The NewsHour with Jim Lehrer

JIM LEHRER: Good evening. I'm Jim Lehrer. On the NewsHour tonight a Newsmaker interview with Secretary of Defense William Cohen; a report on the tobacco bill's Senate death; and one of the issues that killed it; a look at how tobacco and other issues are affecting the '98 elections; and a foreign correspondence about India and Pakistan. It all follows our summary of the news this Thursday.% ? NEWS SUMMARY

JIM LEHRER: Senate supporters of the tobacco bill declared it still alive today. They said they would attempt to add it to every new bill that comes up for debate. A try at attaching it to an energy and water projects bill was quickly voted down. The House of Representatives prepared to work on its own version. Speaker Gingrich said it would focus primarily on teen smoking and not be massive and comprehensive as the Senate bill was.

SPEAKER GINGRICH: We watched the Senate collapse because the minute money became the issue, how you spend the money, which bureaucracy you pay off, who gets the cash, the Senate bill drowned in a sea of money. And I think we're committed to passing a strong, effective, anti-teen smoking bill. We don't want to get into the same kind of swamp that the Senate ultimately lost their bill on.

JIM LEHRER: Earlier in the day House Minority Leader Richard Gephardt doubted there would be progress on a bill as long as the tobacco industry continued its opposition advertising campaign.

REP. RICHARD GEPHARDT: What you have here is the Republican leadership in the Congress calling on big tobacco-their big beneficiary-to lay down ads on television to try to create enough public opinion so that they could kill this bill. That's what's going on. You now have a synergy and a situation between legislators and big interests, monied interests, to create public opinion so that what they want to have happen on a piece of legislation can happen.

JIM LEHRER: We'll have more on the tobacco story later in the program. The U.S. trade deficit hit another record high in April. The Commerce Department said today it was $14.5 billion, up 9.5 percent from March. Asian economic problems were blamed for a decrease in the export of American-made goods, ranging from commercial aircraft to farm products. Commerce Secretary William Daley had this to say.

WILLIAM DALEY, Secretary of Commerce: Almost all of the deterioration in the U.S. exports of goods this year occurred in the Asian markets. Thus far this year U.S. exports to Korea are off 45 percent. Our exports to Hong Kong and Singapore are down about 11 percent, to Thailand down about 26 percent, and to Indonesia down about 43 percent, except for Malaysia and Taiwan, they are, however, continuing to rise.

JIM LEHRER: Tokyo's stock market shot up nearly 4 1/2 percent today, one day after the U.S. Federal Reserve spent nearly $2 billion buying Japanese yen. Other Asia markets also went up, Hong Kong 6.4 percent, Seoul 7 percent, Indonesia's 5. The House of Representatives today considered the transfer of satellite and missile technology to China. Kwame Holman has our report.

KWAME HOLMAN: The House voted overwhelmingly today to create a new committee to investigate whether a U.S. satellite maker transferred sensitive missile technology to China. The committee will look into how and why the Clinton administration allowed Loral Space & Communications to launch a commercial satellite aboard a Chinese rocket and whether campaign contributions made by the company's chairman, Bernard Schwartz, influenced the administration's decision.

SPOKESMAN: Now, over the past few months we have seen startling revelations that have brought us to this unfortunate point, where we need this select committee to sort out what appears to be both a national security fiasco threatening the very security of this nation of ours and our American citizens, and, of course, a potential scandal.

KWAME HOLMAN: Both Schwartz and the president deny any connection between the contributions and the favorable administration decision for Loral. Some Democrats say the move to investigate is politically motivated.

SPOKESPERSON: I see today's action as a move by Speaker Gingrich and the Republican leadership to exploit the China issue. Allowing U.S. satellites to be launched on foreign rockets is a policy started under President Reagan, continued under President Bush and President Clinton. So if there's a criticism of the consequences of that policy, then the blame should be laid at the feet of both parties.

KWAME HOLMAN: However, Norm Dicks, who will be the committee's top Democrat, urged members to withhold judgment.

REP. NORM DICKS: What I hope we can do here is to lower the rhetoric and get at the facts. Let's look at the facts and find out actually what happened.

KWAME HOLMAN: The new committee will have to conduct its probe relatively quickly. Its authority expires in six months.

JIM LEHRER: Overseas today there was more fighting between Serb forces and ethnic Albanians in Kosovo. Shelling was reported near the border with neighboring Albania. Injured Kosovar fighters were taken there after coming under artillery fire. The Kosovo government in exile called on its people to defend their villages against the Serbs. We'll talk to Defense Secretary Cohen about Kosovo right after this News Summary. President Clinton today seconded a friendly overture to Iran. Last night, Secretary of State Albright said the United States was prepared to take specific steps toward normalizing relations with the Islamic republic. Today President Clinton said he would like to end the nearly two decades of hostility.

PRESIDENT CLINTON: What we want is a genuine reconciliation with Iran based on mutuality and reciprocity and a sense that the Iranians are prepared to move away from support of terrorism and distribution of dangerous weapons, opposition to the peace process, and we are exploring what the future might hold. We've not changed our principles, our ideas, or our objectives. We believe Iran is changing in a positive way, and we want to support that.

