The NewsHour with Jim Lehrer

JIM LEHRER: Good evening. I'm Jim Lehrer. On the NewsHour tonight a Newsmaker interview with President Jiang Zemin of China, plus congressional reaction to his visit and summit meeting with President Clinton; excerpts from the day's Senate campaign finance hearings; and an election report on the race for mayor of Minneapolis. It all follows our summary of the news this Thursday. NEWS SUMMARY

JIM LEHRER: President Jiang fielded more criticism of China's human rights policies today. It came from congressional leaders, who held a breakfast for him at the capitol. Tom Bearden reports on President Jiang's final day in Washington.

TOM BEARDEN: The Chinese president took a walking tour of the U.S. capitol's rotunda this morning with House Speaker Newt Gingrich as his guide.

REP. NEWT GINGRICH, Speaker of the House: This is a copy of the Magna Carta.

TOM BEARDEN: The argument over whether the basic human rights embodied in the Magna Carta and the U.S. Constitution should apply to the citizens of China continued as President Jiang had a private breakfast with congressional leaders. Jiang told the Congress what he told the President yesterday; that human rights were relative things and part of China's internal affairs, off limits to foreigners. Congressional leaders said they hadn't pulled any punches.

REP. NEWT GINGRICH: I must say that I think the members of the Congress were very direct on religious liberty, very direct on issues of proliferation, very direct on questions of abortion and compulsory abortion, very direct on questions about jamming radio, American Radio Free Asia, and also very direct in talking about Tibet and the Dalai Lama.

SEN. THOMAS DASCHLE, Minority Leader: I think it's very clear that he left here with a clear understanding of the importance, the consequence, the significance that we put to these issues. He got it from the President. And now he got it from the Congress.

TOM BEARDEN: After the congressional breakfast, Jiang sat down for an interview with the NewsHour, including a question about Tibet.

PRESIDENT JIANG ZEMIN, People's Republic of China: [speaking through interpreter] Tibet is absolutely an inalienable part of Chinese territory. Therefore, this issue is an internal affair of China.

TOM BEARDEN: Later in the day Jiang addressed members of the Asia Society. He was introduced by former Secretary of State Henry Kissinger, who said he hoped history would view Jiang's current visit in the same light as President Nixon's pivotal journey to China. In his speech Jiang promised the Chinese government would encourage a more open society and would resolve the status of Taiwan peacefully.

PRESIDENT JIANG ZEMIN: The basic policy of the Chinese government for the settlement of the Taiwan question is peaceful reunification and one country, two systems.

TOM BEARDEN: Meanwhile, Chinese and American officials were announcing the largest single purchase of American aircraft in history. Commerce Secretary William Daley presided over a signing ceremony where China committed to buying $3 billion worth of jet aircraft from the Seattle-based Boeing Company. President Jiang concluded the Washington phase of his visit this afternoon when he boarded his plane for the short flight to Philadelphia.

JIM LEHRER: We'll have our interview with President Jiang right after this News Summary. Attorney General Reno said today she planned to discuss campaign fund-raising with the Chinese justice minister next month in Washington. Republicans have charged China tried to influence last year's elections with illegal contributions. Chinese officials have repeatedly denied those charges. A major legislative logjam was broken today in the U.S. Senate. Democrats said they would stop their go-slow tactics. They did so after Republican leaders announced the debate and vote on campaign finance reform would be scheduled next year. Both sides agreed it would be considered no later than March 6th. At the Senate hearings on campaign finances today Interior Secretary Bruce Babbitt denied party politics influenced any of his decisions. Republicans had accused him of rejecting a Wisconsin gambling casino project because state Democratic Party donors opposed it. Chairman Fred Thompson said Babbitt had contradicted his testimony in letters to Congress and that, in itself, was troubling. We'll have excerpts later in the program. The stock markets had another down day today on Wall Street. The Dow Jones Industrial Average closed down 125 points at 7381.67. Hong Kong closed nearly 4 percent lower, after its 19 percent gain of yesterday. In Europe, London, Paris, and Frankfurt markets had similar days. In Iraq today the government refused entry to two American weapons inspectors. Yesterday U.S. observers already in Baghdad were given seven days to leave. Iraq has objected to having any American Serb on the United Nations Special Commission charged with making sure Iraq dismantled its weapons of mass destruction. State Department Spokesman James Rubin said Iraq must cooperate with the UN or face serious consequences.

JAMES RUBIN, State Department Spokesman: There should be no uncertainty in Iraq about what the Security Council is insisting Baghdad do: reverse its action and comply immediately and fully with its obligations. This is not an attack on the United States personnel. This is an attack on the very fundamentals of the UN system. It is the Security Council that set up the UN Special Commission and it is the Security Council that has been attacked by this attempt to differentiate between personnel.

JIM LEHRER: Rubin also announced Israeli and Palestinian delegations will convene in Washington Monday for peace talks. Secretary of State Albright arranged those meetings. And that's it for the News Summary tonight. Now it's on to President Jiang of China, plus congressional reaction to his visit, the Senate campaign finance hearings, and the race for mayor of Minneapolis. NEWSMAKER

JIM LEHRER: The President of China, Jiang Zemin, agreed to one press interview while in the United States. It was with us this morning at Blair House. I talked to him for 33 minutes, 12 minutes shorter than we had been scheduled for. He spoke through an interpreter in Mandarin, Chinese. What you will hear are his translated answers.

