The MacNeil/Lehrer NewsHour

16-year-old girls are off-limits, Ohio Congressman David Lucans, Donald Lucans. [intro music] I'm Jim Lehrer. Another round of HUD hearings, an interview with South African black leader Albertina Sisulu, turmoil in the Sudan, and the conclusion of our series on the Hi-Tech Frontier. All tonight on the MacNeil/Lehrer NewsHour. I'm Jim Lara, another round of HUD hearings, an interview with South African black

[intro music] Good evening. Leading the news this Friday, President Bush went to the Iwo Jima memorial to urge support for a constitutional amendment to ban flag-burning. The judge in the Oliver North case refused to declare a mistrial because of defense claims of juror misconduct. General Wojciech Jaruzelski said he would not run for the presidency of Poland. We'll have details in our new summary in a moment. Jim. After the new summary, another session of hearings on the scandal at HUD, U.S. Department of Housing and Urban Development. Then we have a newsmaker interview with Albertina Sisulu, the woman called the grandmother

of the anti-apartheid movement in South Africa, a report on the Sudan, where the military today, seized power from the civilian government, and finally, the conclusion of our series on the hi-tech frontier, a Paul Solman report on biotechnology. Funding for the MacNeil/Lehrer NewsHour is provided by AT&T, combining everything people like about telephones, with everything they expect from computers, to make everything about information easy. AT&T. Additional funding is provided by the John D. and Catherine T. MacArthur Foundation, a catalyst for change. And this station and other public television stations. And the Corporation for Public Broadcasting. President Bush took his campaign for a constitutional amendment banning flag-desecration to the Iwo Jima Memorial today, with the giant World War II sculpture behind him, Mr. Bush told a hastily assembled crowd why he supported the Republican draft of a constitutional amendment.

The language is stark, and it's simple and to the point. The Congress and the states shall have power to prohibit the physical desecration of the flag of the United States. Simple and to the point. This amendment preserves the widest conceivable range of options for free expression. It applies only to the flag, the unique symbol of our nation. Although congressional Democrats have also supported the amendment idea, the communications director of the Democratic National Committee, Mike McCurry, accused the president of using the issue for political purposes. McCurry said he's running for president instead of being president. The heroes of Iwo Jima didn't die so they could become a backdrop for some political photo opportunity. Jim. More came out today on the abuses and misuses at HUD, the Department of Housing and Urban

Development. Today's story was about HUD's co-insurance program for multi-unit housing. Congressman Tom Lantos, who was chairing the HUD hearings in the House, said HUD is losing millions of dollars on the program. There are and were individuals and offices in HUD who flashed caution signs even before the program began. The Inspector General formally cautioned the assistant secretary for housing in 1985 and 1988. Yet the co-insurance program continued with few changes through 1988. And the result has been $671 million in claims spending in the HUD co-insured mortgage program. There will be more claims to come and I'm afraid a lot more tax dollars to go. We will have more on the HUD story right after this news summary. Oliver North will not get a new trial, at least not now. His trial judged this afternoon declined to throw out North's Iran-Contra conviction.

North had asked for the retrial because a juror gave false information in a pretrial questionnaire. The former Reagan National Security Aid will be sentenced next Wednesday. President Bush assured civil rights leaders that he supports affirmative action and minority outreach programs. In a White House ceremony to mark the 25th anniversary of the Civil Rights Act, he called on Congress to reauthorize the U.S. Civil Rights Commission, which was downgraded under the Reagan administration. The president himself was urged today to impose tougher and mandatory economic sanctions on the South African government. The call came from Mrs. Albertina Sisulu, the first anti-apartheid activist to be invited to Washington by an American president. Her husband Walter Sisulu has been in jail for 25 years, with Nelson Mandela and others, for the activities in the banned African National Congress. After seeing Mr. Bush, Mrs. Sisulu said the president had difficulty with the idea of tougher sanctions, but said he would look into it.

We'll have a newsmaker interview with Mrs. Sisulu after the news summary. The African National Congress today rejected reforms of apartheid proposed by F.W. de Klerk, the probable next president of South Africa. There was a military coup in the African nation of the Sudan today. Army forces seized power from the civilian government, a state of emergency was declared, a curfew was ordered, and the parliament and all political parties were suspended. We'll have more on that story after the news summary. The Chinese government did its last bit of purging today of former Communist Party chief Zhao Ziyang. It came during a meeting of the People's Congress, where Zhao was removed from his last government post. The removal was recommended in a letter to the congress by China's senior leader, Deng Xiaoping. It accused Zhao of serious mistakes, apparently referring to his sympathy for the student democracy movement. The governments of Canada and West Germany took sanction action against China today. Canada withdrew support for three development projects in China and put on hold the signings