JIM LEHRER: Iran called the offer "inadequate." The foreign minister said the United States had to renounce violence against Iran, free frozen Iranian assets, and apologize for 50 years of wrong policies. The president's Iran comments came at a White House ceremony to announce two high level personnel choices. He nominated the current U.S. ambassador to the United Nations, Bill Richardson, to be Secretary of Energy, and special Balkans envoy Richard Holbrooke to replace Richardson. Holbrooke was a State Department official for several years. More recently, he negotiated the Dayton Peace Accords for Bosnia. Richardson was a Democratic congressman from New Mexico before going to the U.N.. There were three train wrecks today: A Chicago bound commuter train struck a trailer near Portage, Indiana; a 20-ton steel coil on the truck ripped through the passenger car, killing three passengers. In Durham, North Carolina, an Amtrak passenger train hit a tractor-trailer. The truck driver died. Ten of two hundred and forty train passengers were injured. And in Boston two subway trains collided at a busy station, injuring 10 people. And that's it for the News Summary tonight. Now it's on to Secretary Cohen, the tobacco bill, the political year, and a foreign correspondence.% ? NEWSMAKER

JIM LEHRER: A Newsmaker interview with the Secretary of Defense and to Elizabeth Farnsworth.

ELIZABETH FARNSWORTH: Secretary William Cohen joins us from the Pentagon. He has just returned from NATO meetings in Brussels, where planning is underway for possible action in the breakaway province of Kosovo. Thank you for being with us, Mr. Secretary.

WILLIAM COHEN, Secretary of Defense: My pleasure, Elizabeth.

ELIZABETH FARNSWORTH: Please bring us up to date on fighting today in Kosovo.

WILLIAM COHEN: Well, the reports that I've seen would indicate that the fighting has decreased somewhat. There appears to be some positive benefit from the meeting that President Yeltsin had with Mr. Milosevic that there has been some diminution or reduction in thelevel of fighting. It's sporadic. And it's likely to be sporadic for the foreseeable future, so we try to bring about a diplomatic solution.

ELIZABETH FARNSWORTH: Is there any evidence that President Milosevic is withdrawing troops from Kosovo, as demanded by the six-nation contact group, for the former Yugoslavia, which includes the United States?

WILLIAM COHEN: No indication that he's prepared to withdraw them at this time. As you know, he had predicated that withdrawal upon the end of the terrorist activities on the part of those who were seeking independence, and so that's one of the conditions that the NATO group, the contact group, all would disagree with that kind of condition, so there's no indication that he's withdrawn them at this time.

ELIZABETH FARNSWORTH: And how strong are the guerrillas?

WILLIAM COHEN: Well, they are small in number but appear to be gaining some strength, and much of the concern certainly to Mr. Milosevic in terms of what's taking place on the ground-the more repression, the more violent action that he takes against innocent people is only going to solidify that kind of support amongst the people. So one of the reasons that we have insisted that we have insisted that he cease immediately the kind of shelling that has taken place in recent weeks is that it's going to not only kill many innocent people but also to turn the overwhelming tide of people against him and with the move toward independence. So it's in his interest to stop this for a variety of reasons.

ELIZABETH FARNSWORTH: Mr. Secretary, are the guerrillas getting any help from outside? As you know, there have been reports that Chechens from Chechnya, which fought for-has been fighting for its independence from Russia-have come into help the Kosovars. Is that true?

WILLIAM COHEN: Well, there have been some reports to that effect. I don't have any information that would confirm that the Chechens or others who might otherwise offered help have done so. That's always, of course, a subject of some speculation and perhaps some reality at some point, but I have not seen any evidence that would confirm that.

ELIZABETH FARNSWORTH: And Albania charged today that Yugoslav troops fired across the border into Albania, killing several Albanians. Do you have any information about that?

WILLIAM COHEN: I don't. Again, a lot of reporting is coming in, but we have to take our time, which was evaluating the accuracy of that. We're following it very closely, have not had a confirmation of that particular report.

ELIZABETH FARNSWORTH: In his meeting with President Yeltsin earlier this week, President Milosevic of Yugoslavia did promise to live up to some of the demands of the contact group. For example, he promised to allow refugees to return, and he promised some other things too. Is there any evidence that he's living up to those promises?

WILLIAM COHEN: Well, those are the promises he made explicitly. We would expect to hold him to those promises, though there may be some reluctance on the part of the refugees as such to return to their homes until they see a greater commitment to a cessation of hostilities. So we intend to hold him to his promise, and we will have to see as the days unfold as to whether the refugees will go back. We would hope that we would have international supervision so that we could verify that, in fact, he's keeping his commitment, that they're going back to their homes and, in fact, have been met with some assistance, as far as the rebuilding of those homes.

ELIZABETH FARNSWORTH: So overall, looking at the situation, do you think the air exercises carried out earlier this week by NATO over Northern Albania and Macedonia made any difference?

WILLIAM COHEN: Well, I believe they've made a difference and they've made a difference in the sense that they showed to Mr. Milosevic and to others that NATO is able to act reasonably quickly to gather forces, to put on the very effective air exercise with a multiplicity of countries who were contributing their air forces of support mechanisms to that air exercise, and so it showed, No. 1, solidarity of support, and also ability to mobilize very quickly. So I think it had an impression-made an impression. I also believe that President Yeltsin made an impression with Mr. Milosevic. I met with Minister Sergeyev, the Russian minister of defense. He expressed to me both privately and then into a semi-public audience, at least, the reason that he was going to go back, deliver a message to President Yeltsin, and President Yeltsin was going to talk very directly and very candidly with Mr. Milosevic. So I think all of that contributed to impressing Mr. Milosevic.

ELIZABETH FARNSWORTH: What further options are currently under consideration by NATO?

WILLIAM COHEN: Well, NATO has been tasked to look at the military authorities, have been tasked to look at the-a variety of options-the military options, so that could be utilized. That would be, number 1, effective and obviously desirable to carry out, should that be the case. But I want to make this point that no decision on military action has been made. That is some distance away, if at all, becoming reality. Secondly, we have to be very careful. We do not want to take any action that would indicate to the UCK, those who are seeking independence, that we are going to provide support for that effort. We want both parties to come to the bargaining table. We want a cessation of the hostilities, the killing, and we want them both to negotiate. We do not want to be in the border guard for Mr. Milosevic or any air force for those who are seeking independence.

