The MacNeil/Lehrer NewsHour

Intro

JIM LEHRER: Good evening. Leading the news of this day, terrorists in Lebanon claimed they murdered a kidnapped British writer. Libya asked most foreign journalists to leave the country. President Reagan said again the U.S. was prepared to strike Libya again. And congressional foreign relations committees rejected an arms sale to Saudi Arabia. We will have the details in our news summary in a moment. Judy Woodruff is in New York tonight. Judy?

JUDY WOODRUFF: After the news summary we have three main focuses and an essay on the NewsHour tonight. First, the spending impasse between Congress and the White House. Reagan Budget Director James Miller and Senate Budget Chairman Pete Domenici join us. Next we look at the plot to sell American weapons to Iran with U.S. Attorney Rudolph Giuliani. Then we continue our series, "The War on Drugs," with a look at what's being done to stop drugs in the workplace. And we close with essayist Roger Rosenblatt raising questions about the raid on Libya.News Summary

LEHRER: There is again much news to report on Libya, the U.S. and terrorism. In Lebanon a group claimed today it murdered a British writer in retaliation for Britain's help in the U.S. raid against Libya. The group is called the Revolutionary Organization of Socialist Moslems. Its murder claim was delivered to a Beirut newspaper with a four-minute videotape. The tape showed a man dangling from a scaffold while a crowd yelled, "God is great." A typewritten statement identified the dead man as 64-year-old Alec Collett, a writer for the United Nations who was kidnapped in March, 1985. Authorities in Beirut who saw the videotape told the Associated Press the hanged man bore a strong resemblance to Collett, but his face was covered with a black mask and they could not be sure.

In Washington President Reagan said in a speech the United States was prepared to act again against Libya.

Pres. RONALD REAGAN: America will never watch passively as our innocent citizens are murdered by those who would do our country harm. We are slow to wrath and hesitant to use the military power available to us. By nature we prefer to solve problems peacefully, but as we proved last week, no one can kill Americans and brag about it. No one. We bear the people of Libya no ill will, but if their government continues its campaign of terror against Americans we will act again. And let no one mistake this for a conflict between the Western democracies and the Arab world. Those who condone making war by cowardly attacks on unarmed third parties, including women and children, are but a tiny minority. Arab nations themselves have been forced to endure savage terrorist attacks from this minority. We hope and pray the Arab world will join with us to eliminate this scourge on civilization.

LEHRER: In West Germany the government ordered the expulsion of 22 of 41 persons accredited to the Libyan Embassy in Bonn. It also imposed travel restrictions on those Libyans who remain. In Quantico, Virginia, U.S. Ambassador to the United Nations Vernon Walters said Americans who refused an earlier order to leave Libya will be prosecuted if and when they do return to the United States. He said in a speech those Americans have no business being there now. Judy?

LEHRER: A British correspondent reported from Tripoli today that Colonel Qaddafi is no longer in sole charge of Libya's government. Robert Fisk of the Times of London reported that the country is being run by a five-man military junta which was apparently formed after the U.S. raid to prevent a coup. Fisk wrote that Qaddafi is one of the group but no longer has exclusive control.

MeanwhixDle, Libyan officials today ordered 300 foreign journalists who arrived after the raid to leave the country by the end of the week. The Libyan information minister denied statements by other officials. He said the order was in retaliation for the expulsion of Libyans from countries in Western Europe.

Last night Libyan television broadcast pictures that it described as the wreckage of an American plane. No foreign reporters were allowed to examine it, and the claim could not be verified. The United States has acknowledged losing one plane, and the Libyans have previously said they recovered one.

Austria's chancellor today denied a U.S. claim that Libya was partly behind an attack at the Vienna airport last December that left four people dead. Chancellor Fred Sinowatz told reporters that his government was sure that Libyans were not involved in the incident and that Austria has no plans to expel Libyan diplomats or impose sanctions against Libya. Austria is not part of the 12-nation Common Market, which agreed Monday to take such steps.

LEHRER: Key House and Senate committees today voted against a $354-million arms sale to Saudi Arabia. The vote in the Senate Foreign Relations Committee was 11-6 against the deal that involves mostly missiles. It was rejected by a voice vote in the House Foreign Affairs Committee. The sale was proposed and strongly pushed by the Reagan administration. It will now go to the floor of both houses for a final vote. President Reagan has said he would veto any disapproval legislation. A two-thirds vote in both the House and Senate would be needed to override that.

WOODRUFF: The governments of both Israel and Iran today denied any involvement in the plot revealed yesterday to ship American weapons to Iran. The Israeli defense ministry said Israel had no connection with the plan for which nine people, including a retired Israeli general, were arrested yesterday in New York and Bermuda. The general, Avraham Bar-Am, has told reporters from his jail cell in Bermuda that Israeli defense officials knew of the plan and that he now expects help from Israel.

In South Africa, rioting broke out on the same day that the government outlined its plan to scrap the hated pass laws for blacks. The passes will be abolished and all races will be issued new identity documents. Blacks will be allowed to move from place to place, but will be required to live only in authorized residential areas and not with whites.

LEHRER: The issue was the Gramm-Rudman-Hollings budget law at the U.S. Supreme Court today with the President on one side, the congressional leadership on the other. The administration said Gramm-Rudman-Hollings gives an employee of Congress, the comptroller general, budget-cutting authority that belongs to the President. Lawyers for Congress said no, the comptroller general is just a score-keeper who makes automatic cuts only when certain deficit levels are reached. Afterwards both sides agreed the court dispute would not stop the drive for budget reductions.

JAMES MILLER, Budget Director: We're opposing it simply because we believe the mechanism that was set up involving the comptroller general is unconstitutional. The President endorsed Gramm-Rudman-Hollings legislation. He stands behind that. Of course, all that is at issue today is the nature of that trigger mechanism, whether it will be triggered by a report by the comptroller general or a joint resolution by Congress.

Sen. PHIL GRAMM, (R) Texas: If the Supreme Court struck down the involvement of the comptroller, obviously we'd be disappointed, but I am confident that we could make it work. I don't think that's going to happen, given the arguments today.