of several other cooperative agreements. West Germany announced the freezing of $110 million in development aid to China. In South Korea, police stormed a university campus today to break up an anti-government rally. About 5000 students held the rally to protest the government's refusal to let them go to North Korea for a youth festival. Several thousand riot police moved in, firing hundreds of tear gas canisters. The troops chased many of the students through the campus, beating some of them. Some of the students fought back with gasoline, bombs, and iron pipes. At least a dozen people were injured. The Communist leader of Poland said today he would not run for president. General Wojciech Jaruzelski endorsed the present interior minister, for the job. Jaruzelski made the announcement at a meeting of the party's central committee in Warsaw. He had said Wednesday in an Associated Press interview that he would only run for president if Solidarity supported him. Solidarity officials have said they could not support Jaruzelski.

Ohio Congressman Donald Lukens was sentenced to 30 days in jail and fined $500 for having sex with a 16-year-old girl. A judge in Columbus sentenced the 58-year-old Republican to the maximum penalty of 180 days and a $1000 fine, but suspended 150 days and half the fine. The judge also placed Lukens on probation, ordered him to take part in a sexual offender program, and to be tested for sexually transmitted diseases. Four people died and nearly 40 were injured today in an office building fire in Atlanta. The fire broke out on the sixth floor of the ten story building on Peachtree Street, Atlanta's main thoroughfare. Workers inside broke windows to escape the smoke and waited for rescue by firemen. They were evacuated on giant ladders. A number of the injured suffered from smoke inhalation. At least one person jumped to safety. Others were convinced not to jump by people on the street below. There was no word on what caused the fire, but several survivors said there had been

an electrical problem in the building shortly before the fire broke out. And that's it for the news summary. Now it's on to the HUD scandal, South Africa's Albertina Sisulu, trouble in the Sudan, and the biotechnology frontier. First tonight, another update on the ongoing investigation of fraud, mismanagement, and political influence-peddling at the Reagan Department of Housing and Urban Development. Today, the House Government Operation Subcommittee on Employment and Housing turned its attention to another area, the co-insurance of mortgages, a program which may cost taxpayers hundreds of millions of dollars. Here are some extended excerpts from today's hearings, beginning with a description of the co-insurance program from Subcommittee Chairman Tom Lantos. This cooperative mortgage program is known as co-insurance. One of the carrots to attract the mortgage lender to finance multi-unit housing is an

annual fee of 5 percent the lender collects from the project's operating income. The risk is that, if the project defaults on its mortgage, the lender pays about 20 percent of the mortgage, assuming that he's financially capable of doing so. HUD picks up the tab for the remaining 80 percent of the mortgage, or if the lender is incapable, HUD picks up all of it. As early as 1982, when the co-insurance program was being developed, the acting assistant secretary for housing was warned that the program was ripe for abuse, because of its fundamental design, which allows private lenders extraordinary discretion in making their own appraisals and estimates of property value and servicing costs. Mr. Adams, this seems to me to suggest that this theory of shared risk as a prophylactic to abuse failed in some way here.

Now, do you have an understanding about why it failed? In other words, why these particular co-insurers would be willing to get themselves at risk to this extent? I'm not sure that we have specific evidence, Mr. Morrison. We have discussed it among ourselves. As we mentioned earlier, there's a fee up front that they earn, which is an inducement to them in the process, and I think that is probably absent some monitoring and control by the department. Their fee goes up proportionally with the size of the mortgage. Now, if you inflate the value of the mortgage, you can get a higher upfront fee, correct? The federal government's interest, as I understand it, is not in whether or not Landlord X keeps his or her property. We're not in that -- this is not the Small Business Administration. It's the housing program. Our interest is in getting the housing maintained as standard housing, or brought up to that. So our interest is in that part of the loan, which repairs the building.

We then subsidize these loans, and we subsidize them in a way that causes some problems. My question is, why are we subsidizing a loan that would be for 85% of the value of the building, when the repairs might be for 10% of the value of the building? Why do we have any interest in subsidizing a loan greater than the value of the repairs to be done? If the property, as most of these properties are, are already encumbered by debt, and you finance a loan for repairs, that loan, by its very nature, is going to end up being a second mortgage. How much is a second mortgage going to cost over a first mortgage? Second mortgages in the marketplace, traditionally, require a higher rate of interest. By how much would you say? I can't tell you what-- Suppose the federal government were guaranteeing the second mortgage as it is in this case. It would still effectively require a higher rate of interest. By how much? Because, again, we're talking here about federal guarantees, and I would think the normal rules of first and second mortgages would be somewhat changed.