ELIZABETH FARNSWORTH: There have been reports from the French foreign minister and others that some of the options include a no-fly zone banning heavy weaponry and using air strikes. Are those reports right?

WILLIAM COHEN: Well, there are a variety of options that are being considered. I think it would be counterproductive to discuss what they are at this point. There are simply options being examined by military authorities, and that would make serious perhaps recommendations to NATO itself and then I would also remind our viewers that Congress, that parliaments all have to be involved in any discussion, in a deliberation about military force. This is something that would require consultations and at this point in time there have been no decisions made on military action. We're in the process of consulting with members of Congress. I have been talking to them this morning, and will do so again tomorrow just to get their ideas about what's taking place and obviously help formulate some kind of a policy that would be implemented at a future time.

ELIZABETH FARNSWORTH: And, in fact, several of our NATO partners have said that UN action would be required before there could be further UN action in Kosovo. Do you agree with that?

WILLIAM COHEN: I don't agree with that. We don't agree with that in the administration. NATO, itself, has to make determinations about its security and those actions which are undermining or contributing to destabilizing areas that would also undermine NATO stability as such. And so I don't think thatwe need any Security Council endorsement or mandate. It would be desirable. We'd prefer to have that, but it's not indispensable. It's not imperative. There are some who disagree with that, who believe that it must go to the Security Council. But that would end up giving other countries veto power over what would be essentially actions that are now contributing to instability in the southern-Southeastern tier of Europe, and we think that would be a mistake.

ELIZABETH FARNSWORTH: But, Mr. Secretary, do you have a time frame in mind if the Serbian security forces and Yugoslav troops continue to shell Kosovar villages and many, many refugees are fleeing next week. Would then NATO take some action?

WILLIAM COHEN: Well, again, a lot depends upon NATO's will in this particular circumstance. Those members who are going to insist upon going to the Security Council, that obviously takes more time. Secondly, there's always the prospect that someone in the Security Council would veto any action taken by NATO. And then it would be a question, in addition to that, as to whether members of the respective parliaments or congresses are going to lend their support for any military action. So I think that the time frame is in-undefined right now. Actions taken by Mr. Milosevic or the UCK could accelerate those deliberations, and there's no way of predicting right now what the time frame will be.

ELIZABETH FARNSWORTH: It seems like there's been kind of a pulling back. Last week, NATO made some very definite threats about fairly fast action.

WILLIAM COHEN: The NATO members indicated there should be an immediate use of an air exercise as such to demonstrate to Mr. Milosevic that that power could be used very quickly and very-with very powerful consequences, also, tasking the military so we look at military options. But even during those deliberations several members of the NATO members also argued that it must go to the Security Council first before any actions shall be taken, so that all was very open and made quite public.

ELIZABETH FARNSWORTH: Mr. Secretary, turning now to China and the satellite issue, the New York Times reported today that Pentagon and State Department officials are raising new questions about whether a Chinese-controlled company with close ties to the military should be able to buy some satellites containing sophisticated equipment. These were approved in 1996, but they-a new license is necessary. Should that license be granted?

WILLIAM COHEN: Well, that's precisely why there's an examination of the licensing application right now. The original application has been modified, and that modification will require an examination of the existing procedures. I can't really make any predetermination on whether it should be granted or rejected, but it's now going to a regular process, and I'm sure that all of the agencies and those who are responsible for examining the national security implications, including the Defense Department, will make that determination.

ELIZABETH FARNSWORTH: Earlier in the NewsHour tonight Kwame Holman reported, and we heard Rep. Gerald Solmon on New York say that the technology transfers have been "a national security fiasco," threatening the very security of this nation of ours. Have they been, the technology transfers?

WILLIAM COHEN: Well, I would point out that as far as the commercial satellites are concerned, very strict procedures were observed in terms of what technology would be transferred, how it be transferred, and a determination was made by the State Department concurring the DOD, the Department of Defense concurred that those commercial satellite launches should go forward. And so we have not seen any information. I have not seen any information that would indicate there has been a compromise of our national security as a result of these commercial losses taking place. So I also heard Congressman Norm Dicks call for at least some reservation of judgment on this, that there's an investigation that will be conducted by members of Congress, that should go forward in due course, and everybody keep in mind that we have to have the facts before judgment.

ELIZABETH FARNSWORTH: Do you think that the Chinese now have a military capability they didn't have before because of this transfer?

WILLIAM COHEN: I really have not seen any contribution to a significant improvement to Chinese capability. Beyond that, I think that we'll have to wait for a judgment. I think that what we have done in the past has been consistent with a policy that has been expressed by several administrations. I think we have a choice, and we can either treat China as an enemy or treat them as a country that's going to emerge certainly as a power in the future, and we ought to engage them in international norms of good behavior, and I believe that what President Reagan, President Bush, and President Nixon before that began many years ago is something that is in our national security interest to engage China in a constructive way. That means dealing with them in a very forthright fashion, denying them certain either information or technologies, when it's in our interest to do so, but to cooperate when it's also in our interest to do so. I think we have to engage them. President Clinton is going forward with his meeting. I think that's the right thing to do, and I hope that we can continue to make progress in establishing a good relationship with China.

ELIZABETH FARNSWORTH: Well, Mr. Secretary, that's all the time we have. Thank you very much for being with us.FOCUS - SMUGGLING SMOKES

JIM LEHRER: Now the tobacco bill. We begin with this report from Tom Bearden.