LEHRER: Meanwhile, the Senate dealt a blow today to President Reagan's way of achieving Gramm-Rudman-Hollings budget goals for 1987. By an overwhelming 83-to-14 vote it turned down an administration proposal to eliminate 44 domestic programs. White House Budget Director James Miller had suggested that approach yesterday as an alternative to the Senate proposal, which would raise new tax revenues and reduce the size of growth in defense spending.

WOODRUFF: The House of Representatives did an about-face today that had the effect of wiping out higher limits on outside earnings that it had voted for just yesterday. By a vote of 333 to 68, House members reversed the action taken Tuesday permitting them to make as much as $7,500 a year more for speeches to special interest groups. House Speaker Tip O'Neill said that members had second thoughts about voting themselves a pay raise, in effect, but he indicated the issue would come up again later when the question of salaries is addressed head on.

There was a report today that NASA and its contractors have wasted billions of dollars on the shuttle and other space programs through bad management. The story in The New York Times said that federal audits going back for a number of years paint a very different picture from what is generally believed, that NASA was an efficiently run agency. Among other things, the audits accused former NASA head James Fletcher of misleading Congress and the public in the 1970s about the cost of the shuttle program. Ironically, the report surfaced on the day that the Senate Commerce Committee was to begin hearings on Fletcher's nomination to head NASA once again. Fletcher told the committee today he did not accept the report's findings about NASA.

JAMES FLETCHER, former NASA head: -- the article in The New York Times and, needless to say, I was a little bit shocked. I wasn't sure that he was talking about the same agency that I used to be the administrator of. A summary of my quick review of it, and checking with the inspector general that wrote some of those reports, I'm under the impression that NASA's still one of the best-managed agencies of the federal government.

WOODRUFF: Illinois Democratic nominee for governor, Adlai Stevenson, did as expected today and took the legal steps that he hoped will allow him to run as an independent. Stevenson said he could not run on the same slate as disciples of political extremist Lyndon Larouche, and was therefore renouncing his Democratic nomination.

LEHRER: And finally in the news today, movie director Otto Preminger died this morning. He as 80 years old and suffered from cancer. Preminger was born in Austria and directed his first Hollywood movie, Under Your Spell, in 1935. His last film, The Human Factor, was shot in 1979. His 34 other movie credits included Laura, Anatomy of a Murder, The Man With the Golden Arm, Exodus, and Advise and Consent.

WOODRUFF: That concludes our news summary. Just ahead on the NewsHour, Budget Director James Miller and Senate Budget Chairman Pete Domenici on the impasse between Congress and the White House; U.S. Attorney Rudolph Giuliani on the plot to sell U.S. arms to Iran; our drug series continues with a look at drugs in the workplace; and essayist Roger Rosenblatt with second thoughts on the attack on Libya. Budget Impasse

LEHRER: This was day three of the U.S. Senate debate over a 1987 federal budget. And when and where it will stop, nobody knows for sure, but everybody now knows it will be a rocky trip, particularly for the Republican Senate leadership and the Republican White House. The administration strongly opposes the Senate budget proposal because it calls for some tax increases and cuts in proposed defense spending. Yesterday White House budget chief James Miller wrote a letter to the Senate leadership urging the elimination of 44 domestic programs as an alternative to that proposal. Well, today the senators overwhelmingly defeated an amendment that would have done just that. The vote was 83 to 14. One of the 83 was the Senate Budget Committee chairman and principal author of the Senate budget proposal, Pete Domenici of New Mexico. He is with us now, as is the man who wrote yesterday's letter, White House budget chief James Miller.

Senator Domenici, what was the message of today's vote?

Sen. PETE DOMENICI: Well, the message was a very simple one. We have a very large deficit. It's obvious that the next five years defense has to grow somewhat. It can't go down. Won't grow as much as the President wants. So if you look at the overall makeup, the President and a compelling majority of both houses say you're not going to touch the entitlements, Social Security and those kind of programs. And so the White House and Mr. Miller have maintained that a very substantial portion of these savings can come from eliminating in their entirety some 44 domestic programs.

LEHRER: Such as?

Sen. DOMENICI: Such as Amtrak, REA's direct loan, UDAG, SBA --

LEHRER: That's the urban development grant --

Sen. DOMENICI: Urban development grant; Small Business Administration, a certain kind of their loans; the Economic Development Administration, a old program to help with economic development; Appalachian Regional Commission, a rather parochial highway program for West Virginia and some other states; programs such as Community Development Block Grants; just a myriad of them, 44 in their entirety --

LEHRER: Forty-four together.

Sen. DOMENICI: UDGA. That's a housing loan program. The direct loans for rural housing, which the director's budget wants to save, $1 billion; that's Farmers Home Rural Housing. Many parts of the country have no other program. It's not a great program, in my opinion, but nonetheless --

LEHRER: Okay, there were 44 --

Mr. MILLER: And the position that Mr. Miller and the President have regularly made and that some Senators are continually telling me as chairman is that before you raise taxes, why don't you cut the domestic programs more? And one of the areas they constantly talk about is, why don't we eliminate programs? So I thought I'd give them a chance to decide whether they wanted to eliminate the programs, number one, and, number two, I thought I would put the size of those cuts into perspective. The savings in the first year, the year we're trying to reach the target, would have been about $4 billion. For all of those programs.

LEHRER: All 44 would have added up to $4 billion.

Sen. DOMENICI: All 44. The President's budget had about $9 billion in that first year, five of which were made up of three big programs -- general revenue sharing, Conrail and WIN. We did those. That was five.

LEHRER: What's WIN?

Sen. DOMENICI: That's a program to help train people who are on welfare. It's a job training program. And I apologize. I've worked for this programs so much that -- thanks for reminding me. In any event, we did the five; we didn't do the $4 billion. So we let them vote, and they voted overwhelmingly against it. Now, I knew they would vote against it.

LEHRER: You proposed it knowing full well it would be defeated?

