The MacNeil/Lehrer NewsHour

MacNeil/LEHRER NEWSHOUR SHOW #4342 TUESDAY, MAY 26, 1992

MR. LEHRER: Good evening. I'm Jim Lehrer in Washington.

MR. MacNeil: And I'm Robert MacNeil in New York. After the News Summary this Tuesday, we examine the latest shift in administration policy on Haitian refugees. Next, an update report on the fighting between Armenians and Azerbaijanis. Then Correspondent Fred De Sam Lazaro looks at the efforts of Chrysler to help itself and Detroit's inner city. Finally, Benno Schmidt explains why he's leaving the Presidency of Yale to build private schools.NEWS SUMMARY

MR. MacNeil: The Bush administration said today that it will allow genetically engineered food to be sold on supermarket shelves without special safety tests. The policy applies to plants genetically altered with substances already found in other foods, such as proteins, fats, and oils. Foods changed with substances not commonly found in other food will have to pass Food & Drug Administration tests. Vice President Quayle said the policy was part of the President's regulatory reform program. He spoke in Washington.

VICE PRESIDENT QUAYLE: The reforms we announce today will speed up and simplify the process of bringing better agricultural products developed through biotech to consumers, food processors, and farmers. We will ensure that biotech products will receive the same oversight as other products, instead of being hampered by unnecessary regulation. We will not compromise safety one bit. However, as a result of these reforms, the consumer will enjoy better, healthier food products at lower prices.

MR. MacNeil: The policy was immediately attacked by officials at the Environmental Defense Fund. They said it abandons any responsible regulation and treats the entire public like guinea pigs. Consumer advocate Jeremy Rifkin said he and a group of Florida farmers planned legal action to block the new rules. Food industry representatives said they expect genetically engineered produce, like slower spoiling tomatoes, could be on store shelves as early as next year. Jim.

MR. LEHRER: The U.S. Supreme Court said today if Congress approves, states can collect sales tax on mail orders from out of state catalogue companies. It did so on an eight to one vote. Mail order sales nationwide are estimated at $200 billion a year, uncollected taxes on them at from one to three billion a year. Mail order companies have argued the cost of collecting taxes in many different states could drive smaller companies out of business.

MR. MacNeil: Yale University President Benno Schmidt announced his resignation today to head an effort to create a nationwide chain of profit making schools. The venture was unveiled last year by Chris Whittle, whose communications company broadcasts news programs with commercials into school classrooms. The new project would create 1,000 high-tech private schools by the year 2010. Its backers claim they will provide better education at lower cost than comparable public schools. Schmidt has been president of Yale for six years. At a news conference in New Haven, Connecticut, this morning, he spoke about his new mission.

BENNO SCHMIDT, President, Yale University: One of the elements of it will be that the most outstanding minds and talents and organizers and visionaries in the country are going to think about early education, not that they haven't been doing so before, but I hope to be able to organize that in a way that will produce some more creative thinking and some structural reform.

MR. MacNeil: We'll have a conversation with Dr. Schmidt later in the program.

MR. LEHRER: There were Presidential primaries today in Arkansas, Kentucky, and Idaho. President Bush was expected to win all three, and so was Bill Clinton. Undeclared independent candidate Ross Perot will not show up in the voting because none of the states allows write-in votes. Perot resigned as chairman of his data processing company today, taking a possible step toward official candidacy. Republicans supporting abortion rights today asked the party to drop its official opposition to abortion. It happened at a GOP national platform hearing in Salt Lake City. A leader of the Republican pro-choice group said the party's position is out of step with the majority of Americans and hurts Republican candidates. GOP officials have said they do not expect a change in the party's stand on the issue.

MR. MacNeil: Boris Yeltsin today reportedly said he won't run for a second term as President of Russia in 1996. The comment came in response to a question during the visit to Siberia, according to the Russian news agency Itar Tass. Asked about frequent rumors of his resignation, Yeltsin said he would serve out his term no matter what happened. But he added that he had no aspirations to run again. Sec. of State Baker today ended a two-day trip to the former Soviet republic of Georgia by announcing an economic aid package. He met with Georgian president, former Soviet foreign minister Eduard Shevardnadze, and promised more than 500 tons of food and medical supplies. He said more aid would depend on democratic reforms in Georgia, including free elections scheduled for October. There was word today on the fate of the former Soviet Black Sea fleet. The commander of the commonwealth of independent states will be divided between Russia and Ukraine. The two republics have been fighting for months for control of the fleet's nearly 400 ships and submarines. Some of the ships have carried nuclear weapons, but the CIS commander said the last were removed earlier this month.

MR. LEHRER: The new U.S. policy on Haitian refugees was implemented today. Over the weekend, President Bush ordered the Coast Guard to intercept refugee boats at sea and escort them back to Haiti. Refugees can then pursue claims for political asylum through the U.S. embassy there. State Department Spokesman Richard Boucher today defended that policy.

