment outside my own country. And, as you know, our nuclear force is not meant to cover Europe. Therefore, response is either option zero or some American missiles, middle-range missiles, to respond the SS-20s.

MacNEIL: Well, thank you. Jim?

LEHRER: Yes, Mr. Cheysson, let's move to Lebanon for a few moments. What is your reading of how fragile that ceasefire is over there?

For. Min. CHEYSSON: Well, we are very pleased that there will be a ceasefire. We are of course gratified that the Lebanese agreed that there be a roundtable where around the president elected by all people all political forces are going to meet, because the first thing to do is that the Lebanese should speak with one voice. We feel, and that's what President Gemayel said on French TV a few days ago, that even opponents to him like Walid Jumblatt are nationalists.

LEHRER: Jumblatt is head of the Druse, right.

For. Min. CHEYSSON: And therefore that they can also contribute to the defense of independence, unity, sovereignty of Lebanon. The starting point was, of course, ceasefire. And the roundtable.

LEHRER: But you think there's a very good chance that the ceasefire will hold so there can be a long-range political solution?

For. Min. CHEYSSON: Well, I dare not say there is a very good chance the ceasefire will hold. As you know, the news today aren't that good. But I hope there will be enough reason, you know, that it should hold, and then, as I have said, that this joint effort between Lebanese will start.

LEHRER: There's been much debate, as you probably know, in this country over how long the U.S. Marines who are members of that international peacekeeping force should stay or be committed to Lebanon. What's the nature and the term of the commitment of your forces to the peacekeeping force?

For. Min. CHEYSSON: I think the answer is very simple. The multinational force was set up a year ago in order to help the Lebanese authorities -- legitimate authorities -- to control Beirut. Thank God the Lebanese army was built up to the point where they can do that themselves. But the multinational force is also the symbol, the physical symbol of our support to the president and the government. Second point, outside Beirut, if something happens, who can help the Lebanese? If these are observers, and I hear there will be observers as a result of the compromise reached in Damascus, there are observers, whom will they call to if something happens? To the multinational force? According to us this is not the proper answer. They should be able to call to the international community, to the United Nations, therefore. This is the reason why we insist so much that these observers should have a direct link, a direct dependence on the United Nations in order that they can provoke, they can trigger a reaction by the international community if something happens due to foreign forces in the rest of Lebanon.

LEHRER: Shortly before the ceasefire you criticized the United States' use of naval gunfire against Druse positions in response to shelling of the U.S. Marines, and then three days later the French launched a bombing raid on similar positions. What was the difference? A lot of Americans didn't understand that.

For. Min. CHEYSSON: I didn't criticize the Americans. I said that direct intervention of American gunfire in support of the Lebanese army didn't seem to me to be the best way to achieve a compromise. But we never criticize the Americans when they use their right of self-defense. At that time already we had said that if we were attacked we would respond. We would answer by fire. And that's what we did when, for the second time, we were the target of firing.

LEHRER: Thank you. Robin?

MacNEIL: The difference was that you construed the U.S. ships firing as firing in support of the Lebanese army and not merely as self-defense for the Marines, whereas your aircraft attack was self-defense of your forces?

For. Min. CHEYSSON: The Americans had already shot before when they had been attacked, and we said nothing about it. This is normal. This is normal for any army, any armed force in the world. But then we read in the press that this gunfire to which I referred was not meant particularly to defend your troops, but to support the Lebanese army in the defense of Suk al Gharb, a village, as you know, out there.

MacNEIL: Let's turn to the U.S. economy, interest rates and the value of the dollar. Prime Minister Thatcher has said coming over here she's very concerned about the state of the U.S. interest rates and their impact on other economies like hers.Do you share that concern? Does France share that concern?

For. Min. CHEYSSON: But of course. I wonder who could not share it, not only for my country, for Britain, but for every country in the world, in particular for the poorest ones. How can there be investment when money available, credits available are automatically drawn to the place where you have the best interest rates, the highest interest rates? What is the kind of investment just now which can guarantee a nominal return of 14%, an actual return of 8 to 9 percent? The high interest rates do, in fact, do make investment far more difficult.

MacNEIL: President Reagan says that U.S. recovery is going to cause interest rates to go down and ultimately to help reduce the deficits which some people believe are driving the interest rates and keeping them up. Does France believe that hope in the U.S. economic recovery alone will solve this problem?

For. Min. CHEYSSON: Well, I wish it were true. President Reagan says it will be; some economists also do. I keep my fingers crossed. But we've heard that for a pretty long time. I remember the first industrialized summit which I attended with President Mitterrand. That was in Ottawa more than two years ago. At that time we heard exactly the same statement, and it was meant to happen in the spring of 1982. So let's hope this time it is true. Personally I have my doubts.

MacNEIL: Mr. Cheysson, thank you. Jim?

LEHRER: Going through the top stories of the day again: the Senate added its approval to the War Powers compromise on Lebanon as the ceasefire on the ground held for the fourth day, and the Beirut airport reopened.Concern over what is called a new and serious chill in U.S.-Soviet relations followed yesterday's strong anti-American statement by Soviet leader Yuri Andropov. And the pilots have called a strike at Continental Airlines. There may also be one, a one-or two-day pilots' union strike, coming up against all major airlines. Robin?

MacNEIL: Before we go tonight, we have a preview of a big party they're throwing on Broadway this evening. It is to celebrate the longest run any show has ever achieved. Tonight that record, previously held by tobacco Road, Life with Father, Fiddler on the Roof, and Grease is broken by A Chorus Line.

[voice-over scenes from the musical] This evening will mark A Chorus Line's 3,389th peformance. Fourteen million people have seen the show on Broadway, and another nine million on American tours. Soon it will have played in 12 countries outside the U.S. They have brought back 350 dancers who've appeared in the show to rehearse for tonight's gala performance. Segments of the show will feature members of the present company, the original company and road companies from the U.S. and overseas. [lyrics to "Hello Twelve, Hello Thirteen, Hello Love"] A Chorus Line was conceived as a tribute to the lives of all the dancers in the American musical theater. Tonight's peformance especially honors the dancers who helped make this musical run for eight years so far. [scenes from the show and lyrics from "One"]

[on camera] Good night, Jim.

LEHRER: Good night, Robin. And we'll see you tomorrow night. I'm Jim Lehrer. Thank you and good night.