Sen. DOMENICI: Absolutely. But I want to do two things. I want to prove the point we're not going to solve the fiscal problem of this country with the kind of deficits we've got if we are continually told that one of the principal tools is that and, second, I wanted my fellow senators -- and this is in no way derogatory of them or towardthem -- to understand than when they say to me, why don't you get rid of the urban development grant program, I would vote to get rid of it, but it costs about $40 million a year, you know. Not billions. That's about what we spend for that program. When they say, let's get rid of Economic Development Administration, I want them to know that that's less than $100 million. Now, that sounds a lot to our listeners, and I want to make sure they understand that I think it's a lot also. But what we're talking about are deficits in the neighborhood of 165 to 180, depending on where you are --

LEHRER: Billions?

Sen. DOMENICI: Billions. And I just don't believe that's the primary thrust of solving this budget problem.

LEHRER: All right, Mr. Miller, you were on the receiving end of the message today. How did you receive it, sir?

Mr. MILLER: Oh, I saw it as nothing more than one of the skirmishes that goes on in developing a budget. The votes that count are the ones that come at the last minute. The last vote is the one that counts. And I am confident that there are going to be some more domestic cuts. I am confident that you're not going to see that kind of tax increase.

LEHRER: Now, why are you so confident of that, sir?

Mr. MILLER: Well, because of discussions I've had with some of Chairman Domenici's colleagues and discussions with others. But let me just say, the Budget Committee's budget is really a budget that's tax, tax, spend, spend, except for defense. It taxes $13 billion more. It spends $14 billion more. And it cuts defense --

LEHRER: More than what?

Mr. MILLER: Than the President's budget. And it cuts defense by $19 billion. We simply can't have that. And already half of the Republicans in the Senate have written the leader asking for an increase in the defense number. There are a lot of Republicans that want an increase -- want the tax eliminated. Why do we stand on the tax? What I want to know is why last year the Senate budget resolution cut 13 programs out and we measure, by our count, we have three in today's budget rather than the five that Senator Domenici pointed to. Why do we need a tax increase? The budget resolution last year did not have a tax increase in it. Before the President issued his budget, Senator Domenici was talking about shortfalls, the difference between the Gramm-Rudman target at 144 and what the deficit would be of $50-, $60- or $70 billion, and he said we had to have a tax increase. Well, no, we're looking at something like $38 billion. Those are the latest figures from OMB and CBO. Now, if the figures come down that far, why, Pete, do we have to have a tax increase?

Sen. DOMENICI: Well, let me first say two things. The director is talking about what we voted for last year. Now, I am a friend of the President but I must remind the director that the United States Senate at 3:00 a.m. in the morning, by a totally partisan vote, with the Vice President in his seat and only one Democrat, voted for that because it had a freeze on everything. And then the President met with the leadership and said we don't want to have anything to do with Social Security, and so that budget became a nullity. They're just not going to vote for that 11 or 12 programs again.

LEHRER: He says they're not going to vote when it comes down to it. He also says they're not going to vote for a tax increase. Do you think they will?

Sen. DOMENICI: Oh, I'm sure they will. In addition, let me say one way to look at the tax increase, if we were to give the President his budget as he prescribed it, and I'll be as reasonable as I canwith the director, I say it's $16 billion over; he will say --

LEHRER: Over what?

Sen. DOMENICI: Over the Gramm-Rudman target.

LEHRER: Okay.

Sen. DOMENICI: The whole thing --

LEHRER: If you did what the President submitted --

Sen. DOMENICI: In its entirety it would be 16 over. He would say that defense shouldn't spend that fast, we'll control it better, and he would say there's a farm program that we wouldn't spend the money on. Well, let me just say, if it isn't 16 let's make it 12. But it's 12 over. If we did all the cuts he wanted and gave him the defense he wanted, by a strange coincidence the taxes that we asked for in our budget would make up that $12 billion.

LEHRER: Now, doesn't that add up?

Mr. MILLER: No, it doesn't at all because I think they have grossly overestimated some of these outlays. Let me tell you why. There is in the --

LEHRER: An outlay meaning money that's actually going to be spent.

Mr. MILLER: Money to be spent over 1987; $4.4 billion is in there for agriculture advanced efficiency loan payments. That's not going to happen. It's completely within the discretion of the secretary of agriculture and the President.

Sen. DOMENICI: It's 3.1 instead of 4.4.

Mr. MILLER: We score it as 4.4.

LEHRER: Gentlemen, I don't think we're going to -- yeah, go ahead.

Mr. MILLER: Could I say, also the economy is improving. What I have said, what I said in the letter and what I have said to Pete, to Senator Domenici, Chairman Domenici, is that we can go forward with the budget process without a tax increase. We can also get those defense numbers up. He is not counting on any improvement in the economy. We all know the economy is going much better than we thought last February. That deficit number is coming down.

Sen. DOMENICI: Well, that just isn't true. Not only am I counting on it, I hope it happens, this growth in the economy, because this budget envisions that it grow enormously between now and the time the new budget starts. And if it does not, far more than expected, we'll have a bigger deficit than I plan.

LEHRER: Mr. Miller, are you at all spooked about the simple coincidence of timing here, that you're going through this process at a time when David Stockman, your predecessor, is all over the news, on the television, in the papers, in magazines, saying that Domenici was right in 1981 and he and the White House were wrong, that the figures were all wrong, the concepts were all wrong, etc.?

Mr. MILLER: Well, what troubles me is it seems that Senator Domenici wants to be proven right, that is, that we have to have a tax increase. And I say that we don't. And let me say, while I do feel that it's likely that we won't have the kind of tax increase that Chairman Domenici has proposed, what's more important is that the President of the United States will not accept a tax increase. He has said that over and over.

LEHRER: That is -- he has said that over and over, Senator, and yet you and your Republican colleagues in the leadership are saying, "Oh, yes, Mr. President. We are going to have a tax increase." Somewhere down the line somebody's got to give. Who's going to do it? Both?

Sen. DOMENICI: Maybe neither, and then we will see if Director Miller is right, that these economic times have improved things so much that at the end of the year we will not have a sequester. We won't have the Gramm-Rudman cut, which I think will take about $20 billion more out of defense, substantial --

LEHRER: In other words, if people haven't been paying attention to Gramm-Rudman, if you don't meet the goals then there's an automatic thing and things get cut across the board, including defense.