TOM BEARDEN: The prospect of higher taxes and a black market for cigarettes proved to be key elements in yesterday's defeat of the Senate tobacco bill.

SPOKESMAN: The yays and nays are required under the rule. The clerk will call the roll.

TOM BEARDEN: Opponents of the bill, like Sen. Fred Thompson, questioned whether the legislation would be effective.

SEN. FRED THOMPSON: It's based on the faulty premise that we can raise taxes and can raise prices of cigarettes to a point that will discourage you smoking. We can raise it high enough to do that, but not so high as to create a black market.

TOM BEARDEN: Throughout the fight in the previous month the Canadian black market was continually cited as an example of what could happen if taxes were too high. The Royal Canadian Mounted Police patrol this section of the St. Lawrence Seaway between Canada and the U.S. 24 hours a day. To them, it's a super highway for smugglers. Constable Tim Ranger.

TIM RANGER: You name it, they'll bring it across. If there's a dollar to be made, they'll do it.

TOM BEARDEN: Back in the early 1990's, the Canadian police watched almost helplessly as contraband cigarettes flooded across the border by any available conveyance-trucks, snowmobiles, and boats. Canadian law enforcement says it happened because the government had steadily raised taxes on cigarettes from 42 cents to $1.93. Canada's provinces had also increased their taxes. By then, a single pack of cigarettes cost $6. That same pack, sold in the U.S. without Canadian taxes, cost $2. The gap was so large that smugglers couldn't resist. Constable Ranger believes the same thing would happen in the U.S. if taxes were raised enough to create the same kind of profits.

TIM RANGER: We've run into the problem here in Canada, so I can't see why it wouldn't happen in the United States as well, if taxes are too high.

TOM BEARDEN: The Canadian experience was one of the main points of a $40 million advertising campaign, the tobacco companies aimed at the American public.

SPOKESPERSON: America's law enforcement officers may soon face another problem, a black market in cigarettes.

TOM BEARDEN: The public health community fought back, casting doubt on the comparison between the U.S. and Canadian experiences. Former Surgeon General C. Everett Koop.

DR. C. EVERETT KOOP: When you see the advertising from the tobacco industry, consider the source. These people are experts at manipulation and have been lying to the American people for decades.

TOM BEARDEN: Indeed, whether Canada's problem would be recreated in the U.S. is far more complicated than a 30-second television spot. Several Indian reservations, called reserves in Canada, actually straddle the border-reservations that have played a pivotal role in the black market trade. The Akwesasne Reserve, home to the Mohawks, lies smack in the middle of where New York, Quebec, and Ontario come together-making it an ideal thoroughfare for smugglers.

SPOKESMAN: There's no set borderline here or marker. Right where that tree is there, a foot in back of that small tree, the borderline comes through here and goes across and cuts into that building so that the back part of the Mohawk Council Building is on the state side, as well as this whole parking lot is in New York, and where you're standing is in Quebec.

TOM BEARDEN: Law enforcement officials from Canada and the U.S. are clearly not welcome on the reservation because of armed confrontations in the past. That made it much easier for smugglers-both Indians and non-Indians-to ship cigarettes through the reservation. U.S. wholesalers bought massive quantities of Canadian cigarettes and then resold them at $2 a pack to retailers on the U.S. side of the Indian reserves. Smugglers found it easy to transport the cigarettes back to Canada, where legal cigarettes were selling for three times more. Canadian tobacco companies had long exported relatively small quantities of untaxed products to America, where they were sold mostly to Canadian expatriates. But when taxes ballooned in Canada, exports to the U.S. market exploded. Canadian public health activist David Sweanor.

DAVIS SWEANOR: In a market where traditionally there's about 1/2 billion Canadian cigarettes consumed per yea, by 1993 the Canadian companies, the Canadian operations of the multi-national tobacco companies, shipped roughly 20 billion Canadian brand, Canadian blend cigarettes to that market, 40 times what would be consumed in the United States.

TOM BEARDEN: In 1993, estimates are that about 60 percent of Quebec's cigarette sales were being made on the black market. The trade was so well developed that contraband cigarettes were routinely delivered door to door. People were outraged. They demonstrated on the streets of Montreal, overtly selling black market cigarettes and demanding that taxes be lowered. Quebec was also in the middle of an election campaign, and political concerns relating to the highly sensitive issue of Quebec separatism were also factors. The government eventually acquiesced, and federal and some provincial taxes were rolled back. With the profit margin greatly reduced, the trade in contraband contracted but never really went away. Montreal residents can still make the 15-minute drive across the bridge to a nearby Mohawk reserve and buy cheap cigarettes.

TOM BEARDEN: Where do you find cheap cigarettes?

MAN: Cheap cigarettes, it's on the black market. It's people who can find on the street. You can go even on the Indian side.

TOM BEARDEN: This stretch of highway has been dubbed Tobacco Alley. It's part of the Kennawake Reserve. Cigarettes not only are sometimes smuggled through this are, they're also sold legally, and more cheaply. Unlike the Indians in the U.S., Indians in Canada are exempt from paying federal taxes. They're supposed to charge the taxes to non-Indians, but that doesn't always happen. In Canada, the Mohawks are involved with cigarette sales not only because of their location and not just because of the money an otherwise poor tribe can make. They are also involved for reasons unique to Canadian politics. Joe Norton is the grand chief of the reserve. He says many natives here see cigarette sales as a way to assert Indian sovereignty and independence from Canadian law in a province where the sovereignty of French-speaking citizens gets the lion's share of the attention.