RICHARD BOUCHER, State Department Spokesman: The United States has rescued over 34,000 Haitians at sea. No other nation has done that. We've set up a service at our embassy to allow Haitians to apply for refugee status. That service exists in only three other countries. As of this morning, there were 38 people who have been picked up at sea who've been repatriated. They were taken back this morning. I understand a consular officer from our embassy went on board the ship, told the people who were being repatriated that there was the possibility for in-country processing, and that 17 of those 38 decided that they wanted to make applications, and they were then taken to the embassy. So that is the way we're trying to go.

MR. LEHRER: We'll have more on the Haitian story right after the News Summary. Israeli planes bombed targets in South Lebanon again today. Syrian troops returned fire with anti-aircraft weapons. Police said four Shiite guerrillas were wounded in the raid, Israel's fifth in less than a week. A spokesman for Prime Minister Shamir said the strikes were aimed at guerrillas attacking Israeli targets. He said Israel did not want a military confrontation with Syria. Former U.S. special envoy to the Middle East, Philip Habibe, is dead. He died yesterday of a heart attack while on a private visit to France. Habibe arranged the early meetings between Egyptian President Anwar Sadat and Israeli Prime Minister Menachem Begin that led to the 1978 Camp David Peace Accords. He also headed the U.S. delegation to the 1969 Paris Peace Talks, which ended U.S. involvement in Vietnam. He was 72 years old.

MR. MacNeil: That's our summary of the news. Now we focus on Haitian refugees, war between Armenians and Azerbaijanis, Chrysler invests in Detroit, and a gamble on private schools. FOCUS - PERSONA NON GRATA

MR. LEHRER: Haiti and its refugees are our lead story tonight. The U.S. government has taken measures to slow down the flow of Haitians into this country. Two congressmen will be here to disagree about those measures after this backgrounder by Charles Krause.

MR. KRAUSE: The latest torrent of refugees from Haiti began in late October. That was about a month after the country's first democratically-elected president, Father Jean Bertrande Aristide, was overthrown by a military coup. In response, the U.S. and other members of the Organization of American States imposed a trade embargo and took other measures to restore Aristide to power, but to no avail. The military still rules Haiti. As economic and political conditions worsened on the island, the response of more and more Haitians was to flee in rickety boats, risking hurricanes and shark infested waters in a desperate attempt to reach American soil. To date, the U.S. Coast Guard has picked up 34,000 refugees from the high seas, taking them to Guantanamo Bay, a U.S. military outpost in Cuba. The Haitians say their country, the poorest in the Western hemisphere, has now become a land of wanton violence and military lawlessness.

JEAN SMITH, Haitian Refugee: I leave Haiti just because I saw them -- they don't respect nobody. They just come in and shooting, you know, shooting to the others. You know, they don't care who you are. They just come to your house if they know that, you know, you've got some little money. They just come in, you know, grab you, kill you, and get the money and run away. Some of them people if they know that you voted to ousted, soon they know that, they just come and get you to your house.

MR. KRAUSE: Most of the Haitians are seeking political asylum in the United States, but the Bush administration maintains they're economic, not political, refugees, and, therefore, not qualified to be admitted to this country. The U.S. courts have upheld the administration's position. As a result, some 14,000 of the original refugees have been repatriated to Haiti. But more than 12,000 remain in Guantanamo, living in overcrowded conditions, waiting to be screened or transferred to the mainland. U.S. military authorities now claim there's no room for more Haitians, that Guantanamo is currently filled to capacity. As a result, the Coast Guard announced last Thursday that it would no longer intercept refugee boats unless they were in danger of seeking. That set off a storm of protest in the United States. Then on Sunday, President Bush announced the boats would be intercepted after all, but that those aboard would be repatriated directly to Haiti. Advocates for the Haitian refugees say the administration's position is unfair and hypocritical. Cheryl Little is an attorney with the Haitian Refugee Center in Miami.

CHERYL LITTLE, Haitian Refugee Center: In South Florida, we've accepted tens of thousands of Cubans in a matter of months, 30,000 Nicaraguans in one month, and yet, we've continually worked to keep Haitians out of this country. And I'm talking about Haitians now, you know, fleeing a country whose government we refuse to recognize. We refer to it as a pariah government. You know, we've warned all U.S. citizens to leave Haiti. We've got all non- emergency personnel out of there. We have enforced a strict trade embargo. I mean, it just -- it's incomprehensible to me, you know, that we refuse to recognize the government there and recognize it as a dangerous situation and yet, label the Haitians as economic refugees and claim there's no reason for us to open our arms to them at this time.

MR. KRAUSE: Yesterday, President Bush defended his administration's new policy, saying that Haitians can now request political asylum at the U.S. embassy in Port Au Prince, but administration critics say that's unlikely.

MR. LEHRER: Now we get two congressional views on what to do about the Haitian refugee problems. Congressman E. Clay Shaw, Republican, represents a Florida district that is a major entry point to the United States for many Haitian refugees. He joins us tonight from Miami. Congressman John Conyers, Democrat of Michigan, has held several hearings on Haiti policy as chairman of the House Government Operations Committee. Congressman Conyers, you called the administration's position on the Haitians a policy of drowning. How is it that?

