The MacNeil/Lehrer NewsHour

MR. MacNeil: Good evening. Leading the news this Monday, more bodies, including many children, were discovered in the burnt hull of a Scandinavian ferry boat. Moscow increased pressure on Lithuania as thousands of Georgians demonstrated for independence, Pepsico announced a $3 billion trade agreement with the Soviet Union. We'll have the details in our News Summary in a moment. Roger Mudd is in Washington tonight. Roger.

MR. MUDD: After the News Summary we look at the biggest deal ever made between an American company and the Soviet Union [FOCUS - PEPSI PERESTROIKA], a $3 billion barter of Pepsicola for Soviet ships and vodka, then a report from Texas on the mudslinging lone star Democrats [FOCUS - MUDSLINGING], next an update from Nina Totenberg [UPDATE - GUILTY AS CHARGED] on the Iran-Contra investigation in the aftermath of John Poindexter's conviction, then Elizabeth Brackett reports on the amazing Hubbell Space Telescope [FOCUS - EYE ON THE SKY], and finally an essay by Amei Wallach on the art of Los Angeles [ESSAY - LA ART]. NEWS SUMMARY

MR. MacNeil: The death toll in Saturday's fire aboard a Scandinavian ferry boat rose today with the discovery of more bodies in the midsection of the ship. Many of the new victims in the suspected arson fire were children. We have a report from Peter Sharp of Independent Television News.

MR. SHARPE: With the blaze finally extinguished, firemen were at last able to gain access to the dining area and passenger cabins previously blocked by heat and flames. The bodies of many more children who didn't appear on the passenger manifest were discovered in cabins. Many had died in their bunks, suffocated by the thick smoke that billowed through the corridors. The remains of 75 people have been removed from the vessel, but firemen now believe that the final death toll could reach 200. As church bells rung out, fire and rescue teams stood bareheaded for a brief memorial service beside the bodies they'd carried out of the gutted vessel. Many of the rescue crews are having trouble coping with their job. Today the captain of the vessel denied improper behavior amid allegations that he and his officers had abandoned ship during the fire.

HUGO LARSEN, Ferry Captain: I didn't leave the ship before all the passengers.

REPORTER: And there were passengers on board when you left?

HUGO LARSEN: We could not reach any more.

PETER SHARPE, ITN: With virtually every survivor a potential suspect, the hunt for the arsonist believed responsible for the ferry fire has turned into the biggest murder hunt in Norwegian criminal history, with the police preparing to interview all 330 passengers and crew to find out just who was responsible.

MR. MacNeil: In Britain, officials are investigating another suspicious fire aboard a car ferry in the North Sea. The fire broke out early this morning. It killed one person and injured thirty- two. The ship was carrying nearly 300 people from Wales to Ireland. Police said arson was suspected. Roger.

MR. MUDD: Elections were held yesterday in three countries. There was a surprise outcome in Peru. The pre-election front-runner, novelist Mario Vargas Losa, came out with the most votes, but not enough to prevent a run-off with former university educator Alberto Fugimori. The second round takes place in late spring. Greece's third round of parliamentary elections seems to have produced a winner. The conservative new Democrats have claimed victory. The party's leader, Constantin Mitsotakis, said he would form a new government this week. And in Hungary, 40 years of Communist rule came to an end with a victory for the conservative Democratic Forum Party. Party Pres. Joseph Antole today began the work of forming a new government in which he will almost certainly serve as prime minister. The Democratic Forum advocates gradual economic change.

MR. MacNeil: The Soviet Union said today that it plans to step up political and economic pressure on Lithuania. A Presidential council chaired by Mikhail Gorbachev rejected a Lithuanian call for a compromise in its independent stand-off with Moscow. On Saturday, 300,000 Lithuanians marched in the capital, Vilnius, supporting independence. The Soviet Republic of Georgia was also the scene of an anti-Moscow rally. In the capital, Tblisi, thousands gathered to mark the deaths of 20 pro-democracy demonstrators killed by Soviet troops last year. And in Northern Ireland today, the Irish Republican Army claimed responsibility for a bomb that killed four British soldiers. We have a report from Belfast by Simon Cole of Independent Television News.

MR. COLE: The four UDR soldiers died instantly when their land rover was blown up near Down Patrick, the vehicle now hardly recognizable, the huge IRA bomb, half a ton of homemade explosive, was planted in a culvert, and a huge water filled that blocks the main A-25 road. The bomber watched his target from the hillside and used a command wire to detonate the device. He made his getaway on a motor bike found abandoned in Down Patrick. Ironically, police had had a warning of trouble and were about to make this area out of bounds.

MR. MUDD: In Moscow, Pepsico and the Soviet Union announced a major business deal today. Under the agreement, Pepsi will swap its soft drink for Russian vodka and Soviet-built ships. The 10 year deal is said to be worth over $3 billion. It will make Pepsicola more available in the Soviet Union. We'll have the story on this after the News Summary. The Greyhound Bus Company today filed a $30 million lawsuit against unions representing its striking drivers. The suit accuses the unions of using criminal means to force Greyhound into bankruptcy. It alleges two union locals are responsible for sniper attacks against buses in Florida and Alabama. Greyhound's chief negotiator announced the actions in Washington.