JIM LEHRER: Mr. President, welcome. President Clinton said yesterday that China was on the wrong side of history when it comes to the issue of human rights. Do you disagree?

PRESIDENT JIANG ZEMIN, People's Republic of China: [speaking through interpreter] Different countries have different historic tradition, cultural tradition, and level of economic development. We recognize the universality of human rights. However, each country has its own national conditions, and human rights should also fit the respective national conditions of each country.

JIM LEHRER: What do you think he meant when he said wrong side of history?

PRESIDENT JIANG ZEMIN: [speaking through interpreter] He didn't spell it out actually. However, if one is to apply the democratic principle that you apply here in the United States, then he will--we believe not only in the United States but also in other countries in the world different concepts or alternatives to this issue should be allowed.

JIM LEHRER: Does it disturb you to be questioned as much as you have about human rights?

PRESIDENT JIANG ZEMIN: [speaking through interpreter] I'm not disturbed at all. And I believe that China does not feel that it has done anything wrong in the field of human rights. China has a tradition of 5,000 years, and different countries have their different history and culture. The famous Chinese philosopher in ancient times, Confucius, once said, "Isn't it a pleasure to have friends coming from afar." I am coming to the United States for my visit upon the invitation of President Clinton. And I've already felt that I'm welcomed by majority of the American people here. I have been given a warm welcome by President Clinton, and I've also got the feeling of the friendship between our two peoples. Sometimes some noise came up; this is just natural.

JIM LEHRER: The noise did not bother you?

PRESIDENT JIANG ZEMIN: [speaking through interpreter] No.

JIM LEHRER: Why not?

PRESIDENT JIANG ZEMIN: [speaking through interpreter] Because, as I pointed out earlier, I feel pride and nothing to hide deep in my mind because I believe that the task for me is to ensure that the 1.2 billion Chinese people have adequate food and clothing. However, this is no easy task.

JIM LEHRER: But is it not true, sir, that demonstrations and protests like the ones that are going on here in the United States about your visit and about China would not be tolerated in China, that they would be dispersed, or the people involved would be arrested?

PRESIDENT JIANG ZEMIN: [speaking through interpreter] First of all, one should recognize that demonstrations have, indeed, occurred in China during different times and different periods. However, the Chinese people went on with this through their own means and in their own forms. As a friend of the American people, I believe that the United States should give serious consideration to the fact that our world is a rich and diverse one. Therefore, it's impossible to have only one model in the world, or to expect that people throughout the world would all follow the U.S. way of thinking because the difference in different countries is so huge. China is home to 22 percent of the world's total population. However, God has only given us 7 percent of the world's total arable land. Therefore, it's no easy task for us to feed so many people with these lands. But I'm very happy to see the development we have made in our agriculture. And, for the past few years, thanks to the help we got from the favorable climate, we also achieved bumper harvests.

JIM LEHRER: The impression from the news conference yesterday that these differences over human rights between your country and the United States are deep and irreconcilable, is that a correct reading?

PRESIDENT JIANG ZEMIN: [speaking through interpreter] As I pointed out earlier, it's just natural for our two countries to have some different views on this issue due to such different aspects that exist between the two countries. And the only approach to this is to work to promote mutual understanding between leaders of the two countries and peoples of the two countries so that we can gradually come closer to one another. And I am an optimist; therefore, I am full of confidence about this.

JIM LEHRER: The American press today described that news conference that you and President Clinton had yesterday as an unprecedented blunt exchange, almost a debate between the two leaders of the two most powerful nations in the world. Is that how you saw it?

PRESIDENT JIANG ZEMIN: [speaking through interpreter] I believe yesterday's press conference gave us an opportunity to express our views freely. Real good friends mean that they should treat each other with all sincerity and they will not hide any views from the other.

PRESIDENT JIANG ZEMIN: [In English] Do you agree with that?

JIM LEHRER: But that's how you saw that yesterday, as a healthy exchange and not anything that hurt the relationship; you felt it helped the relationship?

PRESIDENT JIANG ZEMIN: [speaking through interpreter] My answer is yes, I don't think that it hurt it, the relationship. Instead our two countries, we two exchanged views in a very sincere manner. And, as far as the Chinese side is concerned, we have all along believed that we need to work to seek common ground, while putting aside differences. And we need to look for as much common ground as possible.

JIM LEHRER: What is the most important common ground between the United States and China as we sit here right now?

PRESIDENT JIANG ZEMIN: [speaking through interpreter] Now we are approaching the end of the 20th century, and very soon we are going to bring in the next century. The United States is the most developed capitalist country in the world, whereas China is the biggest developing one in the world. And both sides share the responsibility to bring a world of peace, stability, and prosperity into the new century. And I believe the two sides need to work to promote mutual understanding, expand common ground, strengthen cooperation, and build the future together.

JIM LEHRER: And the differences, the philosophical differences over human rights, over a way of governance, these things are not obstacles to this?