JOE NORTON: There's nothing wrong with it-the principle of bringing goods back and forth between our communities for trade, because historically these are our territories; these are our homelands; and we have that right to do that. And if you don't want us to do these kinds of things that you consider to be illegal and cause you problems, difficulties, then let's find alternatives.

TOM BEARDEN: David Sweanor says the Indians are not solely to blame for the black market. He says Canadian tobacco companies knew exactly what was happening when tobacco exports to the U.S. surged.

DAVID SWEANOR: It was all flooding back across the border into Canada, the tobacco companies clearly knew that, and then they said to the government my gosh, we were right, you do have smuggling problems, you'd better lower taxes.

TOM BEARDEN: Don Brown is CEO of Imperial Tobacco, Canada's largest manufacturer of cigarettes. He says his company is not to blame for what happens to cigarettes after they send them to the U.S. market.

DON BROWN: We voluntarily restricted our exports, principally to the United States, because that's our largest export market-through levels that we thought were satisfying the normal demand in the U.S. market. Well, I mean, the demand was huge, we weren't satisfying it and our domestic sales were going down, and the government was unable to control it. We said something's got to stop. We're going to have to start to satisfy the demand, which we did. I mean, you can't separate which is going to a legitimate market and which is going to find its way back here.

TOM BEARDEN: Allegations have been made in U.S. court filings that company officials participated in the smuggling operations. Brown denies the charge.

DON BROWN: Absolutely not. I mean, obviously we knew what was going on. You could see it on your news reports every night. But we were selling to legitimate exports who were satisfying legitimate exporters who were satisfying legitimate markets.

TOM BEARDEN: President Clinton's domestic policy advisor, Bruce Reed, says that American tobacco companies would be held accountable if they ever participated in smuggling.

BRUCE REED: I think the Canadians were asleep at the switch when this happened. If we had that kind of dramatic increase in cigarette exports in the United States, it would not go unnoticed.

TOM BEARDEN: Imperial's Don Brown says that all the administration's plans wouldn't make a difference if there were enough profit to be made by smugglers.

DON BROWN: If the profit is great, everybody gets into it. I mean, we have taxi drivers delivering it all over town, milkmen, bread men supplementing your income. I mean, it's just a lot of profit.

TOM BEARDEN: U.S. law enforcement officials are already asking for more manpower to patrol the long and porous frontier with Mexico. They point to low tobacco prices there as a potential incentive for tobacco smuggling, even without increased U.S. taxes. U.S. officials don't think the two Indian reservations that straddle the border are likely to become any sort of special route for smugglers, because they're isolated and quite remote. There are too many other, easier crossings. California officials say smuggling is already occurring. The state has been losing nearly $50 million per year to smuggling since it raised its tobacco tax.

SPOKESPERSON: I'm the former commissioner of the U.S. Customs Service and the last thing we need in this country is a black market in cigarettes.

TOM BEARDEN: Some current and former officials with the U.S. Customs Service agree it's a problem. They appeared in ads for the tobacco companies.

SPOKESMAN: Children will have unregulated access to cigarettes.

TOM BEARDEN: But Bruce Reed says that with the proper mechanisms in place, the only way a large- scale black market will occur is if the tobacco companies participated.

BRUCE REED: Americans don't smoke Mexican cigarettes. They don't smoke Canadian cigarettes. They smoke American cigarettes, and the only way that you could see smuggling as a problem is if American tobacco companies smuggle their cigarettes out across the borders to smuggle them back. We don't think that that will happen and, if it did, the American people would come down on the companies like a ton of bricks.

TOM BEARDEN: Although the Senate defeated the cigarettes tax, the black market issue is likely to be raised again when the House takes up tobacco legislation later this summer.

JIM LEHRER: Still to come on the NewsHour tonight the political year so far and a foreign correspondence.% ? FOCUS - POLITICAL VIEW

JIM LEHRER: Now a mid-year look at the '98 election cycle, including fallout, if any, from the tobacco bill debate. It comes from three veteran political reporters: David Broder of the Washington Post; Ron Brownstein of U.S. News & World Report; and Elizabeth Arnold of National Public Radio, plus pollster Andy Kohut, director of the Pew Research Center for the People and the Press.Elizabeth, first, how do you read the political impact of the tobacco issue so far?

ELIZABETH ARNOLD, National Public Radio: Well, Jim, I heard all the threats on the Senate floor about retaliation in the fall, but I'd say in the last 18 primaries there hasn't been much evidence that tobacco is upper most in the voters' minds, and the public wasn't that sure that this really was going to curb teenage smoking thanks in large part to the tobacco industry's advertising campaign. But I would say that challengers could make an issue out of an incumbent who takes tobacco contributions and then voted against this bill. They have to make that connection. They can't just say this said Republican is interested in keeping teenagers on cigarettes. They have to make the connection that this particular Republican or incumbent is more interested in getting money from RJ Reynolds than he is in curbing teenage smoking.

JIM LEHRER: Ron, would you agree that it has to be raised by a specific candidate against another candidate, or it isn't going to work?

RON BROWNSTEIN, U.S. News & World Report: Well, I think I agree with Elizabeth, that it's not likely to have much impact as a stand-alone issue in the sense that nothing this year is really having a lot of impact as a stand alone issue. What may be more important is it's part of a larger critique or argument that each side wants to make. I think Democrats very much want to run against a do-nothing Congress, and this would be the centerpiece of the argument that Republicans are sort of systematically swatting away all of these ideas on education and child care, health care, tobacco, that President Clinton came up with earlier this year. And on the other hand, Republicans, I think, are looking toward a fall with a very tax-focused message. They are, you know, resisting the tobacco tax, they're hoping to pass a big tax cut that they expect President Clinton to veto, and they are also talking about, although unlikely to go fully ahead in the Senate with sunsetting the tax code, itself, so tobacco may fit into a broader message, but on its own I agree with Elizabeth, I think it's going to be very difficult to turn many races on this or any other one issue this year.