ANTHONY LANNIE, Greyhound Chief Negotiator: When this case gets to the courtroom, we will show beyond the shadow of a doubt that union officers and members have orchestrated an illegal, violent attack on Greyhound Lines, its employees and its customers. Their motive is clear. They have tried to use violence to win an inflated financial settlement that they could never achieve through lawful collective bargaining. There is a word for that. The word is extortion.

MR. MacNeil: A spokesman for the unions called the lawsuit a desperate act to avoid returning to the bargaining table. There has been no bargaining since March 18th.

MR. MacNeil: The 1990 Major League Baseball season began today one week late. Opening day had to be pushed back as the result of a month long labor dispute between owners and players. There was a sell out crowd at Boston's Fenway Park watching the Red Sox Roger Clements throw the first pitch of the season to Tony Phillips of the Detroit Tigers. It was a strike. Clements and the Red Sox went on to defeat the Tigers five to two. Ten other games were scheduled around the country today.

MR. MacNeil: That's it for the News Summary. Now it's on to Pepsi's deal with the Soviet Union, mudslinging Texas Democrats, Nina Totenberg on John Poindexter's conviction, the Hubbell space telescope and an essay on art. FOCUS - PEPSI PERESTROIKA

MR. MacNeil: First tonight we turn to the largest deal ever between an American corporation and the Soviet Union. Today in Moscow the Chairman of PepsiCo signed a ten year agreement with Moscow worth ten billion dollars. The deal is built on an earlier barter arrangement between the Company and Soviet authorities. It expands Pepsi's distribution network with in the Soviet Union and helps the company solve a major problem facing Western companies doing business with the Soviets. Western firms are particularly interested in the idea of saturating the markets in consumer goods but that is not as easy as it sounds. The biggest challenge facing companies that wish to do business in the Soviet Union is rubles that can not be converted to other currencies. This Stolnitch Vodka Plant is Pepsi's answer. Thanks to a deal worked out during the heady days of detente these vodka bottles contain Pepsi's profits from the sale of soft drinks in the Soviet Union. They not the rubles earned are shipped abroad and sold for foreign currency. Today PepsiCo announced an agreement that would among other things strengthen its use of the barter system to get profits out of the Soviet Union. Here to tell us about the deal and the hurdles American business face in Moscow are John Swanhaus, President of PepsiCo Wine and Spirits. His division supplies Stolnitch Vodka to a third party for distribution in the United States. And Marshall Goldman Associate Director of the Russian Research Center at Harvard University and a Professor of Soviet Economics at Wesley College. His Article Gorbachev the Economist will appear in the Spring issue of Journal of Foreign Affairs. He joins us from PBS Station WGBH in Boston. I spoke with him earlier. Mr. Swanhaus this is the biggest U.S. Soviet trade deal so far. How does it add up to 3 billion dollars?

MR. SWANHAUS: Well it is the retail value between Pepsi Cola sold in the Soviet Union and Stolnitch Vodka sold in the United States.

MR. MacNeil: On top of what you already sell?

MR. SWANHAUS: Well let's say a continuation of a trade deal. Our current deal expired in 1990. This will carry us through the year 2000.

MR. MacNeil: I see so what is really new about it would be on top of the volume of business that you already do?

MR. SWANHAUS: Well what is really new about it are a couple of things. One it is a much more comprehensive agreement that we have ever had before. It is larger in size than anything we have signed with the Soviet Union and three it is longer in duration that being a ten year agreement.

MR. MacNeil: Up till now for a long time have been able to convert your rubles in to dollars in profit by exporting the vodka. Why ships, why go into Soviet Ship?

MR. SWANHAUS: Well we have a very aggressive undertaking in the Soviet Union to expand out Pepsi Business there and ships really work very much the same as the vodka does. It is part of our counter trade agreement with the Soviet Union.

MR. MacNeil: Does that mean because you can not sell enough vodka to cover all the profits that you make from Pepsi in the Soviet Union. Is that it?

MR. SWANHAUS: Well you know since the ruble is not negotiable you have to generate counter trade in order to do business in the Soviet Union. So to drive our sales of Pepsi there we are always looking for ways to develop more counter trade.

MR. MacNeil: I see.

MR. SWANHAUS: And the ships are very much that additional counter trade to our base business.

MR. MacNeil: What will you do with the ships? You are not in the shipping business.

MR. SWANHAUS: The ships will be handled pretty much as the vodka is handled. They will be sold to a third party who is in the shipping business and they will be sold to brokers on the World market.

MR. MacNeil: Marshall Goldman is there a lesson for other U.S. businesses in this kind of deal?

MR. GOLDMAN: Well it helps to get in early. It helps to have imaginative executives but it also helps to be a very large company that takes a long term out look on these things and is not particularly dependent on obtaining dollars right now because if you need them you are going to be in very difficult circumstances.

MR. MacNeil: Are there many more such big barter arrangements possible, I mean, are there a lot of things like ships that the Soviets make which could be used which people haven't thought of yet?

MR. GOLDMAN: There are obviously some things out there that people who are unimaginative as most of us have not thought of but the number that are out there keeps diminishing. More than that the minute that you identify something that is available for barter the Soviets say may be we should ask dollars for it convertible currency ourselves. So it is very difficult and it keeps being squeezed down to a precious few items.