Sen. DOMENICI: Well, he has not said this, and the White House doesn't advocated it. If a stalemate ensues and nothing happens, the most likely result is that we will go through the year, the Senate can't pass any appropriations bills, we'll get up to the end, we'll pass some interim thing, and then we'll take a snapshot and see how much were we off by.

LEHRER: Sounds like a real mess, Mr. Miller.

Mr. MILLER: Well, it's something that we all want to avoid, no question of that. And I think if we work together we'll avoid it. But let me say something. While I have my disagreements with Chairman Domenici, certainly he is to be applauded for getting something moving. You know, the Constitution of the United States says essentially the House should develop these money measures. They've done nothing. They're sitting back, waiting, playing partisan politics.

LEHRER: I want to come back to my Stockman question. Are you the least bit concerned about the fact that Stockman was in the same situation with Domenici four years ago, and he now says, "I should have listened to Domenici? Domenici was right and I was wrong." It's Miller time, not Stockman.

Mr. MILLER: It's light Miller time.

Sen. DOMENICI: But let me say this in conclusion. Frankly, the real point is that Mr. Miller has a job. The President is unequivocally, from the political standpoint, and I respect him for it, says we don't need any taxes. We can keep on doing these little adjustments and say let's wait around 'til next month, the economy is going to recover and interest rates are coming down. But the stark reality is that over the next three or four years you are not going to get this deficit under control with defense having to go up and a continual rehash of this idea that you can get rid of 44 programs, that you can reform this little one and do that one. You can do a lot of it. But the stark reality is that I will be right again. It won't work, and we'll have more deficits.

LEHRER: And we'll all go out and buy Miller's book.

Mr. MILLER: That's right.

LEHRER: Okay?

Mr. MILLER: I'll be lucky if I get to do American Express commercials.

LEHRER: All right, gentlemen, thank you both very much.

Mr. MILLER: Thank you.

LEHRER: Judy? Iran: Arms Ring

WOODRUFF: As we reported earlier, 17 people have been indicted in connection with a plot to ship American-made weapons to Iran. Five arrests were made in Bermuda and four in New York City yesterday after federal charges were filed for conspiring to sell more than $2-billion worth of fighter jets, tanks, helicopters and other arms. Among those arrested was a retired Israeli general who has said the Israeli government knew about the alleged plot. Israel denied having any knowledge today, as did the government of Iran. Joining us now with more details of the case is the U.S. attorney for the Southern District of New York, Rudolph Giuliani, whose office was involved in the investigation.

Mr. Giuliani, it sounds like a pretty sophisticated operation they had. How did you find out about it?

RUDOLPH GIULIANI: Well, we first got notice of it in December of last year, which is actually a pretty short time ago for this kind of an investigation, and began putting undercover agents into various aspects of it. It really is five separate parts or five separate alleged conspiracies with one person at the core of most of them, a lawyer by the name of Samuel Evans, who is an American citizen, an American lawyer, who practices law in England. And he was the one who found most of the people who were available to move arms. Most of these arms are American arms that have been sold to foreign countries legally and that he was able to find through various arms dealers were available for resale.

WOODRUFF: Now, were these arms already delivered to a foreign country, or were they in the -- they were?

Mr. GIULIANI: The vast majority had already been delivered to foreign countries and were on various lists or in a category for resale. In other words, the foreign country was try was willing to sell them to appropriate other foreign countries.

WOODRUFF: Were they delivered to Iran yet?

Mr. GIULIANI: Oh, no. None of them had left the location to which the United States had originally sent them, and they were in the process of having drafted contracts and getting what are known as end-user certificates. When the United States shows --

WOODRUFF: What does that mean?

Mr. GIULIANI: Well, when the United States sells weapons to a foreign country, there's a condition on the sale that those weapons cannot be resold to another country without permission of the State Department. And you have to get an end-user certificate. We would approve the sale for allies and friendly governments, and then there were a group of governments that are on a list where we will not permit a sale. Iran is one of those governments that the United States will not permit a sale or a resale of American arms to Iran.

WOODRUFF: So this Mr. Evans in London was directing a number of different operations, but they all would have had the same result, the arms would have ended up in Iran?

Mr. GIULIANI: That's correct. And the principal thing that each one of these five groups had to do and was in the process of doing, and some of them had already completed it is, in essence, getting phony end-user certificates that make it appear as if the arms are going to a NATO country or to Greece or to Pakistan or the Philippines -- those are some of the countries that were used -- when in fact that was totally untrue. The arms would not be going to those countries, but in fact were going to be shipped into Iran.

WOODRUFF: What were the countries? You started to name them -- Greece --

Mr. GIULIANI: Well, those were four of the countries that were suggested as countries where they could prepare phony end-user certificates. The arms would in no event go to those countries, but actually plans had been made in some cases to ship arms to specific sites in Iran.

WOODRUFF: I see. Why was Evans doing this? I mean, what do you know about his -- for money, or --

Mr. GIULIANI: According to the allegations in the complaint, the profit could have been as high as five or six percent for just doing the end-user certificates, another 10 or 15 percent for the actual delivery of the weapons, and you're talking about a $2.5-billion deal overall.

WOODRUFF: And who was paying, the government of Iran, do we presume?

Mr. GIULIANI: The money would have eventually come from the government of Iran, but since it was an undercover operation, in fact no money was ever going to be paid and the United States government was in the middle of this in terms of investigating it from the very beginning. So there was never any risk, any real risk, that the guns or weapons would move to Iran.

WOODRUFF: Was the Iranian government, I guess is what I'm asking, was the Iranian government master-minding this?

Mr. GIULIANI: No, I can't say that. I can't say that the Iranian government was master-minding it or that any of the governments where the weapons were located were involved in it. We've had situations like this in the past where arms have actually been moved, and because such a good job is done in getting the phony end-user certificates the governments are not aware of it.

WOODRUFF: As you know, the retired Israeli general who was one of those arrested said to reporters today that the Israeli government knew -- that some officials in the Israeli government knew about it. Do you have evidence to support that?