PRESIDENT JIANG ZEMIN: [speaking through interpreter] I don't believe they are insurmountable gap between us. And, as someone who studied natural science back in university, I am of the view that both nature and human society are rich, and, therefore, it's impossible that there is only one model exists there. And, as far as the development of the Chinese economy is concerned, ever since the 14th National Congress of the Chinese Communist Party had been convened, we have been proposing that we need to work under the theory of Deng Xiaoping to achieve the establishment of a market economy under these socialism terms. And what we are working to build is a socialist market economy. For instance, Germany is under the social market economy. And here in the United States it is the free capitalist economy. But this by no means stand in the way of the free exchange of trade between the two countries. Nor do we have the intention of exporting our socialism with Chinese characteristics to you here in the United States.

JIM LEHRER: Explain to the average American what the current form of government is in China. How would you describe it in American terms?

PRESIDENT JIANG ZEMIN: [speaking through interpreter] In our endeavor to develop our economy, we will work to achieve a diversified form of ownership, with public ownership playing the predominant role. Under this mechanism we have the public ownership, collective ownership, private ownership, and even individual ownership. In addition, there are also joint ventures and also solely overseas-funded enterprises in China because at present the level of economic development in China is still somewhat backward. Therefore, we need to follow Deng Xiaoping's initiative to allow some parts and some people in China to become rich first before achieving common prosperity.

JIM LEHRER: I was referring more to the political system, the governing of the country from a political point of view. How would you describe that?

PRESIDENT JIANG ZEMIN: [speaking through interpreter] With the founding of the People's Republic of China, the constitution of new China has been formulated, which stipulates that the National People's Congress is the supreme power-holding organ in China. At the same time, we also have the multiparty cooperation system with the leadership of the Chinese Communist Party, and we also have the Chinese People's Political Consultative Conference. And we have our state council, which serves as the executive branch. Naturally, the Chinese words of our state council carry different meaning when it is translated literally into English, for in the United States we--that means your State Department or the department in charge of foreign affairs. And Premier Li Peng of the State Council is concurrently one of the members of the standing committee of the Politburo of the Chinese Communist Party. And I am the President of the People's Republic of China.

JIM LEHRER: As a matter of history, do you agree with those who say Communism is a fading concept, a fading philosophy of government?

PRESIDENT JIANG ZEMIN: [speaking through interpreter] As the General Secretary of the Chinese Communist Party, ever since the day I joined the revolution, I've been cherishing the ideal to achieve Communism. And I don't believe this is a fading concept. However, I believe it's fair to say that perhaps in the past people had too much ideals. And now we need to work under the initiative of comrade Deng Xiaoping. And we should also follow the concept, which I would like to quote a Chinese saying which goes: "A thousand mile journey need to start from the first step." And, therefore, as I pointed out in the report I delivered to the 15th Party Congress, we're now under the primary stage of Socialism. And, in the words of Mr. Deng Xiaoping, we are working to build a Socialism with Chinese characteristics. And this primary stage of Socialism may also last for many years to come. And I am pragmatic about that.

JIM LEHRER: Could it possibly be too that there could be an evolving change in democracy and this human rights area that isso much trouble to the United States and others as well?

PRESIDENT JIANG ZEMIN: [speaking through interpreter] I believe most importantly there is a need to deepen mutual understanding about each other's situation. And dialogues can also be carried out on the basis of non-interference in each other's internal affairs.

JIM LEHRER: To specifics: Do you consider the appointment of a Tibet affairs coordinator at the US State Department interference in your internal affairs?

PRESIDENT JIANG ZEMIN: [speaking through interpreter] Tibet is absolutely an inalienable part of Chinese territory. Therefore, this issue is an internal affair of China. I read many books about your history. And back in middle school I also read articles written by Abraham Lincoln. What Lincoln did in this aspect was to emancipate slaves in the United States. And in China, in 1959, we began to work to abolish serfdom in Tibet. And actually theocracy had been opposed by people throughout the world ever since the Renaissance period. And, therefore, what we did there was also that we worked to abolish theocracy in Tibet.

JIM LEHRER: So what the United States thinks about Tibet is irrelevant to China, correct?

PRESIDENT JIANG ZEMIN: [speaking through interpreter] I believe interest shown on this issue and many others are matters for yourself. However, as for the issues that are within the framework of the internal affairs of China, there are channels for us to gradually achieve the settlement of these matters.

JIM LEHRER: Taiwan fall into the same category?

PRESIDENT JIANG ZEMIN: [speaking through interpreter] It goes without saying that Taiwan is also a province of China and an inalienable part of China. Therefore, we will eventually achieve reunification of Taiwan with the motherland according to the principle of peaceful reunification and one country, two systems. The concept of "one country, two systems" was first initiated by Deng Xiaoping for the settlement of the Taiwan question. However, this concept was put in place first in Hong Kong. And actually the Hong Kong issue and the Taiwan issue are of different categories. The Hong Kong question is a question left over from history, and it is between China and the United Kingdom; whereas, Taiwan is China's internal affair. And, because of the civil war, the Koumintang went to Taiwan and they left the mainland. I believe in this aspect this part of history about your civil war here in the United States may be relevant. According to the historic books I read about that part of history and also the movie pictures, such as the one called "Gone with the Wind," all showed me that the civil war you fought with the leadership of Abraham Lincoln was for the purpose of uniting America together, and I believe actually you succeeded in doing so. Therefore, the American people will understand the feeling of the Chinese people to see the reunification of Taiwan. And today I will only give you one example to show this. Back several years ago, I once met a delegation of about 700 compatriots coming from Taiwan to the mainland. And the second one on the list of the delegation happened to be my middle school classmate and I immediately recalled his name.