And what we have here is, because people decided we should just go with the normal rules of finance, the normal rules having been set without guarantees, and we're into guarantees, we are subsidizing loans far in excess of what the federal government needs. Let me ask you this: Under this program, then, people could refinance, do the repair, and take several million dollars out of the property. Is there anything to stop them from doing that? The way the program is currently structured, the loan is limited on a refinance to the cost of the refinancing, which includes repair costs, or 70% of value. Okay, now would you answer my question, having said that? That is the answer. No, Mr. Hipps, I asked you a question, which said, is it possible for people to take money out of the building after the refinancing? The answer yes or no? On a 70% of value basis, yes sir. Okay, Ms. Hipps, that's an answer. The first was an evasion. The answer is that we have got a program, which says that in some cases, people can borrow

money to do the repairs, but they can also take some money out. Now Mr. Adams, let me ask you, some of these buildings we have got, where we have got defaults, and where we're going to have to make up the loss, are there any cases where the owner took some money out, and now we're going to have to make up the loan? I don't know, Mr. Frank. Could you find out? Yes, sir. I would appreciate that. Mr. Adams, I want to focus some questions to you. In the discussion that Congressman Frank was having, you can also, under this 70% rule, take, it'd be in a better position to take money out of the project, to do other things with, right? Correct. And so, if you inflate the appraisal, then 70% is a bigger number, it may cover more than the first mortgage, and the repairs, and therefore there may be cash to take home, right? Right. And you also, if you're otherwise subsidized through Section 8, either as a mod rehab project or as an existing Section 8 project, you can jack up the rents and get the federal government

to guarantee you a higher rent stream, too, right? That's why we concluded specifically in the Benton situation, sir. You concluded in Benton situation that they'd actually done that, right? Yes, sir. That they'd actually manipulated the numbers to create for themselves an excessive subsidy. Correct. Now, isn't that criminal conduct? That is presently being investigated, Mr. Morrison. Yeah. I mean, isn't this, isn't it, isn't that just plain stealing? It would appear to represent criminal violation, sir, and it's being investigated. Two mortgage companies that participated in the co-insurance program have been suspended by HUD's new Secretary, Jack Kemp. Other mortgage companies are now under investigation. The co-insurance program has been closed until new regulations are put in place. We go next tonight to a newsmaker interview with Albertina Sisulu.

She is known as the grandmother of the anti-apartheid movement in South Africa. She met with President Bush today at the White House on this, her first trip ever outside Africa. Kwame Holman has more on who she is and why the president saw her. This is a country where there is no honesty, where there is no law, where there is no justice, because if you are doing the right thing, if the government doesn't like it, you are wrong. Albertina Sisulu has been speaking out against apartheid most of her life. She made a name for herself in the 1950s, organizing several major anti-apartheid demonstrations, for which she spent time in jail. Her husband Walter Sisulu has been in jail for the past 25 years. He ran the military wing of the country's main anti-apartheid group, the now outlawed African National Congress, or ANC. He was sentenced to life in prison in 1964, along with the ANC leader best known in the

West, Nelson Mandela. They were convicted of trying to overthrow the government by force. As it did with Mandela, the government has offered to release Mr. Sisulu if he renounces violence as a means to end apartheid. Both men have refused. While Mandela's wife Winnie is better known in the West, in the black townships of South Africa, Albertina Sisulu also is revered as one of the leading matriarchs of the anti-apartheid movement. Five years ago, Mrs. Sisulu was tried on the same charges for which her husband was put away, trying to overthrow the government. She and 15 others were acquitted. Most of the defendants in that trial were members of South Africa's largest anti-apartheid group, the United Democratic Front. It's a coalition of more than 600 community organizations that claims three million members. It was founded in 1983, but banned a year and a half ago under the state of emergency regulations that have been in effect since 1985.

Mrs. Sisulu is one of the organization's presidents. Mrs. Sisulu's children also have been very active in the anti-apartheid movement, most prominently her son, Zwelakhe. He is editor of an anti-apartheid newspaper called The New Nation. He was allowed to spend a year in Boston as a Nieman Fellow, a prestigious journalistic fellowship at Harvard University. Soon after he returned home, he was detained without charge for his role at the newspaper and not released for two years. Mrs. Sisulu has spent much of her life with two bags packed, one at her home, one at her job, ready in case the police arrest her. Her trip here marks the first time the government has allowed her to leave the country. Mrs. Sisulu met today with President Bush at the White House, a session she called a milestone in the fight against apartheid. She urged the President to impose stronger economic sanctions against South Africa. Mrs. Sisulu, welcome.