Mr. GIULIANI: No, we do not. We do not have any evidence to support the fact that anyone in the Israeli government sanctioned this or was aware of it. Several Israeli citizens, both this retired general and three others, including two businessmen in Israel, are alleged to be specifically involved in it and are under arrest in Bermuda. But there's no indication of any further involvement by the Israeli government.

WOODRUFF: What about the Iranian government itself? I mean, you're saying down the road --

Mr. GIULIANI: That I really can't comment on. That would really get into the evidence in the case and there weren't any allegations in the complaints about the position of the Iranian government.

WOODRUFF: Okay, so even though you're not in a position to say that one government or another was master-minding this, still there's some evidence that evidence down the road may point in that direction?

Mr. GIULIANI: I just can't suggest one way or the other on that particular issue.

WOODRUFF: How were they planning to get away with it? Was it with paper transactions and the weapons had already gone to one country? And it's not a matter of smuggling a jet fighter from one country to another?

Mr. GIULIANI: No. Unfortunately we've had cases like this that have actually happened. In fact, we prosecuted one about a year and a half ago in which the arms actually did move to Iran, and we've had cases where the arms have moved to other countries. It really depends on how good a counterfeit or -- a job you do on your end-user certificates. And once those end-user certificates are presented, then you're free to move the weapons. Hopefully at that point our authorities or the authorities of the foreign government would pick it up, but in some cases they don't pick it up and the arms are actually moved under these fraudulent documents.

WOODRUFF: Where are the arms right now? Are they in what country?

Mr. GIULIANI: The arms are now located in all of the countries in which they were located. Israel is the only country in which I think there were specific allegations made. Two of the transactions involve substantial numbers of fighter planes and missiles that are located in Israel.

WOODRUFF: Now, you arrested, as I understand it, nine people yesterday in New York, or there were arrested nine people -- ve in --

Mr. GIULIANI: Now 10.

WOODRUFF: Ten. Oh, so you picked up someone else?

Mr. GIULIANI: One more was arrested.

WOODRUFF: But there were a total of 17 who were charged.

Mr. GIULIANI: Right.

WOODRUFF: Now, where are the others? Are they in this country, or do you have any idea?

Mr. GIULIANI: The other seven are fugitives and essentially the choice that the Customs Service and the Justice Department had to make here was, since there were five separate deals that were moving along simultaneously, what we tried to arrange was to get the principal players, the ones who were the prominent motivators in each one of these schemes, at least according to the allegations, in various places where we could arrest them. We had that opportunity over the last two days and we decided that we'd better act now.

WOODRUFF: Is this the end of it, or are we going to see -- I mean, is there a much bigger operation here, that we are only seeing the tip of the iceberg?

Mr. GIULIANI: I can't say that you're going to see anything on this scale again. This whole thing continues to be under investigation. So there will be probably further developments, but nothing on the scale, that I know of, at least, as has been revealed in the last couple of days in the complaints.

WOODRUFF: Is this the sort of thing -- just one other thing. Is this the sort of thing your office and other attorneys' offices around the country are continually looking for?

Mr. GIULIANI: Yes, the scale of this is larger, but this is the third case now that we've had in a year and a half like this. So it's not, unfortunately, an isolated incident, and it's something that both the Treasury Department and the Justice Department consider to be a major priority. We just have to police the use of these end-user certificates and create a deterrent for people who would misuse them.

WOODRUFF: Rudolph Giuliani, thank you for being with us.

Mr. GIULIANI: Thank you.

LEHRER: Still to come on the NewsHour tonight, the argument over drug testing, and a Roger Rosenblatt essay on the Libyan raid. War on Drugs: High on the Job

WOODRUFF: We continue our series on drugs tonight with a look at efforts to stop drug abuse in the workplace. Employers around the country are increasingly worried about the economic and personal losses associated with drugs on the job. Law enforcement officials are cracking down on workers, as are private companies. To combat the problem, a growing number of firms are requiring employees to take drug tests, as we hear in this report by June Massell.

JUNE MASSELL [voice-over]: These messengers in San Francisco are smoking marijuana on the job and, they say, they do it regularly.

MESSENGER: Actually, you know, pot really doesn't harm you that much. It actually kind of helps me, because if I drink I get violent, but if I smoke pot it really kind of mellows me out, you know?

MASSELL [voice-over]: They are not unusual. Drugs in the workplace have become so commonplace that they are found in almost every industry, from Wall Street to Silicon Valley, from the assembly line to top management. The National Institute on Drug Abuse estimates that 10 of all American workers use illicit drugs on the job. On this road in San Jose, California, near many high-technology companies, people line up at lunchtime in their cars to buy and sell drugs.

UNDERCOVER OFFICER: It's a real commonplace in the afternoon to go to score cocaine from people in the electronics industry. It's an excellent place for a meet because it's out in the open.

MASSELL [voice-over]: The voice you hear belongs to an undercover police officer in San Jose.

UNDERCOVER OFFICER: The blue van that we're looking at has been identified as a known source of supply who could possibly have at least a couple of ounces of cocaine.

MASSELL [voice-over]: This woman, a high-tech engineer and a former drug dealer in Silicon Valley, says eight out of 10 workers at her company use drugs.

"BEVERLY", former drug dealer: It's around a lot because there's a lot of pressure -- engineers, technicians, supervisors. They work really long hours and they need drugs to keep them going.

MASSELL [voice-over]: As drug abuse grows, so does the cost to corporate America. Employees who use drugs are far less productive than their colleagues and miss 10 or more times as many work days. It is estimated that the cost to business in 1983 was $35 billion.

JOSEPH MacNAMARA, San Jose Police Chief: We know what drug abuse does, and when we see these kind of conditions we know that the productivity of the company has to deteriorate. We see a lot of companies going out of business on almost a monthly basis here in Silicon Valley. Certainly not all of that is related to drugs or to crime or to those kind of problems, but we think maybe more of it is related than ever comes out.