JIM LEHRER: Finally, Mr. President, as a matter of Chinese leadership history, Mao's legacy was that of a revolutionary, Deng Xiaoping's as a reformer. What would you like for your legacy to be, how would you like to be known?

PRESIDENT JIANG ZEMIN: [speaking through interpreter] I believe the only thing I would like to do is to continue to follow the Deng Xiaoping theory and to continue to move along the course of reform in opening up as initiated by Deng Xiaoping. However, as I also made it very clear in the report I delivered to the 15th Party Congress, we are Marxists. And we also believe that Marxism, the Mao Tse Tung thought, and the Deng Xiaoping theory are actually integrating with one another. Karl Marx was a great social scientist; however, both Marx and Engles had not so much experience in the actual practice in that aspect. And Mao Tse Tung founded the People's Republic of China and the socialist system in China. And we also believe that great achievement was scored. However, mistake was also made in his late years. And Deng Xiaoping summed up the historic experience and opened the cause of reform in opening up, which I will continue to follow.

JIM LEHRER: Mr. President, thank you very much.

PRESIDENT JIANG ZEMIN: Thank you.

JIM LEHRER: A reminder: That interview was recorded this morning at Blair House. FOCUS - ENGAGING CHINA

JIM LEHRER: Still to come on the NewsHour tonight congressional reaction to Jiang and the China summit, the Senate money hearings, and the Minneapolis mayors race. Margaret Warner has the congressional story.

MARGARET WARNER: And joining us now are four members of Congress who've met with President Jiang during his three-days in Washington: Democratic Congresswoman Nancy Pelosi of California; Republican Congressman Doug Bereuter of Nebraska; Democratic Senator Dianne Feinstein of California; and Republican Congressman Christopher Cox, also from California. Congresswoman Pelosi, you were in the breakfast meeting this morning. President Jiang, I gather, got a pretty thorough grilling. How responsive did you find him to your concerns in that setting?

REP. NANCY PELOSI, [D] California: Well, I start my remarks by saying that I anticipated that we would have a brilliant future with China economically, politically, diplomatically, culturally, in every way with the Chinese people. But that would only be possible if China respected the rights of its people according to its own constitution, as well as universal principles of human rights. Many of us had issues about proliferation, Tibet, forced abortion, religious persecution, the list goes on, and my reaction to President Jiang's answers were that he was evasive. He said that, for example, that he characterized the occupation of Tibet as freeing the Tibetan people from serfdom. He minimized that, and it really was a blessing to Tibet, that China had invaded. He said the harvesting of organs for profit was just a rumor; it didn't happen; there was no forced abortion; there's no religious persecution. Chen Chi Chen, the foreign minister, was deferred to on the issue of proliferation. He said that China has never engaged in the proliferation of nuclear technology. All of these things are not true. Unfortunately, with the cordial meeting that it was, there was no very much candor to go with it.

MARGARET WARNER: Congressman Bereuter, did you find him as evasive?

REP. DOUG BEREUTER, [R] Nebraska: I think that no one went away satisfied with the responses that we heard. I think, however, it was very important for President Jiang to hear the comments, concerns, expressions of questions that were offered very straightforward fashion. The meeting was cordial. It was, of course, proper decorum, but it was very direct. And that, coupled with the kind of remarks and the noise that President Jiang referred to as he heard demonstrations around the city, I think were very important parts of the message that Americans, including members of Congress, wanted to send to President Jiang on his visit.

MARGARET WARNER: Congressman Cox, you've been critical of China in certain respects. How did you find he handled that directness from all of you? I mean, was he as unflappable as he seemed to be just now in that interview with Jim, or did you feel you could ever get him to respond in some way? I don't know. I won't put words in your mouth.

REP. CHRISTOPHER COX, [R] California: Well, it's interesting that you described his presentation on this interview that we all just watched as unflappable because frankly I thought that what you saw is what we saw this morning and that it was very different from the President Jiang that I met with in Beijing earlier this year. At that time I found him completely impassive. I raised with him directly the question of Wei Jing Shang, of Wang Dan, and so on, gave him a list--

MARGARET WARNER: People who are being held--

REP. CHRISTOPHER COX: Yes, political prisoners--Wei Jing Shang being the most notable of them, the father of Chinese democracy. And he was simply impassive. He said not a word. What we saw this morning and what you saw during this interview was at least a loquacious President Jiang, much more media friendly in that sense, but I agree with the remarks of my colleagues. I thought he told several whoppers this morning. I mean, to expect us to believe, as he represented, that not only is there no connection between the executions and the organ sales but there are no organ sales at all--when this is fully documented--is really an affront; likewise that China has never sold weapons of mass destruction technology when just this year the Clinton administration listed the People's Republic of China as the No. 1 proliferator in the world of weapons of mass destruction technology.