What was the message that you brought to President Bush today? Well, actually, to be here, I was invited by President Bush to begin with, and apart from that, I had a message to give him. I told him about the problems we are having in South Africa, problems that are of concern to us, especially the parents, because now what is worse is that the government has declared war on children in South Africa. Children are being detained at an age of nine years, and when they are released, they are not allowed to go back to school. And these children are supposed to go and report to the police station twice a day, and they must be at home at about 2 p.m.

Which means now, from 2 p.m. to 6 a.m. the following day, this children are house arrested. And these children are restricted. That is part of their restriction, that they must be reporting to police stations and be a house arrested. Now, that causes, you know, a problem to us, because these children are harassed by the police, and they are afraid of the police. They run away from their homes. And when they are arrested, they are being charged, put back to jail again. So we have got a lot of displaced children, and in the process, the children are dying of poverty. They are hungry, because there is nobody who is looking after the children, when they are displaced. Apart from that, the state of emergency, which has made, you know, thousands of our people to be detained, means, you know, an increased, you know,

problem on the children. The two parents will be detained, leaving the small children alone. Who is going to look after these children? And they suffer, and they are displaced. In fact, in South Africa, there isn't an intact family, men are torn off from their families, by taking men and lock them in hostels, far away from their homes, and they will be away from their homes for a period of about six to five years, a person is working, you know, cannot even take a holiday, because that money for holiday must be sent home to the children. It is causing such-- And you told President Bush this, what you just said, right? Yes, oh yes. What did he say?

Did you see, did it seem to you as if he was hearing this kind of thing for the first time? Was he aware of this? He wasn't aware, according to him. He wasn't aware of this. He knows that there is apartheid in South Africa, but he didn't know the extent apartheid here has gone. What did you ask him? Did you ask him to do something? Is there something you want him to do? Yes, there are so many things we wanted him to do, because apart from the children being detained and tortured whilst they are detained, they come out being mentally confused, and nobody is really to look after these children. And again, the people are restricted in our country. And all we are asking from this government -- because we feel that all what is happening in our country is because of the apartheid laws, which we think are the source of evil --

we want the scrapping of apartheid in our country, the unbanning of our organizations, the release of our leaders who are in jail, especially the political leaders. You will know that Nelson Mandela has been in jail for the last 26 years, and many others, and my husband, and many others. We want the government to release those people, and we want the government to unban ANC, which has got the majority support of the people in our country. That's the African National Congress. African National Congress That was the people's organization. That was the only mouthpiece of the people. Do you believe that the United States, through the President and the Congress of the United

States, has the power to make these changes, the changes that you want? Oh, yes, that's what we wanted the United States President to do, to support us, because we feel that, amongst the weapons we have to fight against apartheid and force our government for a meaningful and peaceful change, is sanctions. We ask the support for the imposition of comprehensive, mandatory sanctions. What did the President say about that? The President didn't commit himself. He said he has got our message. What is your reaction to Mr. De Klerk's new proposal that he made yesterday for a five-year

plan? Mr. De Clerk is eventually going to become, at least in September, it's probably going to become the new state president of South Africa. What's your reaction to his five-year plan? Well, in fact, we, the people of South Africa, who are oppressed by the laws that are supported by de Klerk himself, do not believe and do not want all the packages given us, because that is the extension of apartheid. It is in its worst form now. If we are going to be divided amongst ethnic groupings, we feel that that will cause more violence in our country, because the people are now going to revolt against that. Because all we want is the scrapping of apartheid and have a democratic South Africa and a government that will be elected by the people for the people.

But there doesn't seem to be any inclination -- there wasn't on the part of President Botha, there doesn't seem to be on the part of President de Klerk -- to do these kinds of things. So if they refuse to do it, they refuse to budge, how then do you all accomplish what you want to accomplish, to get rid of apartheid? That's exactly why we are having-- we want the support of the international countries to help us in pressurizing our government, for a peaceful and meaningful change in our country. Has there been any positive change in the last five, six, seven, eight years? Has it gotten any better to be a black person in South Africa than it was? It's worse now. Many people are restricted, as I am here, apart from the 18 years I have been banned and house arrested, I am under restrictions.

Right now, my passport is a restricted passport. I'm only given America in only 31 days to be out of South Africa, which means when I go back home, I go back to my restrictions. And those restrictions are what? What's your life like? My life is that I cannot have more than 10 people at a time. I cannot address any gathering. I cannot give any interview to any journalist. I must be indoors from 5, from 6 p.m. to 6 a.m. Every day? Every day of my life. And I cannot leave the Magisterial District of Johannesburg, until I get the permission from the police. You were granted permission to come to the United States. This is the first time you've been out of your country, isn't it? Ever since I was myself, it's the first time I got out of my country.