JIM LEHRER: David, how do you read it?

DAVID BRODER, Washington Post: Listening to a couple of Republican consultants today, Jim, I think there is perhaps a little bit more nervousness on the Republican side, particularly on the House side, than you would get from the comments of the Republican Senate leadership. They're concerned that the tobacco issue in conjunction with another issue, which is the so-called patient's bill of rights in managed care programs, which also may be shunted off in this Congress without action, put those two things together, and particularly in suburban districts, Republicans are concerned that for those suburban women, who are a target group for the Democrats, could make the case that the Republican Party controlling congress is not responding to people's health concerns. And health is still a big issue.

JIM LEHRER: What about the tax point that Ron made?

DAVID BRODER: The tax point I think is a mitigating factor, and it's why I think on the Democratic side they don't see the tobacco issue as being as productive for them as potentially this health care and patient's rights issue is.

RON BROWNSTEIN: And they do tie together, because I think what Democrats want to be able to say in the fall is Republicans said no on a whole series of bread and butter issues, because they're beholden to special interests, and that is sort of why they want to fuse all of this together, and that will be the argument in many House races.

JIM LEHRER: Yes. Andy Kohut, you've done some polling on this. What do the voters tell you about what their concerns are, particularly starting with tobacco, where does it rate?

ANDREW KOHUT, Pew Research Center: Well, tobacco doesn't come up when we ask people to name the issues that are most concerned to them. People say education; they say Social Security. They say cutting taxes, but when we say, is this personally important to you that something be done about this, 48 percent say yes, but, number one is the HMO legislation that David Broder was referring to. 60 percent say that's personally important to me. If there is a hot button-if there is a single hot button issue, it is HMO regulation. People are scared to death about benefits being cut back dealing with managed care.

JIM LEHRER: But on tobacco you all had to raise it. They didn't raise it, right?

ANDREW KOHUT: That's exactly right. We all-we had to raise it, but the public says by a two to one margin they sided with the government, which the government is not very popular, and when we asked about Microsoft, the Microsoft debate, the public largely said it was Microsoft, not the government, so this is an issue where the public wants to see the government come in and do something, and there are some risks for Republicans. There's probably some wiggle room, because the public has some reservations about specific aspects of this bill. They worry about letting the tobacco companies off on the liability issue. They think that some aspects of it, on the other hand, aren't fair to the tobacco companies. So it's not a poison pill, if you will, for the Republicans, but they do run some risks.

JIM LEHRER: Elizabeth, what has your reporting shown on this HMO issue? Would you agree on Ron and David in this and also with Andy's polling?

ELIZABETH ARNOLD: I would. It's right up there with education. It is one that you have to raise yourself, though. Education, for me, in traveling around the last six months is the one that comes up, which is traditionally usually comes up with the economy, with crime, but now education is first and foremost.

JIM LEHRER: How does it come up? What do they say? I mean, what do they say about education?

ELIZABETH ARNOLD: This is what they say, Jim. They say the economy is great. Things are booming. I should feel good about my situation. But I looked down the street and my kids' school there are portable classrooms. I'm not happy with the class size. It's specifically looking at their kids' school and saying this isn't in sync with the rest of society.

JIM LEHRER: Andy, do your polls reflect that?

ANDREW KOHUT: Absolutely. Education is number one. It's the number one issue. It's been that way two years running. When we do our January survey and we ask the public for the president and the congressional agenda, they say they rate education above all else.

JIM LEHRER: And they say that as a federal issue. That's the president and the congress that needs something to do about that.

ANDREW KOHUT: The public warrants action, and they think that Washington should do something about it. Remember how the public screamed about the prospects of killing the Department of Education two or three, or four years-three years ago.

JIM LEHRER: Yes. But David, how does that work politically? How does a candidate take the education issue, let's say in this upcoming election, running for the House, and make that work, whether you're a Republican or a Democrat?

DAVID BRODER: I think it's difficult. The Republicans have a specific proposal, which Clinton has vetoed and will continue to veto about school vouchers and school choice. And that issue is defined, but I don't think that's where most of the voters are at this point. They're looking for ways to get help for their kids' present school, not to get them into another school. The Democrats, I think, have one real problem, which is that most people know at a common sense level that if anything is really going to be done about schools, it's going to be done in the local community, or at the state level, not in Washington.

RON BROWNSTEIN: You know, what's really intriguing to me about this debate is the difference between the approach of the Republican gubernatorial candidates and Republican governors, and the congress. If you look at what the governors are doing and running on this year, whether it's Pete Wilson of California or George W. Bush in Texas, or George Pataki in New York, it's an agenda extremely similar, almost overlapping President Clinton's at the national level, reducing class sizes, building more schools, ending social promotion, expanding charter schools, more early childhood intervention. And they're sort of pursuing a sort of convergent strategy where they go out and they say, yes, let's reform education, but in many cases we'll put more money into it. They're trying to cover their bases, cover their flanks on both sides. At the national level the GOP is pursuing, I think, a much more polarized strategy on education and really on most issues where they are rejecting out of hand the entire agenda that Clinton put out, and they're coming forward with ideas like vouchers like the educational savings account, the so-called Coverdell approach, that they know he is going to veto. In effect, they are steering towards stalemate, rather than what the governors are trying to do, which is bring a coalition together by attaching together Republican and Democratic ideas, very different approach to this mid-term election and sort of a very different read in the mood of the voters.