REP. CONYERS: Well, what we've done now is take a bad policy which was compounded by no strategy to restore the democratic President, President, Aristide, the first duly elected democratic President in the history of Haiti, and now we've attached this barbarian notion that we're going to now suspend our immigration laws and the Geneva Treaty, which we have ratified the international law on immigration policy, that we will not only not give them fair treatment when they're picked up, but we're not going to pick them up, we're not going to let them stay, we're going to turn them back, as we did the Jews in 1939, when they were seeking asylum from Hitler, we refused to open our doors to them. And this is the second time this has ever happened, in 1939 and now.

MR. LEHRER: But a Haitian can go to the U.S. embassy in Port Au Prince and apply for entry to the United States.

REP. CONYERS: Well, if they can, it's a wasted effort, because they know that unless they get out of there, first of all, that's highly unrecommended in terms of the terrorist military Junta that's running the place. As a matter of fact, when you are repatriated back, you are considered to be a treasonous person.

MR. LEHRER: And they're in danger, their lives are in danger?

REP. CONYERS: They take your photograph, fingerprint you, and the standard operating procedure is that your home is burned down so relatives are asked not to come back. The other part of this that is very disturbing about our government is that our government in the face of Amnesty International and all the other public interest groups are still claiming nobody's being hurt over there for being repatriated. We have evidence of people that were killed the first night they returned. There's all kind of violence which is driving the people out. And on the high seas, the State Department told me that one out of two people never get here on the boats because of the dangerous conditions.

MR. LEHRER: Congressman Shaw, do you think the administration is handling this correctly?

REP. SHAW: I think they're doing the only thing they possibly can do at this time. There's been no documented evidence that those who have been returned have been mistreated. And as a matter of fact, of the handful that left Haiti just yesterday, I think about half of them did go directly to the embassy to apply for amnesty here in the United States under the law. It's been stated and really without any foundation repeatedly that we're violating international law by doing this. That simply is not true, and we have case law that's been tried here in the United States to say that's not true. Until somebody, a refugee from another country, actually steps foot into our territorial waters or onto our land mass here in the United States, they don't enjoy any of those rights that Mr. Conyers is referring to. And I think also it's important to notice in the last decade we have taken in here in this country more refugees from all over the world than the rest of the world put together. In New York alone there's some 400,000 Haitians living. The whole population of Port Au Prince is only 472,000. So there's almost as many Haitians in New York as there is in Port Au Prince. Right here in Miami, where I'm sitting tonight, some 200,000 Haitians are living right here in this community.

MR. LEHRER: Well, what is your basic argument, Congressman, yours and the administration's, against allowing any more Haitians to come in? As you say, there are thousands of them here now. Why not allow any more?

REP. SHAW: Well, let's look at the alternatives that the administration is faced with. One is bringing more to Guantanamo and they're full, so that is no longer an alternative. The other is to bring them here to the United States. And if we start that, then they're going to come out in droves. They're going to be floating out on boards to get aboard Coast Guard cutters to come to the United States. So that would absolutely open a flood gate that would be economic chaos here in South Florida, in Dade, Broward, and Palm Beach counties, in Monroe County, it would absolutely strap the social services and medical services and everything we have way beyond our capacity to pay for them. So the other alternative is the one that the Bush administration is pursuing, and that is taking back to Haiti. That's the humane thing to do. I think that -- and I'm very pleased to see that the administration backed away from the policy of trying to decide which ones would make it and which ones wouldn't, because I think that puts a terrible burden on the Coast Guard, knowing that many of those that got through their blockade would actually drown and perish at seas. That's some 600 miles across an ocean that's not very friendly and is very unpredictable this time of the year.

MR. LEHRER: Well, Congressman Conyers, what would you do?

REP. CONYERS: Well, I'd do what we've done for all these others that my colleague has cited. In 20 instances over the last 32 years, we've let people in. As a matter of fact, President Bush has granted safe haven to Chinese, Liberians, Palestinians. And to say that in this hemisphere, in the poorest nation of the world, that we're strapped -- and I guess he's saying we can't afford it -- that the humane thing is to return them to a dictatorship that is so ruthless we don't even recognize them is absolutely unthinkable. Let's talk about what the law is. Geneva Convention, no state shall expel or return a refugee in any manner whatsoever to the frontiers or territories where his life or freedom would be threatened on account of his race, religion, nationality, membership of a particular social group or political opinion. That treaty was approved by the Senate in 1968.

MR. LEHRER: You're suggesting that that's what these people face when they go back?

REP. CONYERS: Oh, absolutely.

MR. LEHRER: But Congressman Shaw says that hasn't been documented, is that right, sir, Congressman Shaw?

REP. SHAW: Well, one, it hasn't been documented, and secondly, what I'd like to state is that the law, the black letter law, as stated by my colleague, has been interpreted to be applied only once these refugees reached the shores of the host country. That is not the case in that these people are picked up off the Haitian shore and returned to Haiti. So that law does not apply until they get to the United States.

REP. CONYERS: Well, I thank you for your humaneness this evening. That's the whole point, is that if we are now interdicting them before -- we're doing more to stop people from coming out of their country to escape repression than we are enforcing the OAS economic blockade that's supposed to be bringing them to their knees.