MASSELL [voice-over]: The concern is greatest in industries where mistakes can cost lives. Since 1975, about 50 train accidents have been attributed to drug or alcohol abuse. In the airline industry, pilots under the influence have called cocaine hotlines saying they were too paranoid to fly passenger jets. Because of the pervasiveness of the drug problem, more and more companies are resorting to drug testing of employees. The companies require job applicants to submit to laboratory tests that detect traces of narcotics in urine samples. Some companies also test current employees either at random or on the basis of suspicious behavior. It is a policy which some say is an invasion of privacy.

ROBERT TAGGART, Southern Pacific Railroad: It is an intrusion. The question is, is that intrusion, the minor nature of certainly of urinalysis testing, is that offset by the magnitude of the problem that we have today in society with drug use?

MASSELL [voice-over]: As of now, about 20 of all Fortune 500 companies use some form of drug testing and another 20 are expected to do the same in the next two years. The list includes a roll call of some of the largest and most prestigious firms in America, firms like Exxon, IBM, American Airlines and Federal Express. The largest employer to test all personnel is the U.S. military.

WOODRUFF: That report by June Massell. A strong proponent of drug testing is Dr. Robert DuPont, former director of the National Institute on Drug Abuse. Dr. DuPont is now vice president of Bensinger DuPont and Associates, a consulting firm which helps companies set up drug-testing programs.

Dr. DuPont, do you support all kinds of drug testing? I know there are several different forms of it. Maybe the question should be, which kind do you think is best and most appropriate?

ROBERT DUPONT: Well, I think the answer is probably yes, that I do support all kinds, although it's not always done wisely or correctly. And I think that a company that just enters into this area and says, "We're just going to test people willy-nilly," is asking for trouble, that there have been a lot of difficulties companies have had because they have done testing without thinking it through, without having their procedures in place and their policies really well thought out. So that's the mistake most of them make.

WOODRUFF: Well, should every company do the same kind of testing? I mean, should every company, for example, test people before they hire them and then test everybody on the job? I mean --

Dr. DUPONT: Well, there are several levels of testing. One is pre-employment testing, before people come into the company, and that's the least controversial. And I think that many companies have moved to that. The second level of testing is for cause. For example, you showed in the tape an airplane accident or a train wreck or an automobile accident, this kind of thing, where you've got some problem that comes up and you test. And then the third level of testing is a random testing of current employees. There aren't many companies doing that. But companies are moving from the pre-employment to cause, and I think a number of them are beginning to explore the possibilities of random testing, and of course the random testing is the approach the military uses, which is the largest employer.

WOODRUFF: And do you endorse random testing?

Dr. DUPONT: Basically I think that random testing is a good idea, although it's not the place to start and it's where most of the controversy is. So it's sure not the entry place. It's where most of the trouble is going to come, and I don't think that's the place to start.

WOODRUFF: What do you say about the invasion of privacy argument, that this is something that, you know, is part of a person's private life and it's a violation of that?

Dr. DUPONT: Well, I think you have to recognize that the question is, what happens when the person comes to work? My recommendation is what I call zero tolerance. That is, if you come to work, you come drug-free. So that the invasion of privacy only relates to while you're at work. So a urine test, for example, would be taken -- or a breath test, or any other kind of testing like this -- would be the substance would be in the person's body when he or she was at work, and that would trigger some kind of action, either treatment or suspension or, in some cases, termination.

WOODRUFF: But aren't there some drugs like marijuana, for example, that are believed to linger in the blood system -- or rather in the body for days, even weeks after use?

Dr. DUPONT: Yes, that's right. And the answer is that the person is still bringing that drug onto the job site in his or her body. That's the testing. Now, marijuana is unique because it stays in the body such a long time. You can get a positive test for days, in some cases even weeks after the last use of the drug. But that drug is still there in the brain of the user all that period of time. It's not as if he smoked it and then it's gone. It's still there.

WOODRUFF: What about the accuracy of these tests? Are you convinced that they are always as accurate as they should be?

Dr. DUPONT: I think there have been a lot of problems with that, and the basic trouble, again, the companies have used, is when they don't use proper procedures. They have to be sure that the test, that the urine result really is applied to the person who gave the sample, what's called the chain of custody. They have to make sure of that. And that's not simple. That requires careful work within the company. Then they also have to check a positive test with a confirming test. I wouldn't do just one test. And I think a lot of the criticism has to do with companies that just do one test. If there's a positive finding and there's going to be some kind of consequence to that, then you want to do a confirming test. And the better companies are now retaining samples that test positive, so if there's an appeal they have the sample for the appeal. And that's an approach I think is very smart.

WOODRUFF: Dr. DuPont, we'll come back to you. Jim?

LEHRER: Yes, the other side now from a strong opponent of drug testing. He is Gene Guerrero, director of the American Civil Liberties Union in Georgia. Among other things, Mr. Guerrero has filed a complaint with the United States Labor Department on behalf of workers who have lost their jobs due to drug-testing programs.

Mr. Guerrero, what are your major objections to drug testing?

GENE GUERRERO: Well, I think what we're seeing is a crusade against drugs. And like past crusades in this country and throughout our history, what's lost is the facts, a perspective on the problem, and who suffers are thousands of innocent people. In 1984, Dr. Carlton Turner, the White House drug adviser, came to Atlanta, talked about drugs being the greatest threat this country faces, drug use was increasing dramatically in industry. At the very same time, the government was completing a 200-page study which showed that alcohol abuse in this country has been level for the last decade or so, that drug use went up until 1979 and there have been significant declines since 1979. So drug use is actually going down on the job, not up, and the perspective is that what they found was that while drug abuse cost industry, they estimate, $26 billion, alcohol abuse cost over twice as much, about $56 billion. So what we're seeing is a campaign of hysteria in which companies are being asked by consultants and by the White House to implement programs that treat people without any respect for their basic rights and don't really address a problem.

LEHRER: How do they mistreat basic rights?

Mr. GUERRERO: Well, our experience is that companies use this, they use the simpler, cheaper test; a person is fired at the drop of a hat as soon as a test comes back positive. I got a complaint just a couple of weeks ago from a man who is in a highly skilled and specialized area of work. He's been tested before and passed on other job sites. His test came back positive. He was fired. He went and got his own independent test --

LEHRER: And it was just one test?