MR. MacNeil: Did you have to search around a long time to find the ships or I mean, are there a lot of things that you could have chosen instead of ships?

MR. SWANHAUS: Well quite frankly we felt that through our contacts that there was a potential for ships on the World market. And we approached our Soviet Partners and asked them if they had an interest in working out such a deal and that is how we got started in the ship portion of out business.

MR. MacNeil: Are Soviet Ships known for their quality of construction, I mean, are they so good that they really are an economic thing on the World shipping market or has this an element of political undercurrent about it that you wanted to do the Soviets a favor this way?

MR. SWANHAUS: I am not a shipping expert but I understand that they do make high quality ships that are commercially viable on the World market. We just felt that we found a void in the market and were able to help the Soviets fill that void.

MR. MacNeil: Marshall Goldman is there a political risk in making a big deal like this at a time when things are uncertain in the Soviet Union?

MR. GOLDMAN: Well I am not sure that the risk is all that great in this particular instance because for the most part it is something that Pepsi has been doing for more than a decade. The risk would come if you had to put up capital and build something inside the Soviet Union that would be dependent on either Gorbachev staying in power or his successors continuing to agree to the idea of foreign investment inside the country. There is another risk I should add and that is the shipping business is something that Pepsi has not been a specialist in and we do know that there are peaks and valleys in the shipping business and they may find themselves with very low charter rates at some point but that is a very different kind of issue. The main thing is that you have to hope that the conservatives in the Soviet Union, the nationalists in the Soviet Union, the Marxists in the Soviet Union will not rise to a position of power where they will say we don't want these foreign companies in the Soviet Union. That has happened before in Soviet history and there is no reason why it can't happen again. But I think the way they have it structured now is pretty good and comfortable.

MR. MacNeil: Did you spend a lot of time worrying about that the risk down the road if the political situation turns negative?

MR. SWANHAUS: Well we have always maintained a long terms perspective on the Soviet Union. We have done business there since 1974 and while we always have been through good times and bad times what we found is that it is still very much a businessman to businessman relationship. They like many of our managers are used to managing through difficult times. So in the bad times they were understanding and we were able to work through those situations.

MR. MacNeil: Did Pepsi Co with its long history in the Soviet Union, did you regard this kind of deal as a vote of confidence with Gorbachev staying in power?

MR. SWANHAUS: I think this is a good deal for us and the Soviet Union. That is why the deal can go for the next ten years and why we are pretty confident that we can fulfill on our side of it and the Soviets will fulfill on their side.

MR. MacNeil: How do you see it in that light Marshall Goldman?

MR. GOLDMAN: Well I would be a little more cautious about some of those things although I think that Pepsi has worked itself out a nice arrangement. My understanding is that the bottling plants are not owned by Pepsi, not part of a joint venture. It is the same way that it was before Gorbachev came along and joint ventures became legal. So if Gorbachev should be thrown out you don't have to worry about the bottling plants being taken away and losing money from your investment. The only part of the deal that I think that does involve an investment and your guest John can tell you better than I is the Pizza Huts and there they are in partnership and that could lead to confiscation but as the whole package that is a small portion of the thing. So I don't think that political risks are there for them. Others who are talking about building factories and putting up millions of dollars it could be a more risky venture and we do know that some joint ventures have already collapsed. So other enterprises have gone by the way side because they couldn't take rubles out of the country and convert them in to dollars.

MR. MacNeil: Does he have the details of that right. Do you subscribe with his description of your deal.

MR. SWANHAUS: Yes I do.

MR. MacNeil: Is this in Pepsi's mind a kind of holding action until the ruble is convertible. Sort of keeping you in there in a big way until the ruble is convertible?

MR. SWANHAUS: No our deal is not depending on the ruble being convertible although I do agree with Marshall, you know, getting in early on is a way to do business these days in the Soviet Union and take a long term perspective. But our deal is not dependent on the ruble becoming convertible.

MR. MacNeil: But if in a few years it became convertible that would make your deal what?

MR. SWANHAUS: I think that it would make our deal easier to execute if the Soviet Union opens up to a Western Style economy. The more we feel we will be a position to do even more business over there.

MR. GOLDMAN: There is another risk, of course, and that is if the ruble does become convertible it is likely to be come convertible at a much poorer rate than exists now. So the rubles that you have now will tend to lose value. Pepsi as I understand again has structured this that the ruble will lose some value but the way that it has been going it could hurt others.

MR. MacNeil: Is that right you built in a bit of insurance against the lower value of the ruble down the line?

MR. SWANHAUS: Well our deal is a barter type arrangement. It isn't really completely dependent on the fluctuations of the ruble.

MR. MacNeil: Do you find, are a lot of American firms, I mean, it is three months since we last talked about this or four months since the Malta Summit when Mr. Bush was making gestures to encourage American firms to do business there. Marshall Goldman are a lot of American firms holding back as they watch the situation there?