REP. SHAW: I think you --

REP. CONYERS: Then we've got the American law. If you don't like the convention, here's the United States law. The attorney general shall not deport or return any alien to a country if the attorney general determines that such alien's life or freedom would be threatened in such a country on account of race, religion, national membership in a particular social group or political opinion. Now - -

REP. SHAW: Again, that law --

REP. CONYERS: -- if he's asking me to go prove that there are dead bodies of those repatriated or that there is brutality, it almost flies in the face of what you can read about in the newspapers.

MR. LEHRER: Congressman Shaw.

REP. SHAW: Well, the State Department has been doing the best they can. They've tracked some 2000 cases that were returned to Haiti, and it has not been able to find the problems that my colleague is speaking of. But I'd like to strike a note of agreement with my colleague, that I think we are going to have to tighten up the sanctions that we placed against Haiti, and I quite frankly would support a blockade, an actual blockade of that country, and some other limited military action in order to try to return some stability to that country, and get rid of a very oppressive regime that absolutely has from a standpoint of the way it handles its economic and political business complete disregard for human -- for human rights.

MR. LEHRER: Congressman Shaw, what is your response to Congressman Conyers and others who have suggested that the Haitians are being given a different kind of treatment than other refugees who have sought haven in the United States?

REP. SHAW: In law -- and I heard Ms. Little refer to that on the previous segment -- and that is that they have special status under the law that was passed by the Congress. If the Haitians are to have special status, then the Congress has to speak to it. So it's --

MR. LEHRER: You mean the other people, the Cubans --

REP. SHAW: Yes, the Cubans and all of that. That's right. They have special -- they have a special status under the law as passed by the Congress of the United States and that does not apply to the Haitians.

REP. CONYERS: He's a Naval lawyer. He's been on judiciary committee and I -- I hate to correct him but the President has the power to do this unilaterally. We pass a law when the President doesn't act. I need about twice as many to pass my bill as I had to create safe haven. And we would do it notwithstanding the President. But this is a matter of humanity. Why treat them different? These are our Western hemisphere neighbors. We've let in many times more than them. And I would even like to help Congressman Shaw by saying there's nothing in the law that says they have to go to Miami or his congressional district. They could be located anywhere in the United States temporarily until Aristide is restored.

REP. SHAW: Well, there's a problem in limiting the movement of people who have some temporary status. The question still remains as to whether these people are being treated any different. And I would point out that over the last decade that some 160, approximately 160 plus, have legally emigrated from Haiti to the United States. So there's no discrimination. It's just a question enforcing the rights. And I feel sorry for these people. They're wonderful people. When they get here, they've been productive, but the problem is we've got problems in our own inner cities. We have problems with employment here in the United States, and this is certainly no time to take on the poor of the world and put them into any of our cities, any of our states. And I think what we need to do is to protect our borders and do what we can to restore democracy in Haiti and to that I would be glad to join with John in trying to work that out and persuade the administration and/or the Congress that now is the time to act.

REP. CONYERS: Oh, absolutely. It's clear that the President is less than enthusiastic about the subject. It doesn't take a foreign policy expert to realize that we're not at all excited about returning Aristide to power. And the military thugs down there have read that in-between the lines of our policy as well. So what do we need to do? We need to have a United Nations blockade, rather than an OAS blockade. We need to stop the air travel of other foreign ships that come back and forth to Miami Airlines regularly. We need to stop the bank accounts of all those -- the elitists there that never were for Aristide are having a ball now. But, you know, the painful thing is that these military thugs aren't really an armed camp or a strong military. It's a rag tag bunch that could be really turned out of there relatively easy.

MR. LEHRER: All right. We have to --

REP. SHAW: It's only around 7,000. I think one thing important for your viewers to know, and that is that we have pumped around $47 million this fiscal year into Haiti in humanitarian aid. And that's important for the people to know.

MR. LEHRER: All right, gentlemen, thank you both very much. UPDATE - ANCIENT FEUD

MR. MacNeil: Next tonight, the fight over territory in the former Soviet Union that threatens to become a wider war in central Asia. The territory is Nagorno-Karabakh, a predominantly Armenian enclave in Azerbaijan. As the fighting worsened there in recent weeks, both Turkey and Iran said they might act on behalf of predominantly Moslem Azerbaijan. But today on a trip to Moscow, Turkish President Ozal appeared to back off those threats. In the past six days, Armenian troops forged a bridge head, linking Nagorno-Karabakh with Armenia, itself. The corridor has effectively broken the Azeri blockade at Nagorno-Karabakh. Ian Williams, the Moscow correspondent for Britain's Channel 4 News, joined one of the first Armenian food convoys into Stepanakert, the capital of Nagorno-Karabakh. Along the way, he witnessed the devastation of Lachin, one of the key Azeri strongholds taken during the Armenian advance. Here is his report.