JIM LEHRER: Andy, speaking of the mid-term election in more general terms, what do your polls show about just what the interest is in these things?

ANDREW KOHUT: Well, we have a very different mood of America than we had four years ago. There's less interest in what's going on in Washington and less interest in politics, and there's less anger, there's less desire to change, and both of those things point to lower turnout. We found four years ago almost half of Americans say they follow government and politics and public affairs most of the time. Now it's only about 36 percent. And that bears out our monthly news interest index trend over the past three years. We also find fewer voters saying they strongly feel we need new faces in Washington. Both of these things bode reasonably well for the Republicans. The Republicans will be advantaged by a pro-incumbency sentiment. People largely want to see their incumbents re-elected, and they will also be advantaged by lower turnout. Lower turnout helps Republicans generally, and it seems to be very much the case in 1998.

JIM LEHRER: Elizabeth, you've been going around the country. How would you measure the interest in this election, in the primaries, thus far, the primary still to come, and the election generally?

ELIZABETH ARNOLD: Well, turnout has been low, and that's typical for a mid-term election year. It's been compounded by the good economy. But I wouldn't go so far to say that voters are apathetic. In the Oregon primary a few weeks ago-there's a new elected position called Superintendent of Public Instruction-16 people ran for that position. I don't think that that's-I think what's going on is voters are looking for a different way to participate, a more effective way to participate, and they used to be mad at Washington. Now they don't really expect that much from Washington, and they're looking locally. There's great interest in city council races and sheriffs' races and races like superintendent of public instruction.

JIM LEHRER: Yes. Go ahead, Andy.

ANDREW KOHUT: But if we look at the primaries that have been held so far, there have been nine primaries that had both gubernatorial and Senate races. Four years ago those primaries averaged a participation rate of 22 percent, as they did in 1990. It was 18 percent in 1998. So far, this lower interest is, indeed, translating into fewer votes. And if we were to apply that to the 36 or 37 percent who normally vote in mid-term, we could get them real close to 30 percent, only 30 percent of American voters voting. Now it's too early to-people haven't figured this one out. They haven't thought about what they're going to do on the first Tuesday in November, but the early signs are not good.

JIM LEHRER: How do you read the signs?

DAVID BRODER: I think both Andy and Elizabeth are right in terms of this driving the current situation. There's one other thing that we need to mention as a reason for people being turned off in Washington. They think the press in Washington is preoccupied with scandal stories, and they're sick of it, and they have an accurate sense that not much else is really being done here. But the caution I would have is that if we'd been having this discussion four years ago, I don't think any of us would have been smart enough to see the Republican sweep that, in fact, developed. My great friend and mentor, the late Jim Roe, used to caution me, David, there is a trend. Sometimes you see it early; sometimes you see it late. I'm not sure that in the end we won't see that there is something moving up there.

JIM LEHRER: What do you want to add to that?

RON BROWNSTEIN: Well, the only trend-the interesting trend that's out there, beside-there's a difference between low interest because people are angry and cynical and turned off from Washington and low interest because they're basically feeling better about the direction of the country than they have really at any time for a sustained period in the last 20 years or so, and what you saw in the California race, I think it's quite revealing-

JIM LEHRER: The governor-

RON BROWNSTEIN: the governor's race-where Al Checchi, the businessman, spent $40 million basically saying send me to Sacramento to turn this place upside down and to really shake it up and to make big bold change, and he was beaten by a candidate who-a professional politician, a career politician-I mean, the ultimate opprobrium-Gray Davis, who said, look, I can make-you know, I can tinker here and there and I can make this thing work a little better, but we're moving in the right direction and we don't need that kind of fundamental change. I think that's a message that we're probably going to hear more of in the fall and people will be less afraid to talk about having-being part of the political system because the political system is producing somewhat better results on a whole series of questions.

JIM LEHRER: Okay. Elizabeth, gentlemen, thank you all very much.% ? FOREIGN CORRESPONDENCE

JIM LEHRER: Finally tonight a foreign correspondence, our occasional conversations with American reporters serving overseas. Phil Ponce has tonight's.

PHIL PONCE: Joining us is Kenneth Cooper, who covers South Asia for the Washington Post. He's based in New Delhi. A Pulitzer Prize winner, he's been on this assignment for two and a half years. Welcome, Ken. The big news out of India, of course, has been the testing of nuclear devices. Just how popular was that decision for the average Indian on the street?

KENNETH COOPER: Well, even before they tested in India, all the opinion polls showed about 70/75 percent of the people approved of such tests. In the aftermath of the test, the first Saturday thereafter there were celebrations in Delhi and other major cities, organized to a certain extent by the ruling party, where you had people distributing sweets, which is a form of celebration, glasses of cold milk. It's very hot weather. This is also a sort of celebration, throwing firecrackers, and the like. And average people-I remember right after the announcement I rushed into my home, which is also my office, and rushed out again to go to a briefing where there was more explanation given, and I ran into my neighbor, who's an insurance agent, and I told him what had happened. And his response was very nice, very nice.

PHIL PONCE: Why is that? Why were people so pleased about it? What did that reaction tap into?

KENNETH COOPER: A sense of some insecurity in the nation, a great deal of it associated with China, a larger neighbor, which with India was very close in the first couple of decades of their independence in modern China, and then in 1962, China, in the view of Indians, betrayed India and attacked them in a border war that some historians credit with leading to the death of Jowala Neru, the first prime minister, he was so heartbroken by his miscalculation about how friendly the Chinese were. And it's widely remembered not just by people who were alive at the time but they've passed on the sense of distrust and insecurity about China to their children.