MR. GOLDMAN: Well it is a mixed package. Some are very enthusiastic and are moving along. Some have gone ahead and are now pulling back and some that are engaged in ordinary trade are pulling back. The Soviets are having significant economic problems not only internally but externally. Some American grain dealers who have been trading with the Soviet Union for many years have actually stopped delivering grain even though they have contracts because the Soviets now have trouble paying their bills and the banks are reluctant to pick some of these things up and some of the other companies have gone in and discovered again that the inconvertibility problem is too much for them and have simply pulled out. So people are continuing to explore. There are 1200, 1300 joint ventures which have been signed throughout the World with Soviet firms but of those only about 200 have been operating and only about 30 or 40 are making money. So they are running in to every conceivable problem but the temptation, the expectation that this market will be enormous as Pepsi has found is what drives these firms. But it is risky. You can not go in if you have a weak stomach.

MR. MacNeil: Do you agree with that?

MR. SWANHAUS: Very much so.

MR. MacNeil: What do you think finally of the fact that the two Western Companies that have moved in recently in a very big way, you increasing your stake in the Soviet Union, Mc Donald's of Canada moving in there. Both fast food companies. What do make of that. That the Soviet economy needs consumer goods of all kinds what seems to be the easiest to make a deal with is fast food?

JOHN SWANHAUS, Pepsico: Well I think there is tremendous appeal. Our concept as you know we are going to open up two Pizza Hut Restaurants there as part of our new deal and we think that the restaurant business is one that offers a lot of potential in the Soviet Union but again one that you have to take a long terms perspective on. We are starting with two and we are hoping for a lot more but we will have to manage two and see how it goes.

MR. MacNeil: Marshall Goldman what is your answer to that. Why has fast food found the foot in the door easier than other things?

MARSHALL GOLDMAN, Economist: Well because the Soviet people have this enormous desire for food. They have enormous amount of rubles to spend but there is no food coming up from the Soviet system. In order to do this in effect you have to create your own distribution system. The Mc Donald's store there which I should add and John does not like to hear this is selling Coca Cola is serving 50,000 customers a day now. There is nothing like this anywhere in the World but it is like an Oasis and everybody comes there from out the whole country. What has happened though is when that many people come you get long line an hour or more so the fast food actually ends up being slow food but it is food. People come in to Mc Donald and say they will take a 100 to go. They had to put limits on that to stop that and I met with the President of Mc Donald's of Canada this weekend and he said that he met some one in a railroad station with 10 Mc Donald's hamburgers that he was taking to Siberia. That is what is happening and that is where the desire is,

MR. MacNeil: Okay Marshall Goldman, John Swanhaus thank you both for joining us.

MR. MUDD: Still ahead on the Newshour the down and dirty primary fight in Texas, Nina Totenberg on John Poindexter, the Hubbell Space telescope and an essay on L.A. art. FOCUS - MUDSLINGING

MR. MUDD: Next we turn to politics Texas style. Tomorrow is the run-off primary for the Democratic Gubernatorial nomination. Even by Texas standards this year's contest between Attorney Gen. Jim Mattox and State Treasurer Anne Richards has been one of the roughest in recent memory. One prominent Texas Democrat said the run-off would probably embarrass Heinrich Himler. Betty Ann Bowser of public station KUHT in Houston has our report on this bitter campaign.

ANN RICHARDS: [July 18, 1988] Poor George. He can't help it. He was born with a silver foot in his mouth.

MS. BOWSER: That night Ann Richards was the darling of the Democratic Party, and she used the national recognition it brought to campaign for governor of Texas. Richards is for the death penalty and abortion rights and against higher taxes.

ANN RICHARDS: If you can't fill the till, don't pass the bill.

MS. BOWSER: She is also divorced and makes no bones about being a recovering alcoholic.

MS. RICHARDS: [Campaign Commercial] I've been a teacher, a county commissioner and state treasurer, but my proudest accomplishment is as a parent.

MS. BOWSER: The carefully crafted image she sets forth is one of a 56 year old grandmother who cares about family and education, a fresh face on the Texas political scene, a woman who can take on the good old boys and bring a new day in Texas. Richards was so popular going into the Democratic Primary race that it appeared she would easily defeat her two male opponents. Then came the live debate televised statewide and "that" question.

DEBATE MODERATOR: [March 2] But once and for all, I'd like you to answer a question that every other candidate has answered.

MS. RICHARDS: Right.

DEBATE MODERATOR: [March 2] Have you ever used illegal drugs?

ANN RICHARDS, [D] Candidate For Governor: I have revealed more about my personal life, including my alcoholism and my recovery for 10 years than any person who has ever run for governor before.

DEBATE MODERATOR: Is that a yes or a no answer?

MS. BOWSER: Richards did not answer the question. Opponent Mark White took care of the matter in one sentence.

MARK WHITE: I have never used illegal drugs.

MS. BOWSER: Attorney Gen. Jim Mattox also said he had never used illegal drugs, and Mattox, whose critics call him the junkyard of Texas politics, seized the moment.

JIM MATTOX: Regardless of how much you think it'll hurt you, you need to respond and answer this question in the primary because it has become the biggest question of this campaign, have you used illegal drugs?

MS. BOWSER: Richards has never answered the question although it has followed her everywhere.

REPORTER: I have interviewed someone that says they saw you smoke marijuana.

MS. RICHARDS: I have no idea what you're even talking about.