MR. WILLIAMS: A stream of Armenian vehicles snaked their way along the narrow valley pass in what was until a week ago part of Azerbaijan. They carried food, medicine, and arms for Nagorno-Karabakh, together with refugees returning to their homes in the Armenian enclave. These are the first substantial supplies to arrive by road since heavy fighting cut Nagorno- Karabakh off rom the outside world. They passed the debris of the fierce battle for the corridor, hardware and burned out Azeri settlements. Across the valley, thick smoke hangs over the town of Lachin, which was the main Azeri community between Armenia and Nagorno-Karabakh. Flames engulf former Azeri homes, torched, say the Armenians, by their owners before they fled. But that's hardly likely. These buildings have only recently been set alight and throughout the town what hasn't been destroyed is loaded onto lorries and taken by the victors. The corridor captured by the Armenians is 30 miles long across rugged mountainous terrain. Close to Nagorno-Karabakh, the convoy passes the bodies of dead Azeri soldiers, left to rot in a ditch, and a Muslim graveyard, desecrated by the victorious Christian Armenians. After four hours, the lorries arrive in the central square in Stepanakert, the capital of Nagorno-Karabakh. This convoy is from Southern Georgia, home to 300,000 ethnic Armenians. They have made the 400 mile journey to bring mainly potatoes.

MAN: [Speaking through Interpreter] They are our people, our brothers. We have to help them. They have been fighting and have had no time to get supplies.

MAN: [Speaking through Interpreter] In another few days, 25 more of our trucks will come.

MAN ON STREET: [Speaking through Interpreter] I came to help my brothers and sisters. I look at their faces in the sun today and I see their happiness. After living so long in cellars, at last they can see the sun. It makes me want to cry.

MR. WILLIAMS: They provoke a scramble from local people who have survived for months on strict rations of bread, water, and whatever else they could scavenge. Convoys like this one are now arriving through the corridor at the rate of two a day. So far, there have been no attempts by the Azeris to try and stop them, though few accept that situation to last. Talk here is of a pause in hostilities, not an end, that and a determination to keep the corridor, their new life line, open.

GAMLET GREGORIYAN, Government Minister, Nagorno-Karabakh: [Speaking through Interpreter] The corridor will stay open. No one has the moral or political right to close it. We have been given the right to live. For the people of Karabakh, this corridor is our life line.

MR. WILLIAMS: The government still works out of the town hall, though the building has been largely wrecked by Azeri rocket fire. A year ago, this was where Russian President Boris Yeltsin tried to broker a cease-fire between the two sides. He succeeded only in stopping the fighting for a short while. There are few buildings in Stepanakert which don't bear the scars from the continuous bombardment of the last three months. The people of the capital have no electricity, gas or running water. They're forced to collect water from stand pipes and wood is their only source of fuel. For the first time in months, children are able to play in the filthy streets, without the constant fear of rocket attack, though the conflict has left its mark on even the youngest. This woman showed us the basement in which she and her neighbors sheltered during attacks and to which she fears she may soon have to return.

WOMAN: [Speaking through Interpreter] They're planning what to do next. We know what they're like. They're capable of anything.

MR. WILLIAMS: For the people of Stepanakert, hours of waiting in their fortified basements became a way of life. In the city's makeshift hospital, a victim of a weekend attack on a nearby village, here, their medicine consists only of scarce relief supplies from Western Europe. Nurses huddle to keep warm as best they can. Armenian fighters have now pushed the Azeris out of Nagorno-Karabakh and man barricades 10 miles East of Stepanakert. This is the new front line between Armenia and Azerbaijan. For the first time in five years of conflict, Nagorno-Karabakh is now 100 percent Armenian. The Armenians say they are prepared to pursue the Azeris into Agdam, further inside Azerbaijan, if necessary, for their defense. Shusha, the last Azeri stronghold inside Nagorno- Karabakh, was captured a fortnight ago. It lies in the mountains above Stepanakert and it was from here the Azeris launched their rocket attacks on the capital. Empty rocket boxes are stacked beside the Christian church in what was historically the Armenian capital. The town's mosques have been gutted by the victorious Armenians. Armenian civilians are streaming into Shusha to reclaim their old property now deserted by the Azeris. For the Armenians in Nagorno-Karabakh, military success has provided a valuable respite. But few here expect the uneasy peace to last. Such is the mutual hatred generated by this conflict.

MR. MacNeil: Still ahead on the NewsHour, Chrysler and Detroit's inner city and Benno Schmidt on leaving Yale to build private schools. FOCUS - NEW BEGINNING?

MR. LEHRER: Now a story from the inner city, the inner city of Detroit, Michigan. We have a report about a joint venture between the city and the Chrysler Corporation to bring it back to life. The reporter is Fred De Sam Lazaro of public station KTCA- Minneapolis-St. Paul.

MR. LAZARO: In the car business, there's always lots of hoopla when a new model is introduced. But rarely in automotive history has more significance been attached to a new car than this jeep Grant Cherokee, significance far beyond the auto industry. The car is one of Detroit's most technologically advanced ever. It is built in one of the big three's most sophisticated automated plants and it's being built in Detroit.

LEE IACOCCA, Chrysler Chairman: The analysts of Wall Street said we were nuts. They said to us, couldn't you find a better location to invest a billion dollars?

MR. LAZARO: Strange as it seems, in the historical context, Detroit is considered an odd place to build a car these days or a car factory, as Chrysler did. Most carmakers, Toyota, Honda, even GM, have built their new plants far away in rural areas, with young, often non-union workers. The strategy has proven successful, according to University of Michigan analyst David Cole.