MARGARET WARNER: And, Sen. Feinstein, you reportedly went, I think, to Beijing. You're an old friend of his or old acquaintance, and gave him some advice on how to handle this trip. How do you think he handled it, and do you agree with your colleagues, that he told some real whoppers this morning?

SEN. DIANNE FEINSTEIN, [D] California: I think it depends on what you call a whopper. And I think there are very strong views on this side of the ocean among some people. I think there's a very different perspective in China. The question that I've always had is how do you encourage a relationship that can be positive and in the long-term can achieve some of the things that were talked about this morning without driving China's back against the wall, isolating them, and turning it into an adversary? And that's a very fine balance. I've been very proud of the President of the United States. I think the summit--and you're concentrating on every negative part and not on any of the positive parts of what was accomplished. I view the accomplishments as substantial. There will be ongoing communication. Up to this point there was no ability of the President of the United States and the president of China to even talk with each other on an emergency or an acute basis. There now will be. We have now instituted dialogue on the top level. It's going to continue. I think there's going to be an opportunity for an increasing repartee back and forth, instead of confrontation. The Nuclear Proliferation Agreement, the Energy Agreement, the Rule of Law Agreement, the agreements with respect to bringing their military more in contact with our military, the narcotics, DEA presence in China, all of these things are a major beginning. We knew--everyone knew that there was going to be a tough edge on human rights. And you've heard in the interview that was just given on Communism part of that tough edge. I don't agree with much of what he said about Communism. I mean, after all, Communism is a total state ownership of land and business. And the Chinese government is going in exactly the opposite way. So exactly the opposite thing is happening from what he was saying on television, in my view, but I think the important thing is that he heard the concerns of my colleagues. They represent a lot of American people. He heard their views. He will consider those views, and I think in the meantime the communication will be ongoing, and I think this is only healthy.

MARGARET WARNER: Congresswoman Pelosi, do you agree with that point that if you set aside human rights or a couple of negative issues, that having the summit was a very worthwhile exercise and there were real achievements?

REP. NANCY PELOSI: Well, I think that human rights are fundamental to our relationship. That's why I said this brilliant future depended on China's respecting its own people. But I tink that it is important that the leaders of our two countries meet. I believe that we should attempt to be engaged in effective engagement; we don't have that now. I oppose the state visit, the celebratory nature. I didn't think we should roll out the red carpet to the leader of the regime that rolled out the tanks in Tiananmen--or get a 21-gun salute to that same person. What I do think--

MARGARET WARNER: And why--explain--excuse me, but why exactly?

REP. NANCY PELOSI: Well, I think the reasons are self-evident; that it is important for our leaders to meet--a working visit would have been a more appropriate auspice. It might have defused some of the demonstrations of protest to the nature of the visit that President Clinton was providing for President Jiang. But I want to get to a more fundamental point, and that is one of the achievements that's being proclaimed from this summit, the proliferation agreement, is very, very, very--should be a great reason for concern. The agreement is based on promises, once again, and not on performance on the part of the Chinese government that they will not proliferate weapons of mass destruction, in this case nuclear. The Chinese promised in May of 1996 that they would not assist any unsafe-guarded states with nuclear technology. And the report of the CIA from 1996, the spring of 1996 to the end of the year, had them as "the" most significant proliferator and provider of weapons of mass destruction, including nuclear technology, to Iran and to Pakistan. The Office of Naval Intelligence this year--1997--has said--has also spoken to that point using China as the--providing most dangerous technology to the Persian Gulf region.

MARGARET WARNER: All right.

REP. NANCY PELOSI: So for the President to try to say that China has--is worthy--and I say that because we have a law which very clearly points out what a country must do in order to be certified to be in accord on the nuclear cooperation accord, China hasn't done that. What China has done is repeatedly broken promises, one after another, that they will not proliferate weapons of mass destruction.

MARGARET WARNER: Okay. Let me let Congressman Bereuter in on this point. What about this nuclear agreement, which the President certainly said he regarded as one of the centerpieces of this summit?

REP. DOUG BEREUTER: Well, first of all, I'd like to say that I think the fact the summit was held was a very appropriate step. I'm pleased that that took place. There were accomplishments. One should never over- sell what was expected. The administration did not. I, in fact, like a lot of my colleagues on both sides of the aisle, would like to see this summit, this exchange of our top leadership's views and dialogue take place on a regularized basis. I think that would be more productive. Now, I have had briefings today, and I feel confident on the basis of those briefings that, in fact, there's written agreement on what the Chinese will not provide to Iran. And that's exactly one of our important objectives. It's no--there's no question in the past they have provided nuclear materials to Pakistan. That's my judgment. I think it's well based in that judgment. But with respect to the Non-Proliferation Treaty, the things that, in fact, China has involved itself in Iran, did not violate the NPT. But now we have a very specific indication there ending the two elements that do not violate the NPT as soon as possible, with a very specific time frame, and they will end any kind of nuclear cooperation with China, with Iran. Now, if, in fact, there's a violation the President should and could be expected to immediately stop our supply of the domestic nuclear components for power to the PRC.