MS. BOWSER: Richards took the offensive in the last week of the primary with an ad that accused both of her opponents of being unethical. [CAMPAIGN COMMERCIAL]

MS. BOWSER: The commercial hurt White more than Mattox, and despite Richards' refusal to answer the drug question, she and Mattox captured the most votes, but since neither pulled a majority, they found themselves in a run-off. [CAMPAIGN COMMERCIAL]

MS. BOWSER: Mattox and Richards hold almost identical positions on the substantive issues. He has presented himself as the champion of the little man, the fellow who was tough on crime against new taxes, for a state lottery, and most important, against drugs.

JIM MATTOX, Democratic Candidate: In a situation like Ann Richards and from a purely law enforcement perspective, she needs to say what she did, when she did it, how much she did, and who supplied it.

MS. RICHARDS: But you just remember that the one that throws the mud the hardest is the one that the fan is liable to turn on and put it right back on them. You can't throw --

MS. BOWSER: Richards has accused Mattox of taking money from a known racketeer and worse.

MS. RICHARDS: I'm telling you, I've got a guy here who is not what you'd call without blame, a man who has taken money to affect the decisions that he makes in his office, and we have asked time and time again for him to let us see his income tax. I made all my income tax public.

MS. BOWSER: And Richards repeatedly brings up the fact that Mattox was once indicted on commercial bribery charges. What she leaves out is that he was also acquitted. Karl Rove is an Austin political consultant who says these personal attacks have clouded the substantive issues.

KARL ROVE, Political Consultant: I think it was a deliberate decision not to talk about real issues. I mean, Democrats, these are, especially Mattox and Richards are liberals and this is not a liberal state and they wisely I think said, we can't talk about the things we'd really like to do because I think in their heart of hearts they knew that fundamentally to do that in the Democratic Primary would damage them for the general election.

MR. MATTOX: Sometimes my opponents call me a little too tough, but I say to 'em, I say to 'em, the fellow that I represent, the fellow that I worship made people so angry --

MS. BOWSER: This last week of the campaign has been pure political theater, an unfolding soap opera. [CAMPAIGN COMMERCIAL]

MS. BOWSER: Richards paints herself as the victim of unscrupulous campaigning and says she will never answer the drug question because to do so will scare those who need help away from seeking it.

MS. RICHARDS: I think it's time that we put principal above politics. I think that it's time for those of us who have a success story to talk about it in those terms. Mattox is such a difficult person when it comes to political campaigning he's always been a mudslinger, every race he's ever been in.

MS. BOWSER: The day after that interview, Mattox came out with this commercial.

ANNOUNCER: [Campaign Commercial] What illegal drugs, if any, did Richards use as a 47 year old officeholder? Did she use marijuana, or something worse like cocaine, not as a college kid, but as a 47 year old elected official sworn to uphold the law?

MR. MATTOX: What's on television is exactly the question that the press asked and if the press didn't want this question --

MS. BOWSER: But you put it on television.

MR. MATTOX: That's right. No, the press originally put it on television.

MS. BOWSER: But you seized it and you put it in your commercials the last week of this week of this campaign.

MR. MATTOX: They are questions that should be answered.

MS. BOWSER: And you're not one bit ashamed about it?

MR. MATTOX: Well, the obvious thing is there's an easy way to solve that problem. All she has to do is answer the questions.

MS. BOWSER: Last week, Mattox said he has witnesses who say they saw Richards smoke marijuana, but none of those alleged witnesses has come forward. Then, only four days before the election, newspapers in Dallas and Houston printed stories alleging Mattox had used marijuana.

MR. MATTOX: I have never been in an apartment and smoked any dope. I have never been in a car where any dope has ever been smoked.

MS. BOWSER: Jim Moore has covered politics for Houston television station KPRC since 1975 and he says he's never seen anything like this.

JIM MOORE, Political Reporter, KPRC: It isn't just a question of drugs. It's a question of everything that the two of them are doing. It's that, you know, we have a state where the prison system is being run by the courts. I mean, we essentially have a government that soon will be run by courtrooms and judges and instead of confronting those things head one, we've got two people out there bashing each other over who's the sleaziest character. It is, it's obscene.

MS. BOWSER: While the Democrats continue to beat each other black and blue, Republicans are sitting on the sidelines all smiles. Party officials say the low level of campaigning has damaged the party's credibility, has turned voters off and can only contribute to the Republican effort in the fall. [CAMPAIGN COMMERCIAL]

MS. BOWSER: 58 year old Midland rancher and millionaire Clayton Williams spent $6 million of his own money to get the Republican nomination. He currently holds a 19 point lead over both Democrats, but in order to win in November, he must attract and keep a sizeable number of Democrats willing to cross over into the Republican camp. And Rice University Prof. Robert Stein says there is much more at stake than an election.

ROBERT STEIN, Political Scientist: Texas, Florida, and California are the real plums of the sunbelt and the competition for the Gubernatorial office is very competitive in all three states. Of course, this is a census year, redistricting, and this is critical. If the Republicans don't make in-roads, winning the Gubernatorial offices in those states, and making some real in-roads at winning the majority of one of the Houses, the 1990s are going to be lost to them, the next century is going to be lost to them in terms of being able to control what the redistricting looks like, so it's a critical year.