DAVID COLE, Auto Industry Analyst: I do believe that it is probably easier to start from scratch, to move into what is called a green field site, select your employees very, very carefully, in a sense, cherry pick the community of the very best employees.

MR. IACOCCA: I could have taken the experts' advice and found a corn field, somewhere, I guess, to build a new plant.

MR. LAZARO: Chrysler decided on Jefferson Avenue in Detroit's tough, lower Eastside, a site that housed the first Chrysler factory in the 1920s. Workers at the rebuilt plant are on average 51 years old, with 27 years of union seniority. Older workers cost more in wages and health insurance, but their experience saves millions in training costs. The city also helped the company bottom line with $400 million in incentives. Beyond that, Chrysler has gained immeasurable good will in its work force. From all indications, the dividend in labor relations is paying off handsomely.

AARON TAYLOR, United Auto Workers: As far as sales projections, quality, goal, and the product, itself, hey, I think it has reached all expectations, and we expect it to even exceed that.

MR. LAZARO: To hear Aaron Taylor talk more about sales projections and working conditions would have been unthinkable a few years ago. Taylor says union leaders earned their keep by fighting management.

MR. TAYLOR: That's how you got elected. You had a hatchet and they had a hatchet that did no good. It didn't do anything. And as you can see, it didn't stop plant closings around the country. The Japanese come along, showed us some of the cooperative things. We took and took a look at what they're doing and then we took and Jeffersontized it and then we come aboard with what we call industrial democracy.

MR. LAZARO: Workers were involved early in the process of designing the new Jefferson Avenue plant. The results are readily evident. In older plants, workers bend over or work in pits on the undercarriage. At this plant, they stand erect. The cars are tilted for them. Where workers typically carried heavier components they installed, here a robot assists. Plant manager Jim Lyjinen says this has improved productivity and quality.

JIM LYJINEN, Plant Manager: So that when they did these repetitive things over an eight hour day, three hundred and sixty times a day, they'd be able to do it as good at the end of eight hours as they do it at the beginning of the shift.

MR. LAZARO: Besides production workers, the new plant was also built with the car's designers in mind. Chrysler's new jeep is the first major product with a new Japanese style team approach. Typically at the big three, design and manufacturing engineers have worked in separate departments.

DAVID COLE: And so what we end up with is a design that you have to figure out how to manufacture, which has been kind of a traditional case. Now we end up with a design that is designed with manufacturing in mind, designed with being able to build quality into that product initially.

MR. LAZARO: Initially, reviews of the jeep's quality and design have been positive. William Jeanes is editor of Car and Driver Magazine.

WILLIAM JEANES, Car and Driver Magazine: The report card's very good. It's stood up to the kind of test that we put it through, much improved from the old one. I would give it definitely a B+ or an A-, which is pretty -- about as high as we go.

MR. LAZARO: Still, it will be sometime before a more final set of grades come in, those based on larger consumer surveys. It is these that determine market success.

WILLIAM JEANES: I would say that takes about nine months to a year before we would be able to quantify how well they've done what they've done.

MR. LAZARO: In terms of the quality of the vehicle.

WILLIAM JEANES: Exactly, the things gone wrong measurement.

MR. LAZARO: What the Grand Cherokee is to Chrysler, its factory is to the city of Detroit and Mayor Coleman Young says all major cities.

MAYOR COLEMAN YOUNG, Detroit: I think the biggest problem with our cities today, with our economy, is a lack of jobs. And I think that the base for those jobs in our big cities is still industrial and manufacturing. As you know, all across the country, there's been wholesale desertion, abandonment of big cities of manufacturing facilities.

MR. LAZARO: The Chrysler Jefferson plant has its critics in the city, but chiefly they criticize its cost to the taxpayer. By some estimates, it's as high as $200,000 per job. City Councilor Mel Ravits opposes the idea of using financial incentives to attract industry.

MEL RAVITS, Detroit City Council: I think that the alternative public policy ought to have been to put our money, these hundreds of millions of dollars, into building up our neighborhoods and their adjacent shopping areas to make a safe and secure city. That then might have been the lure to bring Chrysler and General Motors to come here and pay their own way.

MR. LAZARO: One needs only to glance across the street from the Jefferson Avenue plant to see the neighborhood neglect Ravits wants to address, or talk with neighbors like Barbara Sellers.

BARBARA SELLERS: They build a plant like this in the neighborhood but they still -- like I said -- they still got all this, you know, this list.

MR. LAZARO: What would help this neighborhood, do you think? I mean, what are some of the solutions to clearing out some of the mess?

BARBARA SELLERS: Tear some of these, tear these buildings down, just like this one here, clean up the rubbish, the lady's house behind us over there, her house got burned three years ago and the rubbish is still next to her house.

MR. LAZARO: But in the chicken and egg dilemma, supporters of the plant say its 2500 jobs have to come first, ahead of the other needs.

MAYOR YOUNG: There's nothing wrong with the city of Detroit that five more Chrysler plants couldn't change.

MR. LAZARO: The city had to offer incentives, Mayor Young says, or Chrysler would have gotten them from any number of locations.