Have you, what is your own view as to why the South African government suddenly allowed you to come here, even if it was for 31 days? Well, it's clean, it's because it was the invitation from the President. And de Klerk is coming, I think, in a few weeks as well. Yes. But you believe that the President of the United States, because he wanted you, and he specifically invited you to come, the South African government couldn't say no? No. They couldn't say no to President Bush. And in fact, the coming here of de Klerk. We don't know, because I suppose the Americans are against apartheid. That's what we were given by President Bush, that they want apartheid to be abolished. But the package he gave us this morning of his policy is complete apartheid, you know,

the entrenching of apartheid. I wonder why is he coming here? Because my understanding, if he is going to tour, you know, the international world, he wants more friends, and he wants money to use on these ?pockets? he is going to formulate. This apartheid, a ?pocket? he is formulating. Do you think you will be punished when you go back to South Africa for things you've said here, just like what you've said in this interview? Well, I'm not sure, but because I was invited by Bush, although I wasn't told to come in, say anything against my government, because that is part of my restriction, that I'm not supposed to say anything against my government, but I'm prepared for that.

I've suffered all my years with my children. I've got children in the exile. I've got children in jail. Their father is serving life imprisonment. I've been in and out jail. So to me, to suffer, it does not mean anything if I am telling the truth. And, in fact, it has been my wish that one day I'd get out of South Africa and tell the world what is happening in our South Africa. Mrs. Sisulu, thank you very much for being with us tonight. Thank you very much. We turn next to the Sudan, the African nation, where for the second time in four years a government has been turned out in a coup. Much of that country's instability stems from its division between the Arab and Muslim north and the African and partly Christian south. That division has led to years of civil war and other tragedies, often unnoticed in the West.

Brian Stewart of the CBC Journal was in the Sudan before the coup and prepared this report, which includes his interview with Prime Minister Sadiq al-Mahdi, who was deposed today. Sudan, Africa's largest country, the great divide between Arab and Black Africa, now torn apart by civil war. The civil war is added to other Sudan calamities, which make even the biblical plague seem humdrum. Across vast areas, the desert advances, famines have struck twice in four years. Whole regions are impoverished, the nation near bankrupt. Sudanese sense their country is drifting, like desert sand. And, now, war. Hundreds of thousands are fleeing the bloodshed into Ethiopia.

We follow the army of young orphans forced to flee on their own for months, because slavery has returned along with the war and famine. So much comes crashing together in Sudan -- Islam and Christianity, Black Africa and Arab Africa, ancient tribalism and modern nationalism. Conflicts now involving war and famine. Sudan is a virtual microcosm of Africa today. The strongest current religion, four years ago, one of the world's strictest Islamic dictatorships was overthrown here. A turbulent new democracy took its place. Allahu Akhbar. Allahu Akhbar. But the country's leader, Prime Minister Sadiq al-Mahdi, insists that Sudan will remain Muslim at the core.

We think that the Sudanese experience is the best, that is, to recognize the ideological and political force of Islam, which cannot be denied, at the same time, to recognize the rights of non-Muslims in every way, and to reconcile those. But in the South, the mainly Black Africans are not reconciled. They make up 30% of the country's 22 million and mostly follow Christian or African religions. As Africa's giant, Sudan always prided itself as a bridge between Arab and Black Africa. But civil war has violently split Sudan into north versus south. Most of the south is now in rebel hands. The southerners feel they are fighting religious and political domination by the Arab north. Khartoum, in the north, has concentrated power and benefits unto itself and remain deaf to

the southern complaints. Reforms long promised were never delivered. To prominent southerners such as Bona Malwal, editor of the influential Sudan Times, the south inherited betrayal. I think the root cause of the war is political power. I mean, you know, political power in the country has been centered since the British left the country. They left the administration of the Sudan entirely in the hands of northern Sudanese. I think the British had some idea that the northern Sudanese were not going to be very fair to the southern Sudanese. And, unfortunately, for a reason we can only guess, the British did not see to it that the power is left in a balanced manner in the hands of the whole country. What makes it worse is the neglected south is potentially richer than the north. It has better land, and, in 1980, Chevron struck oil here. But southerners were convinced

the benefits of oil would never flow to them. In 1983, their resentment exploded into guerrilla war. The Sudan People's Liberation Army, or SPLA, demanded new power for the south. Later, Jaafar Nimeiry responded with even harsher Islamic rule. He threw alcohol into the Nile to announce a return to ancient Muslim penalties called Sharia, which included flogging and hand amputations for even minor crimes, imposed also on non-Muslims. He is going to be punished for thirty ?lashes?. widespread resentment led to Nimeiry's overthrow four years ago, but to few real improvements. The democratic government is now impressively open in debate, but it is dominated by