MARGARET WARNER: All right. Congressman Cox, your view on this, because you've written extensively about it, the nuclear agreement.

REP. CHRISTOPHER COX: Well, of course, this raises in importance the misrepresentations that President Jiang made this morning, the fact that he could tell us that China has never ever sold any nuclear technology to anyone in the teeth of our knowing to a certainty that China has sold ring magnets for the enrichment of uranium, as well as arrange to sell missiles to Iran, suggests that we ought to be very, very wary, indeed of accepting paper promises at the summit in return for an immediate benefit. And that is civilian nuclear technology that we will now make available to the People's Republic of China.

MARGARET WARNER: All right.

REP. CHRISTOPHER COX: My concern is--

MARGARET WARNER: Congressman, I'm sorry. We are out of time, and I'm terribly sorry. Thank you all very much. SERIES - THE MONEY CHASE

JIM LEHRER: Kwame Holman reports on today's Senate campaign finance hearings.

KWAME HOLMAN: If anything rivals the ability of recent political campaigns to generate money it's casino gambling. And the two came together in today's hearing of the Senate Governmental Affairs Committee.

SEN. FRED THOMPSON, Chairman, Governmental Affairs Committee: In late 1993, three small four bands of Wisconsin, Chippewa Indians applied to have the Department of Interior take land in Hudson, Wisconsin, into trust, so that the Hudson bands could convert a failing dog track into a casino.

KWAME HOLMAN: Committee Chairman Fred Thompson was describing the focus of today's hearing. Hudson is located on Wisconsin's western border, just a half hour drive from Minneapolis-St. Paul. Nearly two years after the three nearby Chippewa Indian tribes asked the Interior Department to approve their casino application, the Department said no.

SEN. FRED THOMPSON: On July 14, 1995, the political appointees at Interior formally announced the rejection of the application.

KWAME HOLMAN: The committee's interest in this story involves a group of Indian tribes opposed to the new casino, tribes that already were operating casinos, including a lucrative one in Green Bay, and feared a new casino would hurt their business.

SEN. FRED THOMPSON: In early 1995 these opposition tribes hired Patrick O'Connor, a prominent lobbyist, as well as a former DNC treasurer.

KWAME HOLMAN: And soon after that the Interior Department ruled in favor of the opposition tribes. Those Indian tribes then contributed thousands of dollars to the Democratic Party.

SEN. FRED THOMPSON: During the next four months the DNC an the DSC--Democratic Senatorial Campaign Committee--collected over $50,000 from O'Connor's class. The tribes, who were on the winning side of the Interior decision, those same tribes contributed an additional $230,000 to the DNC and the DSCC during 1996.

KWAME HOLMAN: The three Chippewa tribes also had hired a prominent lobbyist, Paul Eckstein, to argue for their casino interests with Interior Secretary Bruce Babbitt. Eckstein has known Babbitt for 35 years. They were classmates at Harvard Law School, and Eckstein worked on several of Babbitt's political campaigns.

JACK COBB: Do you consider Sec. Babbitt a friend?

PAUL ECKSTEIN, Lobbyist: Yes.

KWAME HOLMAN: Under questioning from Republican Counsel Jack Cobb Eckstein described a meeting he had with Babbitt on July 14, 1995, the day the Chippewas' casino application was rejected.

PAUL ECKSTEIN: I went in and explained that we had just heard from Counselor Duffy that the decision was going to be issued that day, and it was going to be denial, and reminded him of the commitment that had been made to make a presentation to him with my clients. And his response was that Harold Ickes had directed him to issue the decision that day. At some point the secretary asked me, do you have any idea how much these Indians, Indians with gaming contracts, have given to Democrats? I said, I don't have the slightest idea. And he said half a million dollars.

JACK COBB: Is there any doubt in your mind that Secretary Babbitt told you that he had been directed by Mr. Ickes to issue the decision that day?

PAUL ECKSTEIN: None whatsoever.

KWAME HOLMAN: Chairman Thompson said his review of records obtained by the committee suggests then White House Deputy Chief of Staff Harold Ickes and several other prominent Democrats worked to block the casino application and made themselves available to the opposition's lobbyist, Patrick O'Connor.

SEN. FRED THOMPSON: Beginning in April of 1995 Mr. O'Connor left a number of phone messages at the White House for Loretta Avant, a White House staffer who worked for Harold Ickes and handled Indian issues. Following the advice of White House counsel that White House staffers should not speak to lawyers or lobbyists on Indian issues Avant had her assistants return to the O'Connor phone calls and tell him as such. Meanwhile, on Monday, April 24, 1995, during a presidential visit to Minneapolis, Mr. O'Connor saw President Clinton and told the President that he was representing Indian tribes opposed to the Hudson Casino project and complaining that Avant would not return his phone calls. President Clinton called over Bruce Lindsey and asked him to follow up with Mr. O'Connor. Hours after the O'Connor discussion with President Clinton Lindsey telephoned Avant from Air Force One to check into the Hudson matter. Avant agreed to call O'Connor but only after cautioning Lindsey that White House counsel had advised her not to speak directly to lobbyists on Indian issues. Before calling O'Connor Avant also wrote a strongly-worded memo to her boss, Harold Ickes. As you can see in this memo, Avant described the Hudson issue as a hot potato too hot to touch. "The legal and political implications of our involvement would be disastrous," she said.