MAYOR YOUNG: If you're going to stay in the game, you had to play. Now you could adopt a holier than thou attitude if you cared to. It's very unrealistic. It ignores life. It ignores what's going on underneath your nose. And one day you wake up and all your industry's gone. And I'm afraid that's what's happening in Detroit.

MR. LAZARO: What happened to Detroit was particularly devastating for the city's black community. Factory jobs in the motor city had historically been the ticket out of poverty.

AARON TAYLOR: The manufacturing jobs and the plants is what really created the black middle class in Detroit in the first place, including myself. I'm a second generation Chrysler worker.

MR. LAZARO: Whether the new plant will prompt other manufacturers to join Chrysler is still an open question. Analyst Cole says there's promise.

MR. COLE: Some of the best deals that you could find in terms of property and available buildings and people that are eager to work are in the inner city areas, and the Jefferson plant is a pretty graphic demonstration of that. By no means is the problem easy from the standpoint of dealing with crime and drug issues and education in the inner city schools. But it looks like it's far too early to write off our urban areas.

MR. LAZARO: Meanwhile, Jefferson workers, most of them black, most of them residents of Detroit, are keenly aware of the plant's significant. Robert Woods, a 25 year veteran, says they are determined to make the investment pay off.

ROBERT WOODS: We'll all be retiring soon. As a matter of fact, just about all of us are going to retire about the same time. That's going to open up jobs for all the kids. And I don't know, two or three thousand jobs, or whatever, but we're going to leave, but when we leave, we're going to leave it right for them. And that's what we're doing now.

MR. LAZARO: While it's still unclear whether there'll be more plants like Jefferson North or whether they are a panacea, Woods and fellow workers say it's still far better than what they call the other big three, Wendy's, McDonald's, and Burger King. CONVERSATION - EDISON PROJECT

MR. MacNeil: When University Presidents resign, they don't often make national news. But Benno Schmidt has created quite a stir by announcing today that he's suddenly quitting Yale University. Not only is he leaving one of the nation's oldest and most prestigious academic institutions after only six years, but he's doing so for a risky and controversial experiment to shake up the nation's school system. The plan is the brainchild of Christopher Whittle, the Tennessee millionaire best known for his controversial cable program that brought news and commercials into schools. Schmidt will join Whittle in trying to create a chain of a thousand profit making schools around the country to compete with public schools, and Benno Schmidt joins us now. Dr. Schmidt, thank you for coming in. When university presidents resign, as I said, it doesn't create much of a stir usually. Yours has created enormous stir. A lot of people are very surprised and wondering what your motive is.

DR. SCHMIDT: Well, Robin, I think it is rare for a university president to resign in order to focus his energies on elementary and secondary education. My motive is very simple. I think like many Americans I've been increasingly concerned that our schools aren't working well, despite excellent people in them who are devoted. And I've concluded that the system inhibits innovation, new ideas, fresh thinking, and our schools are not serving the country as well as they should. I think nothing's more important to the future of the country. And I've concluded that introducing a new system, competition, choice, diversity, based on fresh thinking and innovation holds the best chance of improving the whole system. And I think that's the most important way in which I could try to contribute to the future of the country through education at this point.

MR. MacNeil: People who studied this say that America became a mighty industrial power and a world power and a leader in the second industrial revolution because she had pioneered free compulsory public quality secondary education. Now, faced with terrific new competition out there in the world in the middle of the third industrial revolution, must we abandon that principle, especially with emphasis on free and public?

DR. SCHMIDT: No, not at all. I think if this experiment works, it will have the consequence of revitalizing public education. I think one of the problems with public education is that it now operations in a political and bureaucratic milieu which makes experimentation very difficult, which makes risk taking unlikely, which makes, therefore, innovation and creativity unlikely. We're going to try to create a new system based on entirely fresh thinking. We won't question whether children should begin school at the age of five months, rather than five years, or even perhaps before they're born with their parents. Why should schools exist only eight or nine months, five days a week? We need to ask basic questions. And if we can produce some answers that really work, if we can produce innovative technology, innovative teaching methods, new ways of involving parents, then I think those innovations can be brought into the public school system and the whole system will benefit. I view this experiment as actually friendly and supportive of public education in that it will try to provide the system with the innovation and fresh thinking that I think it lacks at the present time.

MR. MacNeil: It wouldn't surprise you to know that some people in public education don't agree with that. Let me quote -- we talked today to a woman who's been on our program several times. She runs what's generally regarded as a successful school called The Central Park East High School in New York City. Her name is Deborah Meier. She's the principal of that school. And her comment was this: If Whittle's idea takes off, the public schools will be for the worst off only. Everyone else will buy their way out of the system. We'll have public schools built on a welfare approach. So using that argument, how would it help public schools?

DR. SCHMIDT: Well, it --

MR. MacNeil: Your experiment.