northerners and has failed to reassure the south. Peace talks have floundered. The solution of the government, always, particularly with matters of civil war in the south, has always been more war and more oppression. And more war and more oppression naturally bred more violence. And the war escalated rather than scaling down. So, year after year, with awful predictability, more government troops are sent south, there to suffer defeat after defeat. The rebellion is headed by this man, Colonel John Garang, who's kept his forces winning, despite great misery faced by all southerners. He's pleased now that the United States has cut off military aid to the north. Here he warns some visiting U.S. congressmen that the Libyans have now stepped in to help the north.

We have been bombed by Libyan planes, and we have evidence to this because we have a live Libyan pilot that we captured. Is there a road from here? The congressmen don't doubt the SPLA is winning. As Colonel Garang outlines his liberated zone, he is able to note it's already larger than Texas. The rebels have caught key road and river supply routes, so remaining government garrisons must survive on air supply. Rebel radio carries word of successful ambushes and advances. This is Radio ?SPLA?. The news. Five government soldiers were killed and nine others wounded. And here inside the main government garrison of Juba, these hapless soldiers are still trapped, fearing a bloody end. There's barely room to parade in.

The rebels have them tightly surrounded. The government tries to recruit southerners to fight southerners, but morale is rock bottom. Desertion is common. The army is losing its stomach for the fight. Sudan's military has openly hinted it may overthrow the government unless the unwinnable war is ended. In southern Sudan, the tide of war refugees is rising daily. A shaky and temporary ceasefire has allowed some food into relief centers, but not nearly enough for the estimated two million in need. Juba itself swelters in the very heart of the conflict and lives in terror. It is a dirty war. Both the army and the SPLA have tried to starve each other out, trading giant famines. Many of Juba's 280,000 refugees had food stolen at gunpoint by SPLA rebels. In this war, neither side seems to have cared much about winning popular support.

Instead, famine and brute terror has been used to coerce local populations. People here have seen their lands pillaged time and again by armed bands from both sides. The results have been horrific and have now virtually tripled the entire south. But, in a war of atrocities, many of the worst have been committed by tribal and Arab militias armed by the government. Militias have massacred thousands of southerners, stolen enormous herds of cattle, and even reintroduced slavery of women and children. Militias fan extreme fears. Even some northern hardliners, such as Dr. El-Tourabbi, believe they're dangerous. Isn't this the ultimate nightmare image, that you could get tribal infight, militia- tribal infighting of incredible savagery in the future? Well, that's something that would have to be a reckoned with, because, if the Sudanese army is not reinforced and broadened and well-armed, then the initiative will fall to these local militias, which could turn the Sudan into a very savage scene of conflict.

In blood-curdling times, the voice of the innocent is all the more poignant. A southern refugee named Attendi. [speaking foreign language] I've suffered a lot. All of us have. Most of my family was killed. I've had two children kidnapped before me. The war is horrible, but this sorrow is not for me alone. I'm sure that Arab women have seen their families killed as well. Their sorrow must be as painful as my own. If only this war would stop. Unless the war is stopped, the pace of suffering will quicken. Famine, disease, violence, feed on each other, creating always more victims. Already results of the war are cascading Khartoum itself, like some volcanic overflow.

One million southern refugees now surround the city in appalling shanty towns, left without help or even sanitation. It is a wretched tide that has shocked Khartoum diplomats into putting more pressure on Sudan to end the war. In the case of southern Sudan, there's always the problem of how much information the outside world has. One of the weapons, one of the methods of the Sudan government, has been to try over the years to keep the southern Sudan closed off from the rest of the world. Suddenly, the horror of Sudan threatens to become a scandal. Very late, the UN is trying to race food south to avoid another 100 to 200,000 famine deaths. The deadline was 120,000 tons by now, but only a third of that made it. For Sudan itself, it is now very late.

Many nations have meddled in its currents, the US, Libya, Ethiopia. Now there's fear warring factions could turn it into another Lebanon. Finally tonight, the fifth and last part of our hi-tech series. We look at the technology of the future, biotechnology. Scientists in this country are coming up with some of the most exciting new breakthroughs in biotech, but they're not always having an easy time coming up with money. Paul Solman has our report. In hi-tech communities from Silicon Valley to here in suburban Washington, American amenities await the Japanese. The realty agent's job is to make the man from Mitsubishi happy. This apartment complex has a shot at filling its pricey vacancies with visiting Japanese scientists.