Dr. DUPONT: Just one test. Well, as far as he knows, only one test. He went and got his own test, he came back negative, they wouldn't give him his job back. He fears for his future. He says he's a born-again Christian, doesn't use any kind of illegal substance whatsoever, doesn't smoke, doesn't drink, wonders if some herbal tea that he uses may be the reason for his past test. I read the very next day about a psychopharmacologist at UCLA who testified in some hearings here in Washington that prescription drugs can mess up these tests, as can herbal teas. Now, what do you say to that guy whose future has been destroyed by this kind of testing program?

LEHRER: Well, what is the answer then? No tests, or better tests?

Mr. GUERRERO: Well, I think that if you look at where the courts are examining this problem, with public employees and employees that the courts can reach, what they're saying is that there has to be some reasonable suspicion before you give somebody a test, that you can't just do it randomly or with hotlines or with any other device. There as to be a cause.

LEHRER: The cause. Item number two on Dr. DuPont's list?

Mr. GUERRERO: That's right. What's happened in San Francisco is the first jurisdiction to pass legislation on the issue. They've passed a law that says that you cannot give a test unless there's actual reason to believe that somebody is under the influence of drugs and is impaired and is posing a threat to that person's safety.

LEHRER: Do you oppose pre-employment tests as well?

Mr. GUERRERO: I do. I think in some ways they're even more dangerous because none of the -- a few companies are going to spend the money to have a second test done for pre-employment tests. These tests have incredible error ranges --

LEHRER: Like what?

Mr. GUERRERO: Well, they're anywhere from five to 35 to 45 percent for the admit test. The Centers for Disease Control did a study of 13 labs and found that on the cocaine test only one out of 11 labs had reliable procedures. There are big mistakes done in these labs. They do -- the lab in Atlanta that does most of this testing in the Southeast does 2,000 tests a day, 2,000 urine tests each day. So that even just with the normal sort of human error that happens in any business, even a well-run one, you're going to find mistakes made.

LEHRER: What about Dr. DuPont's point, though, that employers have the right to expect employees to come to work drug free?

Mr. GUERRERO: I think an employer has an absolute right to demand that somebody performs on the job, that they show up alert and attentive and that they be productive. And if there is a reason to suspect that somebody's got a problem that's interfering with their work, the company should do the same thing that good companies do with alcohol abuse. And that is, if somebody's got a drinking problem, you identify that person, you say, "You've got a problem. You're going to lose your job if you don't shape up," and you help that person through a treatment program. That's not what happens. These companies are putting these people out on the street when they've done absolutely nothing wrong and don't even have a drug problem.

LEHRER: Mr. Guerrero, thank you. Judy?

WOODRUFF: Dr. DuPont, let's take his points one by one. He says this is a campaign of hysteria, that drug use is on the decline rather than increasing, that alcohol is a bigger problem than drug abuse. What about that?

Dr. DUPONT: Well, I think it's important to include alcohol in that, and I certainly agree with that. I think there are a lot more areas where we would agree than disagree. I think the zero tolerance definitely includes alcohol as well as drugs. I don't have any question about that, and I think there has been a history of companies doing this poorly, and I think that that's another point that I definitely agree on. But I do think --

WOODRUFF: So you agree there's been some overreaction?

Dr. DUPONT: Well, I don't know about overreaction. I would say there have been some actions taken that were not prudent and where there has been jeopardy to individuals that hasn't been right.

WOODRUFF: All right. What about his point that these tests are frequently used to just fire people at the drop of a hat when, say, one test has been done, it hasn't been backed up? This gentleman he cited who thought he'd drunk herbal tea?

Dr. DUPONT: Well, that's why I think it's important for the companies to maintain the sample so that they can come back and check that again. It is not -- there is nothing that will give a false positive on multiple tests. There are things that will give an error on a single test. But if you do the test again using a different technique, there is nothing that will cross-react. So you can do this --

WOODRUFF: What do you mean, nothing that will cross-react? What does that mean?

Dr. DUPONT: Well, what happens is a substance, for example, a prescription drug on a particular test may give a false positive for, let's say cocaine, for example, on one kind of test. So you take that same urine sample and now you test it using it a different technique. When you do it with a different technique, that prescription drug will no longer give a false positive, and now you will be able to distinguish between the cocaine and the prescription drug or the herbal tea. So you have to do multiple tests.

WOODRUFF: All right, Mr. Guerrero, would that satisfy you?

Mr. GUERRERO: Well, the problem with these tests is, they don't directly test for the presence of drugs. They don't find actual cocaine in someone's urine. They test these metabolites that have characteristics that are similar to a wide range of other things. The false positive comes from poppy seeds, from tonic water, from prescription drugs, from cold medication, from cough syrup. There are all sorts of problems. The EMIT test -- everyone agrees that the EMIT test is notoriously unreliable. The Atlanta lab uses the EMIT test --

WOODRUFF: What is the EMIT test --

Mr. GUERRERO: It's the simplest test. It's the one that you can turn out these tests for $5 a shot. The Atlanta lab that prides itself on being an infallible backup uses the EMIT test as the confirmation, as the second test, for cocaine. There are terrible problems with these, and I've gotten a number of situations like the one I've described where somebody goes out and spends money for their own urinalysis test. It comes back negative and the company still won't put somebody on.

Dr. DUPONT: See, I think the EMIT test is an excellent test. This is an amino acid test, it is highly specific, and it's very unusual, it's rare, to find any false positives at all when the test is done correctly. That is an excellent test. But even an excellent test needs a confirmation if there's going to be a serious negative consequence.

WOODRUFF: All right, Mr. DuPont, what about Mr. Guerrero's other point that this is just -- you know, people are dismissed on the basis of one test and that that's just not fair? It's just not right.

Dr. DUPONT: Well, it depends on what the circumstance is, what the punishment is. And I think one thing to do is to refer people to treatment. But there is a case to be made that within the context of at least some industries and some situations that termination is an appropriate response, and I believe that that is correct.