KWAME HOLMAN: Democrats on the committee insisted the decision to deny the Chippewas' casino application was based on the merits of the case and displayed the names of local elected officials all the way up to the governor, who were opposed to building another casino.

SEN. CARL LEVIN, [D] Michigan: There was very, very strong opposition from the governor, the attorney general, the leaders of the legislature, the local officials against this casino. Now, would that be a fair statement?

PAUL ECKSTEIN: There was strong opposition. It wasn't uniform.

KWAME HOLMAN: Once members finished their questioning Eckstein got up from the witness table and left the hearing room, making way for the second witness, Interior Secretary Bruce Babbitt.

SEN. FRED THOMPSON: Good afternoon, Mr. Secretary.

KWAME HOLMAN: Babbitt said he had no contact with Harold Ickes concerning the casino application but that their staffs had talked on three occasions. Babbitt also said the decision to deny the application was based strictly on the merits of the case.

BRUCE BABBITT, Secretary of the Interior: The department in this administration has adhered to a policy that off-reservation gaming will not be imposed on communities that do not want it. In this case the three Chippewa tribes requested that we acquire off-reservation land to open a casino located within the City of Hudson, which is 85 miles away from and outside the nearest of their three reservations.

KWAME HOLMAN: Babbitt acknowledged he mentioned Harold Ickes in his conversation with Paul Eckstein. He said he did so in an attempt to end the conversation.

SEC. BRUCE BABBITT: I don't recall exactly what was said, but, on reflection, I probably said that Mr. Ickes, the department's point of contact on many interior matters, wanted the department or expected the department to decide the matter promptly. If I said that, it was an awkward effort to terminate an uncomfortable meeting on a personally sympathetic note, but, as I have said here today, I had no such communication with Mr. Ickes or anyone else from the White House.

KWAME HOLMAN: And Babbitt denied making any comment to Eckstein about contributions made by Indian tribes.

SEN. FRED THOMPSON: Well, is it possible that you could have talked about contributions in that conversation--by the Indians?

SEC. BRUCE BABBITT: Well, I simply have no recollection of any conversation to that effect.

SEN. FRED THOMPSON: Are you stating under oath definitely that you did not have such a conversation?

SEC. BRUCE BABBITT: I am stating under oath that I have no recollection of any conversation of that kind.

KWAME HOLMAN: Chairman Thompson ultimately ended the line of questioning after openly expressing frustration with Babbitt's answers. The issue of potential political influence on the Indian casino decision, however, will continue to be scrutinized. The Justice Department last week said it had begun a preliminary investigation of the matter. FINALLY - CHANGING TIMES

JIM LEHRER: Finally tonight next Tuesday is election day around the country. Among other things, 11 mayors' jobs are on the line. One of them is in Minneapolis. Fred De Sam Lazaro of KTCA reports.

FRED DE SAM LAZARO: Minneapolis has long had a reputation for quiet prosperity, a cold climate, and liberal politics, a place where Walter Mondale and Hubert Humphrey began their careers.

SPOKESPERSON: The people of Minneapolis have spoken and they said Sharon!

FRED DE SAM LAZARO: Four years ago Minneapolis elected Sharon Sayles Belton mayor. It was particularly noteworthy because over 80 percent of the voters were white, according to University of Minnesota Urban Affairs Scholar Judith Martin.

JUDITH MARTIN, University of Minnesota: I don't think it was in any way, shape, or form a reflection of racial politics at all, so in that sense the fact that the mayor, who was elected four years ago, was a black woman is almost incidental to the fact that she was a council member who'd been a successful leader on the council and wanted to move forward.

FRED DE SAM LAZARO: Four years forward Mayor Sayles Belton says Minneapolis is enjoying unprecedented economic prosperity. She says property values are up; property taxes are not up; and unemployment is at a record low 2 percent.

MAYOR SHARON SAYLES BELTON, Minneapolis: As we speak, there's a billion dollars' worth of investment going on in downtown, 2 1/2 million square feet of office space under construction, none of it's subsidized by the taxpayers, happening because people are confident in Minneapolis's economy, ten thousands jobs having been created in the last four years. These things, again, bode well for our city.

FRED DE SAM LAZARO: Prosperity typically bodes well for political incumbents as well; however, Sayles Belton faces a challenger who is anything but typical.

BARBARA CARLSON, Mayoral Candidate: I am known to be outspoken. I am know to be bright. I am known in many circles to be outrageous. I speak my mind, and I tell the truth.

FRED DE SAM LAZARO: Fifty-nine-year-old Barbara Carlson is a former Minneapolis City councilor, and she was once married to the current governor, Arne Carlson. But Barbara Carlson's notoriety comes mainly from her six-year stint as a talk radio host when she often worked from her hot tub at home or this one at the Minnesota State Fair. D.J. Leary edits a weekly newsletter "Politics in Minnesota."