The scientists will get the royal treatment. You can't even fit a frost-free refrigerator into a typical Tokyo apartment. Still, Dr. Noriyoshi Tamura is worried that the counters may be a little high from Mitsubishi families. Especially in the case of their wife, smaller than the... I know. I have heard that the height of this counter is tall. I know. I know. I know. I know. I know. Dr. Tamura is leaving nothing to chance, because he's a man with a mission. In nearby Silver Spring, Maryland, an American company, Digene, has come up with a potentially lucrative new biotechnology, and Dr. Tamura wants it for Japan. In the past year, owners Leon and Floyd Taub have gotten a lot of money from Mitsubishi Petrochemical. In return, Mitsubishi gets 20% of the company, and more importantly, the right to learn some of Digene's technological secrets and take them back to Japan. In Japan, it's very difficult to find creative research.

Digene has already established creative technology in its own labs. So it's easier for us to invest in the technology here in the States and bring it back to Japan to develop. What we're looking at here is a pap smear, and you can see there's many cells present in this pap smear, but there's only a few that contain DNA, but they stand out very clearly. Digene has come up with a new way of diagnosing cervical cancer, which kills 7000 women a year in the U.S., 2000 in Japan. Mitsubishi's money may speed up the process, even help save lives. But, if the Japanese take home the technology, they could dominate yet another key industry. For decades, the U.S. has pioneered new technology only to watch Japan exploit it commercially. Take electronics in general. We developed that industry. As early as 1971, corporate America was putting out propaganda films like this, warning that the U.S. was losing manufacturing jobs to overseas competition.

But they took nearly all the consumer electronics manufacturing 47,000 jobs. Calculators, TVs, VCRs, Japan developed U.S. technology and became the world leader in electronics. The concern is that this same pattern will repeat itself on the next industrial frontier, biotechnology. Biotechnology is a rapidly developing commercial enterprise which promises to save lives, improve farm production, and revolutionize medicine. An infant industry, biotech has already increased the meat in beef cattle, the milk in dairy cows. Its promotional pitch is that it will someday feed and revolutionize the world. And economists Stephen Cohen agrees. Biotech is a technology. It's a way of making lots of things. It's not just a few drugs. It's agriculture. It's pollution cleanups. It's major changes in medical. And, frankly, it's major changes in life and philosophy, much more so than computers.

If you're not on top of it, you can't move ahead. You may find yourself falling woefully behind in agriculture. It's like in the 19th century, if you didn't know how to do steam, you were nowhere. And this is the same thing. Right now, American firms are still ahead in biotech. But the Japanese are poised to take our know-how to market. Digene's cervical cancer test kit, for example. As a matter of fact, in Japan, we don't have any kits like this on the market. So we're thinking about to market as soon as possible before everybody starts. In Japan, consumers love new technology, like biotech. Biotech, an exclusive feature of attack detergent, penetrating the fabric, dissolving microscopic dirt. The power of bio, she's saying, produces surprising whiteness.

But to attack the market in general, Japanese firms still rely on American science. That's why they bankroll innovators like the Taubs and send scientists here to learn from them. When the project goes well and successful, we'd love to send more people here and have more cooperative work. It would be our pleasure for the relationship to continue to grow and become bigger through the years. But is Leon Taub being naive? Let's assume the Japanese will honor their non-compete clause in these test kits. Still, Mitsubishi must want to learn the technology well enough to develop its own new product, which could someday compete directly with Digene That's always a danger, according to biotech expert Aki Yoshikawa. That is a risk involved in licensing or joint venture partnership. You cannot guarantee that your friend today is your friend for 5-10 years from now. You are competing in the marketplace.

That is bottom line in your business. Berkeley, California's Cetus Corporation sees Japanese firms as the competition. Although it's a major multinational player in biotechnology, Cetus has steered clear of granting licenses to the Japanese. A pioneer of interleukin 2, a much publicized cancer treatment, Cetus is now working on a wide range of products. It's burning capital at a rate of $4 million a month. Japan would be an obvious and eager source of capital, but Chief Executive Officer Bob Fildes, an Englishman, thinks that liaisons with the Japanese are too dangerous. Here at Cetus, we really don't encourage that sort of activity. We're very happy to talk to Japanese about potential business deals, but it's done in an office. I don't think it's in our interest to take every group of Japanese businessmen that want to come to the United States and walk them through our research labs and walk them through our production plant and show them our latest technology. I don't think that's in our interest.