WOODRUFF: On the basis of one test, you think --

Dr. DUPONT: Well, but the one test would be the cocaine use or marijuana use. You have to understand that one test means they've used it, they have come to work with drugs in their system. And I think that what the company needs to do is to make sure everybody understands what the standard is and what the consequences are. If, when a person is told on the job, "If you come to this company and you have drugs in your system, you will be terminated," then I think it is perfectly fair to do that.

WOODRUFF: Mr. Guerrero?

Mr. GUERRERO: Well, look at the experience with the Navy. The service has had the most experience doing these tests. They've done millions of these tests. They've had to reinstate thousands of people that were discharged unfairly because the tests were so unreliable. The Navy had error rates of 97 in some of its testing labs. They say they've cleaned up their procedures, they've switched tests. Just a couple of weeks go the Navy secretary had to reinstate a senior midshipman at the Naval Academy who was discharged because he failed a urinalysis test. They did a thorough investigation. There was no evidence of cocaine use. He missed five weeks of school and he may not graduate with his class on May 21st. These things are not infallible. They don't work.

WOODRUFF: So your point is that we shouldn't have them?

Mr. GUERRERO: Well, I think there's a larger question involved. You know, next September of next year we'll have the 200th anniversary of the adoption of our Constitution. In 1787, when the delegates met in Philadelphia we had a very different society from what we have today. We got our livelihood from small farms and small businesses. Now none of us have that kind of property that provides a livelihood. We're dependent on employers for our well-being. What kind of society -- what would our Founding Fathers think about a situation where the big authority source in your life can make you drop your pants and urinate in public as a condition of getting or keeping a job? What kind of society does Dr. DuPont and his friends want us to have?

WOODRUFF: Dr. DuPont, do you want to respond? Is it possible to do drugs on your own and still be considered responsible?

Dr. DUPONT: Well, I'm not for anybody using illegal drugs under any circumstances, so that's clear. But I think that you can draw a line around employment and say when you come to work you're drug free. Let's remember that the majority of workers don't use drugs and this idea of protecting the drug-using worker not only is negative for those people, it's negative for other employers, it's negative for the public confidence, it's negative for those companies. And the idea that we would wrap the Constitution around behavior that is hurting everyone to protect a few people that are doing something illegal doesn't make any sense to me.

WOODRUFF: Gentlemen, we'll have to wrap it up there. Gene Guerrero, Dr. DuPont, we thank you both for being with us. Jim?

LEHRER: Tomorrow our "War on Drugs" series turns to the so-called high scorers, athletes hooked on more than just playing the game. Libya: Moral Questions?

LEHRER: Finally tonight, some words on Libya and the U.S. raid from our regular essayist, Roger Rosenblatt of Time magazine.

ROGER ROSENBLATT, Time Magazine: An awful lot has happened since the U.S. bombing raid on Libya. The murder of two Britons and an American in Lebanon, the kidnapping of a British photographer, the attempt in London to blow up an Israeli airliner, the shooting of an American diplomat in Khartoum, an attempted bombing in Turkey. On top of that, the Soviets backed out of a pre-summit meeting that might augur the death of the summit itself.

Relations with our allies have been soured. Our firmest ally, Mrs. Thatcher, is in big trouble with her country for allowing U.S. bombers to take off from British airfields. And threats and more threats. Hard to find an American tourist coming home to Greece these days.

So was the bombing raid a mistake? Tactically, yes. Raiding terrorists is a long-haul commitment: in for one bomb, in for 1,000. Terrorism and aerial attacks are opposite forms of warfare. All the training camps of Libya could be leveled to dust and still innocent-looking men and women with suitcases will continue to stroll into airports. Are Americans ready for the long haul against Libya? Even if it worked there, are we ready for the long haul against Syria? In the realm of terrorism, Libya is minor league compared to Syria. Every succeeding bombing raid will make it more difficult to cut down or cut out.

Morally, was it a mistake? The picture of a vast world power pounding down on a small, albeit menacing, country is not pretty, does not fit comfortably with standards of a fair fight. And bombs invariably kill people, babies included, no matter how one decorates the event with terms like "collateral damage." A moral question, at least.

President Reagan can redeem the nation by backing off a bit and by rehearsing the deliberate process before the next raid, giving warnings again and trying economic sanctions again. But at the moment it is hard to see how the attack on Libya did anything but satisfy the collective urge to swat Colonel Qaddafi, a lethal hornet whose whole prominence in history depends on the evil he effects.

Yet calling the raid a mistake does not mean that it was a mistake that should have been avoided. There are, odd to say, mistakes that have to be made, mainly because in the world of real balances some mistakes are worse than others. Would it have been the greater error to let Qaddafi go about his business unimpeded? Yes. Could we have reacted differently? Probably not. Some now say that America could have hired assassins to eliminate Qaddafi, but these operations have gotten us into trouble before. They happen to be against the law, and we usually mess them up. No exploding cigars for Libya.

A mistake that had to be made. Sounds like a fair definition of tragedy, or frequently of history when a nation does something it ought not to do for reasons that seem compelling at a particular juncture. What seemed compelling here was an end to American passivity. The passivity was getting corrosive. It had to happen, just like a tragedy. The test now is how we control the play, how to avoid more mistakes that have to be made. And the world is full of mistakes, only mistakes, exploding in a chain. Scary to think that such a world is always only a few mistakes away. This is our time.

LEHRER: Again, the major stories of this Wednesday. A terrorist group in Lebanon claimed it had murdered a 65-year-old British writer for the United Nations. The group delivered a videotape of a man dangling from a rope. A typewritten statement with it said the man was killed in retaliation for Britain's support of the U.S. raid against Libya last week. In Washington President Reagan repeated his warning that the United States is prepared to strike Libya again if it continues its terrorist activities. And the West German government expelled 21 of 44 persons accredited to the Libyan Embassy in Bonn and restricted the activities of the others. Good night, Judy.

WOODRUFF: Good night, Jim. That's our NewsHour for tonight. We'll be back tomorrow night. I'm Judy Woodruff. Thank you and good night.