MS. BOWSER: And the political stakes are high. Whoever is the next governor will practically control how the state is carved up for redistricting, dictating the state's political landscape for the next 10 years. UPDATE - GUILTY AS CHARGED

MR. MUDD: The verdict in the John Poindexter trial is next tonight. On Saturday, a federal jury found Pres. Reagan's former national security adviser guilty of all five felony counts of conspiracy, lying to Congress and obstructing Congress. Poindexter, a 53 year old retired rear admiral, is the highest ranking official from the Reagan administration to be brought to trial in the Iran- Contra affair. The verdict, which will be appealed, supported the prosecution's claim that Poindexter had conspired to shield President Reagan from the political debris of Iran-Contra. Poindexter, who will be sentenced in June, could be sent to prison for 25 years and fined $1 1/4 million, however, none of the other six Iran-Contra defendants has received more than two months' probation and a $150,000 fine. But both the Washington Post and the New York Times are reporting that the Poindexter verdict has rejuvenated the investigation of Independent Counsel Lawrence E. Walsh. Here to help us make some sense of what's ahead in the Iran- Contra investigation is Nina Totenberg, the Legal Affairs Correspondent for National Public Radio. Nina, Dan Webb, the Poindexter prosecutor, said Saturday after the verdict was announced that the trial was a very important trial in American history. Why is it so important?

NINA TOTENBERG, National Public Radio: Well, at rock bottom here is the question of whether the executive branch, high officers of the executive branch, can conspire to get around congressional laws on foreign policy and then lie about it to that very same Congress, and here we had a national security adviser to the President convicted on all the charges against him, five guilty verdicts, and I think that Dan Webb did not misstate that, that it was a very important moment, in addition to the fact that Judge Walsh, the independent counsel, has been widely criticized, particularly by conservatives, and I think it is fair to say that this guilty verdict was very important for the Independent Counsel's office because it'll deflect some of that criticism and allow him to complete his investigation.

MR. MUDD: So the question is now that he has got this high ranking security adviser, why doesn't he stop now while he's ahead? Is there more to come?

MS. TOTENBERG: I haven't bugged the grand jury room yet.

MR. MUDD: No, no.

MS. TOTENBERG: But his mandate from the courts in an official document that's signed by a federal court under federal law requires him to investigate the Iran-Contra affair until he is through, not until he feels like it or it even politically seems like a good thing to do. And so now he will undoubtedly put Adm. Poindexter and Oliver North in front of the grand jury and start asking him questions, and all of their testimony so far has been aimed at Ronald Reagan and I'm sure once again some of the testimony will be aimed at Ronald Reagan, but there are lots of other people who may have something to fear from this testimony, a whole array of people who could be indicted for perjury, for example.

MR. MUDD: Who would they be?

MS. TOTENBERG: Well, let's name a few names.

MR. MUDD: Right.

MS. TOTENBERG: Or a couple of names. There's Donald Greg who served as national security adviser to then Vice President Bush and who has always said he didn't know any of this was going on. Well, supposing Adm. Poindexter were to testify that he kept him fully briefed. Certainly he'll be asked that. There is Elliot Abrams, the former Asst. Sec. of State, the man so many people seem to love to hate, he's testified that he had very limited knowledge about what was going on in aid to Contras, but if any of these men should testify that they told him, his testimony before Congress and the grand jury could turn out, "could" turn out to be perjurious. All these people, and there are many more, have given testimony that will now be put to the test of the top protagonists in this affair.

MR. MUDD: You mentioned that a lot of testimony led to Ronald Reagan. Did you mean to tell me that there are those in the Office of the Independent Counsel who want to go after former Pres. Reagan?

MS. TOTENBERG: There are people in the Independent Counsel's office who think he should be indicted for perjury. Now I should say that it is very hard to convict somebody, anybody, an ordinary person of perjury, for saying he doesn't know and doesn't remember, something that Pres. Reagan said about 120 times in his testimony in the Poindexter trial. And I think it's unlikely that Independent Counsel Walsh will allow a perjury prosecution of a former President of the United States to go forward, but those decisions still have yet to be made, and I don't know what other evidence there is out there, and the kind of discussion you and I might have here about that would probably narrow the kind of discussion that will happen in the Independent Counsel's office.

MR. MUDD: But if they went forward, if they went forward with an investigation, would they want an indictment, would we be faced again with a President, with a former President of the United States under some sort of indictment, and then where would we be? They're not going to send Ronald Reagan to jail, are they?

MS. TOTENBERG: It's unlikely they'll send him to jail, but part of this is about whether anybody is above the law, whether he's President or king, and at what point. These are all balancing questions, and should you put the country through that and what kind of evidence do you have against him? And as I said, it's unlikely he'll be indicted, but there are respectable people who think that his testimony was not forthright and therefore he should not be treated differently than anybody else.

MR. MUDD: Suppose in June when the admiral, former admiral is sentenced, he gets a jail term. Would President Bush then be under political pressure to pardon him?

MS. TOTENBERG: He'll probably be under political pressure to pardon him and not to -- on the one hand, conservatives, many of whom are angry with President Bush right now, might be satisfied and given a sop, according to this theory, if he would pardon Adm. Poindexter, and he even might pardon everybody connected with the Iran-Contra investigation.