Why not? Because we are in a competition. We're in a global competition where the United States is competing with Japan, is competing with Europe, and its-- An analogy really would be the World Series. It's the World Series of who's going to win economically? At the moment, in the World Series of biotechnology, America is still ahead. The betting is that if American companies can raise enough capital here at home, they can stay ahead. And indeed, Cetus has raised half a billion dollars in the stock market. We were criticized for actually raising a large amount of capital we didn't immediately need. We were accused of being a bank. Now people realize that the strategy was a smart one, because when times got mean in the marketplace, we've got the money to see us through. The problem is, the marketplace can get mean in a hurry. America's short-term stock market is often blamed for our high-tech troubles. We're going to stop this frantic market for a moment to explain. These symbols represent firms, and this is HNZ, the Heinz Corporation, whose stock just

sold for 54 and an eighth dollars per share. The problem is that impatient investors focus on these minute-to-minute blips instead of the long-term prospects of the firms themselves. And a company like Cetus can find itself riding a rollercoaster of speculation. And in fact, that's been the story since the day Cetus hit the market. The price drops by two-thirds, then doubles, nose dives, quadruples, investors blowing hot and cold on biotech, the company along for the ride. In Japan, the market can be bumpy, but it plays a much smaller role in providing capital. Long-term loans from banks have been the traditional source of funding. But, in America, new firms depend on the stock market. And when the rollercoaster scares off investors, many young firms go begging. You go to understand a lot of them are really under pressure at the moment. They're running out of money, and they'll turn anywhere to find money to stay alive. And I think the tragedy is that we haven't found ways in this country to provide that

money. If we did, then they wouldn't have to turn the Japanese to help. How are we doing? We're doing okay. So, the traditional bridge loan is going to carry us? Yeah, it'll carry us for another month to two months. Here in Burlingame, California, Hans Ribi and his wife have their last dime tied up in a company called Biocircuits. But entrepreneurs like them find it tough, getting anyone else to invest so much as a penny. They are disturbing proof that America's famous venture capital is increasingly less venturesome. What we have to focus in on here is staying alive until end of July. These days, venture capital funds are as likely to invest in leveraged buyouts, the reorganization of existing companies, as startups like the Ribi's. I can't believe it. It works. Biocircuits has created a truly futuristic product, a bio-chip. Biologically engineered material is layered on a semiconductor microchip.

Apply a sample of blood or tissue, and the chip diagnoses disease instantaneously. While employees labor in the lab, the chief scientist spends his days dialing for dollars. Hans Ribi calling for Fred Adler. Fred Adler is a venture capitalist known for taking risks. But from Hans Ribi, he's not even taking phone calls. Oh, okay. Very good. Thank you. Today, Hans Ribi, one of biotechnology's bright young scientists, has left the lab to make a personal pitch in San Francisco. He's at Arthur Young and Associates, which matches capital, both domestic and foreign, with entrepreneurs like Ribi. The biotech specialist here is Steve ?Burl?. If a big Japanese company comes to you today, will you talk to 'em? Certainly. If it's in the best interest of the company. So you believe there's a way you can play their interest in this technology to your advantage? Well, I feel very strongly that we keep our technology here in the United States.

But if there's the potential to collaborate or associate with a major player, and if that player is from Japan, and it's in the best interest of this company, then I would consider it. To Ribi, the company comes first, the country second. But, given the lack of startup capital, you can't blame the American entrepreneur for selling his technology. Even though Japan has vowed to dominate biotech by the year 2000. Throughout this series, we've contrasted America's short-sightedness to Japan's long-term vision. When we project ahead to the year 2000, we can imagine three very different scenarios. First, America turns it around, competes head-on with the Japanese, and holds its own. Second, America competes and falls back. Finally, there is a third scenario, in which, however haltingly, the Japanese and American economies merge.

After years of exposure, the Japanese succumb to the American dream. Finally secure, the Japanese kick back and take a breather. America, meanwhile, takes a page from Japan's book, working harder and smarter. In this final scenario, the teams in the high tech race would be made up of players from both economies. There would still be secrets in the world of technology, but the current tension between our two countries would ease. A nice surprise for everyone. Wow! Thank you. Thank you. [music] Again, the main stories: President Bush pressed for a constitutional amendment banning desecration of the flag, and Oliver North lost his bid for dismissal of his conviction. Good night, Jim. Good night, Robin. Have a nice weekend. We'll see you on Monday night. I'm Jim Lehrer. Thank you and good night.

Funding for the MacNeil/Lehrer NewsHour is provided by AT&T, combining everything people like about telephones, with everything they expect from computers, to make everything about information easy. AT&T. Additional funding is provided by the John D. and Catherine T. MacArthur Foundation, a catalyst for change, and this station and other public television stations, and the Corporation for Public Broadcasting.