PHIL PONCE: How about when Pakistan set off its nuclear devices, what was the reaction in India then?

KENNETH COOPER: Well, in-between-I think it serves to talk a little bit more about what it was like before that. I spent a lot of time at cocktail receptions of the sort that go on in this town in Washington in-between the two tests, surrounded by English-speaking, educated, elite, upper caste Indians, who were very defiantly proud in a very bullish way. We showed the United States. We're important. This shows we're important. And it was a very upbeat mood, sort of gleeful. The moment that Pakistan tested that glee started to turn to a bit of fear, because of the palpable feelings we had in this country during 40 years of a Cold War and the thought of being vaporized in a nuclear attack started to set in. I think before that time there was an illusion that maybe Pakistan didn't have the technology to do it, maybe the United States would buy off its Cold War ally with a package of aid and Pakistan wouldn't test, but as soon as they did, the mood changed dramatically.

PHIL PONCE: How is-are you in a position to say how the average Indian feels about Pakistan, how the average Pakistani says he spent time in Pakistan as well, how the average Pakistani feels about India, is it hatred, is it something else?

KENNETH COOPER: It's mutual hostility, and there's a lot of deep resentment on both sides about the events of partition in 1947 August, when British Columbia, India, was divided into predominantly Hindu/Indian predominantly Muslim Pakistan. Millions of people moved in either direction to settle with their religious community, and in the process at least 1/2 million people, maybe more, were killed. So there's bitterness about that and also about the fact that these migrants had to pick up and leave behind all of their property. Some very prominent leaders of the Hindu nationalist Barta Janitu Party, which leads India's government, are such migrants from Pakistan. And I think that a lot of their feeling and animus towards Pakistan has really been their family's own personal experiences.

PHIL PONCE: What preconceptions have you encountered in India about the United States?

KENNETH COOPER: Well, there's a view among some members of the educated elite who have not been to the United States, that the United States is sort of the source of all things bad: pollution, over-development, materialism, greed. It's almost a caricature of our country. I find,by the way, that Indians who've gone to school here or visited had quite different views, more balanced views about the quality and nature of this country.

PHIL PONCE: Have you talked to any Indians who previously held one view and then came here and thought something else?

KENNETH COOPER: My wife and I have a good friend who's become a good friend, who was a yoga teacher, a man in his 40's, went to sort of a left-leaning college and developed Marxian views in his youth and have moved more toward a Hindu Nationalist position, and he and his wife stayed with us for a week, week and a half one time, and every night at dinner we had these long debates that basically revolved around his premise that the United States basically represented all that was wrong with his country and caused all its problems. And there were some pretty intense debates, some of which made my wife uncomfortable. It was all very honest and open. And then maybe a year later a man and his wife came to the United States and his comment on his return was something like completely different from his previous view, he said, "It's a land with many possibilities."

PHIL PONCE: How about you, did you have any preconceptions about India or Pakistan when you went that have subsequently changed?

KENNETH COOPER: Well, I knew India was a complex place. But, quite frankly, I'm not sure an outsider could ever fully fathom it. And, as I've been there, I've sort of peeled away layers. One of the things that makes it an exciting place to work is that you discover more things as you're there. I often say that traveling around India, one of the things that makes it really engaging to be a journalist there, that when you go around a curve, around a corner, you literally never know what you might see. And you do see things that surprise you, that shock you, that amuse you.

PHIL PONCE: Give me an example of something that surprised you or shocked you or amused you.

KENNETH COOPER: Well, I went to Kashmir, the disputed Himalayan territory that's a subject of dispute between India and Pakistan, and I went there for an election. And it was an election in an area that had-there'd been an insurrection, a separatist insurrection that had been suppressed enough to have an election, and early one morning on election day myself and other reporters, western reporters, were in a car. We went around a curb and I saw something that I thought I could never imagine seeing. I saw security offices with long batons forcing people to go to the polls to vote. Now one of the reasons this was shocking to me as an African-American I remember when-I don't remember but we had a history where people were intimidated-my people were intimidated with force and the threat of force so that they wouldn't vote. So here you had force being used people-to compel people to vote. And it was very shocking, in fact, to see.

PHIL PONCE: As an African-American, how were you perceived and how were you treated, how do treat it, how do people greet you in India and Pakistan?

KENNETH COOPER: I would say by and large there's no difference in how they deal with me most of the time and how they would deal with an American who's living there, representing a corporation, and has a certain lifestyle. I'm a Farengi.

PHIL PONCE: Farengi meaning?

KENNETH COOPER: Foreigner. Slightly pejorative, with some colonial connotations. But I also find there are occasions when I talk to some Indians, again with limited exposure to this country, who because of what I look like are a little confused about who I am. And they often ask me, whatis your country? And I said, America, and they say, "America?". And there's usually an awkward pause, and I say, yes, African-American. And they still look confused, and if they look confused for too long, I say, hey, we come in all different colors.

PHIL PONCE: Ken, thank you very much for joining us.% ? RECAP

JIM LEHRER: Again, the major stories of this Thursday, Senate tobacco bill supporters vowed to attach it as an amendment to every new bill that comes up for debate. On the NewsHour tonight Defense Secretary Cohen said future NATO action in Kosovo should not advance the cause of ethnic Albanians seeking independence from Serbia. And President Clinton nominated U.N. Ambassador Bill Richardson to be Energy Secretary and Richard Holbrooke to the U.N. post. We'll see you online and again here tomorrow evening with Shields & Gigot, among others. I'm Jim Lehrer. Thank you and good night.