D. J. LEARY, Newsletter Editor: This is a woman who kissed a cow on a main street in downtown on the front page of the newspaper, had a tattoo put on her derriere on everything but on C-Span. I mean, she's done everything public you can possibly do and shared rather intimate knowledge of her relationship with the current governor. Barbara is extraordinary at drawing attention to herself and her issues.

FRED DE SAM LAZARO: The big issue Carlson has drawn attention to is one that polls show most worries voters: crime.

BARBARA CARLSON: Everyone needs to know how rampant drugs are and how they've been allowed to be rampant in the city of Minneapolis.

FRED DE SAM LAZARO: Carlson wants to add 300 officers to the Minneapolis police force to combat a sharp increase in drug-related crimes. Although down from a peak two years ago, Carlson said crime has increased 9 percent in the city during Sayles Belton's term. Carlson said the main culprits are newcomers from rust belt cities like Chicago and Gary. Many, she charged, are attracted to Minneapolis by its welfare system.

BARBARA CARLSON: We have very generous benefits in the state of Minnesota, and people will never tell you that they will move here for those benefits but they'll say it's the quality of the schools, or it's the parks, or it's the possibility of a new job. But we have a group of people that are not being responsible. We have a group of people that have terrorized this city. We have a group of kids that are selling drugs openly on our street corners.

FRED DE SAM LAZARO: Sayles Belton said she set up programs to provide young people with alternatives to crime, as well as cracked down on criminal activity through beefed-up neighborhood policing. The mayor also takes issue with the way Carlson describes newcomers to the city.

MAYOR SHARON SAYLES BELTON: If they're here to make a contribution or to improve the quality of their life because it's better here than someplace else, that's okay. I've got people who come in all the time from other places, and they settle well in this community, and they make a contribution.

FRED DE SAM LAZARO: Everyone agrees Minneapolis has attracted significant numbers of people living in poverty, and the city has also become a new frontier for drug dealers from cities like Detroit and LA, where markets are relatively saturated. The changes have strained public services, those of both the city and the independent school district. Along with migration from the rust belt Minneapolis has seen growing refugee populations from East Africa and Southeast Asia. Continuing a trend of the past decade, minorities now account for about 30 percent of the city's population, nearly double their numbers since the 1980 Census. Children of color now account for 2/3 of all pupils in the Minneapolis Public Schools.

JUDITH MARTIN: It's become a much more diverse city. The metropolitan area is slowly becoming a more diverse place. We're becoming more like other cities in the United States. It's come to public attention, I think, much more in terms of what you read in the newspaper and what you see on the evening news in terms of who's being arrested and who's being shot on the streets and all of those sorts of things. So there's I think been a growing consciousness about the racial complexity of Minneapolis that wasn't there even just four years ago.

FRED DE SAM LAZARO: Supporters of Carlson say she's tried to lead a civic dialogue on issues of race and social problems.

BARBARA CARLSON: I believe the only way we are going to change our neighborhoods--

FRED DE SAM LAZARO: However, in this debate, held in the city's historically black Near North Side Carlson had trouble living down the sins of her shock radio days. For example, she tried to explain a war of words she once had with an African-American gossip columnist, who's had run-ins with both candidates.

BARBARA CARLSON: I said, how would she like it if I were to go after her in the way she's gone after my kids, how would she like it if I were to call her a "black bitch." That's what I said. I did not call her a black bitch. I said, how would she like it if I were to do so, and I want you to know, sir, that was an inappropriate thing for me to say!

MAYOR SHARON SAYLES BELTON: It never ever came to my mind that I would ever call her a name because I was mad, never. When we're in the public's eye and have leadership position and have the opportunity to shape attitudes. We have to be careful; we have to be thoughtful.

FRED DE SAM LAZARO: Tensions rose during this debate and after it, placards carried by Carlson supporters, most of them white, antagonized many black audience members. Later in a scuffle the mayor's driver, a black police officer, shot at a Carlson supporter's car. Both candidates said it was not a racial incident but Sayles Belton charged Carlson's style--an emphasis on crime and welfare migration--have been provocative.

MAYOR SHARON SAYLES BELTON: You know, some of that language, in my opinion, is race baiting. And I think it's deplorable. I think it's right for everyone to challenge and aggressively go after anybody who comes from anywhere to bring crime and violence into our community. And we should attack them with a vengeance. And I certainly am doing that as the mayor.

BARBARA CARLSON:I'm talking about pubic safety. I'm talking about children, and that is not race baiting. That is reality. This is a city with a crime problem. This is a city with lack of leadership. This is a city whose schools are in a very difficult, tenuous position today. And this is a city that is at a crossroads without leadership.

FRED DE SAM LAZARO: One recent poll showed Sayles Belton with about a 10 percent lead over Carlson. Polls also show weaknesses in both candidates, the low-key style of Sayles Belton and exactly the opposite from her challenger. RECAP

JIM LEHRER: Again, the major stories of this Thursday President Jiang defended China's human rights polices in a session with congressional critics. On the NewsHour he said such divergent views were not an insurmountable gap in Chinese-American relations. And stock markets around the world had another down day. The Dow Jones Industrial Average dropped 125 points. We'll see you on-line and again here tomorrow night with Shields & Gigot, among others. I'm Jim Lehrer. Thank you and good night.