MR. MUDD: But that would get him into sticky molasses. He has no need to do that, does he?

MS. TOTENBERG: No, but he could pardon everybody and thereby stop an investigation, but then of course, he would be subject to the criticism that he was trying to cover up something. And I would imagine, and this is the other side of the coin, of course, that even if here to pardon only Adm. Poindexter, it would look fishy and there would be a lot of people who would say George Bush is simply now a part of the conspiracy to cover up and he's never really been pulled into this thing all that much and I think it would be politically just sort of suicidal.

MR. MUDD: And one last quick question, do you think Adm. Poindexter is the sort of man who would want to strike a deal?

MS. TOTENBERG: No. I said on the very first day of that trial that he looked to me like an admiral going down with his ship and that's the same way he looked to me when he got those guilty verdicts, stoic but going down with the ship.

MR. MUDD: Thank you, Nina. Nina Totenberg, Legal Affairs Correspondent for National Public Radio. I know you'll be back to talk about this some more, Nina. Thank you.

MS. TOTENBERG: Thanks, Roger FOCUS - EYE ON THE SKY

MR. MacNeil: Next tonight the Hubbell Space Telescope. Tomorrow morning, weather permitting, the Space Shuttle Discovery will be launched carrying a large telescope that scientists hope will launch a new era in astronomy. The telescope will be placed in orbit and tested two days into the mission. Elizabeth Brackett reports on the promise of the Hubbell space telescope.

MS. BRACKETT: Since Galileo, astronomers have searched the heavens, building bigger and better telescopes, in an effort to see further into the night skies, to understand the universe, how big it is, how it began, and how it will end. But their vision was always marred by the distortion of the earth's atmosphere. Then some 45 years ago, this man, Lyman Spitzer, a retired professor of astronomy at Princeton, dreamed of a way to solve that problem by placing a telescope in space.

LYMAN SPITZER, Princeton University: My astronomical friends a the time thought this was somewhat foolish. One good friend of mine, I told him that I was going to be associated with the space astronomy project, he shook his head and he said, well, Lyman, you're young, you'll live to see it fail.

MS. BRACKETT: At age 75, Spitzer has lived to see his dream become a reality. His dream, the Hubbell space telescope, will be aboard the space shuttle Discovery. Named after the famed astronomer, Edwin Hubbell, the 43 foot long, 12 ton telescope is not the biggest telescope ever built, but many feel it is the best, and at a cost of almost $2 billion, certainly the most expensive. Soon this telescope, the result of decades of effort by thousands of engineers and scientists, will be orbiting 380 miles above earth, clear of its distorting atmosphere.

PROF. SPITZER: The scientific arguments for a large space telescope in orbit are really very very clear, very objective, very straightforward, and scientifically there can be very little question about them.

MS. BRACKETT: The key feature of any telescope is its mirror, for it is the mirror which collects the light. Hubbell's mirror is considered the finest large mirror ever made. Months and months were spent polishing and smoothing the 94.5 inch mirror until it deviated no more than a millionth of an inch from a perfect surface. Colin Norman is a physicist working on the space telescope project.

COLIN NORMAN, Space Telescope Science Institute: We expect to be able to get images which are ten to thirty times sharper than previously obtained. The other major advantage of having a telescope above the atmosphere is that ultraviolet rays which fairly interesting information about the physics of the objects in the universe, and because we can fly above the atmosphere, then we'll be able to see these ultraviolet rays quite clearly.

MS. BRACKETT: This is a photograph of a distant cluster of stars taken from an earthbound telescope. This is the same cluster as Hubbell might see it. Many more stars are apparent and they are clearer, more distinct, much like the difference between looking at the universe from the bottom of a swimming pool or from on top of the water.

NETA BAHCALL, Princeton University: One of the most exciting projects or general topics, sub-disciplines that will be studied with space telescope because of this very high clarity resolution for the first time is the origin of the universe, the cosmology, how the universe started and how it's evolving to what we see today.

MS. BRACKETT: Neta Bahcall teaches astronomy at Princeton and helped select the scientists who will be able to use the Hubbell.

MS. BAHCALL: We'll be able to see the galaxies and the quasars, see their structure for those galaxies and quasars that are extremely far away from us, and anything in astronomy that is very far away from us, we see it as it was many billions of years ago, as it was very early on in the life of the universe, simply because it takes time for the light to come from that object to us today. So if we can see and we can see these objects very far in the universe, it means very early in the life of the universe.

MS. BRACKETT: A telescope is sort of like a time machine. Some of the light Hubbell will pick up will come from stars born shortly after the universe began, so scientists say, in effect, the space telescope will enable them to see almost to the beginning of time.

COLIN NORMAN: We'll be able to reach out to scales which are equivalent to seeing the universe when it was about a billion years old, somewhat less. The current age of the universe is about 15 billion years so that we are, in fact, if were a man at 60 years old, we would be looking back at our life when we were say 4 years old.