DR. SCHMIDT: It would help because the approaches, the inventions, the technology, the new methods that we derive we intend to make available to other schools, public and private. It will help in the -- it will not I think be as she describes because our aim is to assure that about a fifth of the students in our system are full scholarship students. We want to prove that we can operate a system that's open to all, that costs what the public school system costs, but do it better by innovative, fresh thinking, by getting the benefits of systemwide integration of technology, of training, of design, of experimentation, economies of scale. Education is about the last of the huge social and economic endeavors in our society that functions in a completely fragmented way. To use your analogue, it's pre the first industrial revolution as it now operates. We think if we change that, that we can get enormous benefits and efficiencies and innovations that will be available to make the whole system better. I've been in higher education. Does anyone really think that the existence of institutions such as Yale and Harvard make institutions such as the University of Michigan or the University of California worse? Not at all. Competition serves all of our interests. The private colleges and universities help the public universities and vice versa. We learn from one another. Competition and choice, diversity is healthy. The problems that we now have are not with people in public education systems who are devoted, excellent people in many cases. It's that a single system doesn't work well.

MR. MacNeil: But is it a single system? I mean, it's a system of thousands of school districts and within their own democratically elected school boards administered by them with some state supervision.

DR. SCHMIDT: But in the sense that I'm talking about in terms of whether there's competition --

MR. MacNeil: In other words, I've had another half to the question, wouldn't the Whittle system with a thousand schools, if you get to a thousand schools, nationally administered with savings of economy and scale and using all the new technology and television, wouldn't that be more one massive system than the local systems which are now locally run and administered?

DR. SCHMIDT: If we were able to succeed,I would expect that there would be then competing systems set up. The public schools, it's true, they're not a --

MR. MacNeil: More for profit national chains, if that's the word.

DR. SCHMIDT: I think one can expect a good deal of political as well as educational innovation here, choice programs, voucher programs. Alternatives are cropping up all over the country because there is growing concern and dissatisfaction with the present system. The point is to introduce competition and choice in order to provide a stimulus for diversity and experimentation. That's what the current system doesn't -- tends not to encourage.

MR. MacNeil: Aren't you worried about making the public system worse by skimming the cream of ability -- you say 20 percent scholarship students -- obviously, you're not going to take as scholarship students with learning disabilities or other handicaps, social or intellectual or any other kind -- you're going to take the best that you can get.

DR. SCHMIDT: No.

MR. MacNeil: Are you not?

DR. SCHMIDT: No, no. And this is an important point. One of the - - because one of the purposes of this is to try to improve education for all children, we intend that these schools will be open to all. If more students apply than we have room for, we'll select them randomly.

MR. MacNeil: But you'll take the same kind of troubled student that the public system is required by law to --

DR. SCHMIDT: We're going to take the same kinds of students that the public system takes. We're going to set up schools in different kinds of places, in inner cities, in the country, in rural areas, suburbs. We want to try to see whether we can devise innovations and new approaches that will serve the interests of all children. This is not a program to provide another layer of private schools to serve the elite.

MR. MacNeil: You just mentioned the voucher system which President Bush has proposed and his new Secretary of Education, Mr. Alexander, propose, to give parents a choice. Mr. Whittle I saw quoted today in the stories about you saying, well, this didn't depend on the voucher system being enacted. But how could you afford it -- or how could you bring in other than rich children, unless there is a voucher system?

DR. SCHMIDT: Well, I think, I think there's a lot of evidence that parents who are not parents of great means will devote considerable resources to the welfare of their children. Our day care system, by and large, supports that kind of assumption.

MR. MacNeil: You mean, that lots of parents could afford 5,000 plus dollars, which obviously will increase as the years go by?

DR. SCHMIDT: Well, I mentioned --

MR. MacNeil: For each child.

DR. SCHMIDT: I mentioned that one out of five children in our system, as we plan it, will be full scholarship students. Then the other 80 percent I would expect to represent a very wide range. If you look at the parental spending in day care systems, you'll find a very wide range of parents are willing to invest significant amounts of their resources for the good of their children. And as I said, part of the aim here is to try to demonstrate that for roughly the same costs as our public school system, that we can create radical improvements due to structural reforms that I think are extremely difficult even to contemplate in the current situation of education as we know it.

MR. MacNeil: I just wondered why a person with your academic background and so on would not have chosen as his first choice to apply your energy and conviction and idealism about this to improving the public schools, rather than this alternative.

DR. SCHMIDT: I think you might ask the same question of whether a person, whether the person who created Federal Express, why didn't he go into the post office. All around the world, the world is in the grip of changes that rest to a very considerable extent on one single fundamental insight, and that is the concentrations of power, particularly in public bureaucracies tend not to be innovative, creative or in some cases to serve the needs of people who are various and have different needs. Choice, competition, diversity is changing the world and we think we ought to heed those lessons here.

MR. MacNeil: Sorry to have to interrupt, but that's our time. Benno Schmidt, thank you for joining us.

DR. SCHMIDT: Thank you very much. RECAP

MR. LEHRER: Again, the major stories of this Tuesday, the Bush administration said it will allow the marketing of some genetically engineered foods without special safety testing. The Environmental Defense Fund criticized the policy, saying the administration had abandoned responsible regulation. And the U.S. began intercepting Haitian refugees at sea and returning them to Haiti. Thirty-eight refugees were sent back today. Good night, Robin.

MR. MacNeil: Good night, Jim. That's the NewsHour tonight. We'll back tomorrow night. I'm Robert MacNeil. Good night.