MS. BRACKETT: The distant light gathered by Hubbell will bounce off the primary mirror to the secondary mirror. Then it will be fed into its two cameras and analyzed by other instruments which include a photometer and two spectrometers. The data will then be transmitted back to earth via space based and ground based relay systems. The data sent back by the space telescope will be processed here at the Space Telescope Science Institute in Baltimore, Maryland. The institute was organized in 1981 to provide scientific oversight for the telescope project. For the last year, the institute has had the difficult task of allocating viewing time on the telescope. Fifteen hundred scientists from around the world applied for time, nine times more time than was available. Now a strict schedule has been set up for the first year of the telescope's operation. One of the people eagerly awaiting Hubbell's first data transmissions will be John Bahcall. Along with his wife, Neta, and Lyman Spitzer, John Bahcall has fought and lobbied for the space telescope for the last 20 years. He explained recently to some of his colleagues at the Institute for Advanced Studies in Princeton what he hopes to find from Hubbell's first pictures.

JOHN BAHCALL, Institute for Advanced Studies: [Speaking to Group of Colleagues] There are eight stars here. Instead of eight stars, if the missing matter in the halo were in the form of brown dwarfs, which were reasonably bright, not the brightest that they could be and still be seen, there should not be eight stars here, eight brown dwarfs, there should be over a hundred. So that is really, that's going to pop out at us. The space telescope will have the resolution to find those faint brown dwarfs is what they're called. They're really failed stars. There are stars that are not massive enough to burn hydrogen and make helium to fuse the light elements as our sun does to shine. These will be very faint stars and among the first pictures from the space telescope we'll be able to see whether there are a lot of these little faint starlike objects scattered all over the image or not. If they are, there will be a great discovery for the telescope.

MS. BRACKETT: If these brown dwarf stars exist, it will help answer one of the unanswered questions of astronomy. What and where is the 90 percent of matter believed to exist but never seen? The dark matter. And that will help scientists answer another fundamental question, how will the universe end.

MS. BAHCALL: By trying to understand how much matter exists in the universe we can decide, we can know, using the formulas and expressions for models of the universe whether the universe will expand forever or will collapse upon itself. If there isn't enough matter in the universe, there is not enough gravity to pull the expansion back together, the universe will keep expanding forever. If, however, there is enough mass in the universe, if the force of gravity and the mass is strong enough, it will pull back on this expansion philosophy and everything after expanding for a while will start collapsing on itself.

MS. BRACKETT: The telescope could provide answers to another intriguing question, are there other beams in our universe?

PROF. BAHCALL: My own guess is that there are many other intelligent human beings in our galaxy and that we will discover them by looking hard and someday stumbling across them in ways that we've just not anticipated. The telescope will search for planets around other stars, it'll search for proto- planetary systems around other stars, but it's a long shot as to how much we'll find, but we might.

MS. BRACKETT: Most scientists agree that the real excitement of Hubbell will come from finding the unexpected. Hubbell's wide field camera will make a deep survey of the night skies, scanning for the unknown.

MR. NORMAN: The medium deep survey will be one of the major projects undertaken by the Hubbell space telescope and one should always do this when you have a jump in observing power by at least a factor of 10. You should just take a piece of sky which has not been biased by having any spectacular objects in it and you should just look, and it's the ultimate in experimental physics.

MS. BRACKETT: For years now, shuttle astronauts have practiced servicing the Hubbell in an underwater tank. Originally NASA promised a shuttle launch every two weeks for service. Broken or outdated equipment on the telescope would be regularly fixed or replaced. But that was before the Challenger disaster. Now, the first maintenance call willnot be for three years. Since the Hubbell was designed for regular service calls, some scientists wonder if it might be too delicate an instrument for the rigors of space.

PROF. BAHCALL: It worries me but my best guess is that it'll work, that we'll be astonished as to how well it works. But there are no guarantees here. The saying in Hebrew [speaking Hebrew], there is nothing certain in life.

MS. BRACKETT: If the launch fails or the space telescope doesn't deploy or doesn't deploy high enough, what impact will that have on science?

PROF. BAHCALL: Oh, it would set us back for decades. It'd be a catastrophe for the nation. It would be a catastrophe for the world, I think it'd be a catastrophe for the human race.

MS. BRACKETT: If it works, astronomers say Hubbell will mark the beginning of a new and glorious age of astronomy. Hubbell will start giving us better answers to those age old questions of where we have come from and where we are going. ESSAY - LA ART

MR. MUDD: For better or for worse, most artists and the cities they live in are constantly worrying, fretting and looking over their shoulder at what's happening in New York, the supposed center of the art world, but as Amei Wallach, critic for New York Newsday, tells us there may soon be two supposed centers of the art world.

MS. WALLACH: In Los Angeles, they'll tell you their city came of cultural age this year and the emblem is Frank Gary. He's the hometown architect chosen to design the Walt Disney concert hall even though almost every other major international architect wanted the job. For a city to choose a hometown boy is an act of faith. Pick the wrong favorite son and you're provincial. Pick the right now and you're confident and mature. Gary would be a serious candidate anywhere in the world. After all, he won the Pritsker Prize this year, architecture's equivalent to a Nobel. A Gary house is a rambunctious arrangement of rectangles, squares, circles, and things like airplanes that you'd never expect to have anything to do with a building. They're like strangers at a cocktail party, he likes to say, all bumping up against each other. It's precisely because there are so many museums, galleries, collectors, and artists bumping up against each other these days that Los Angeles is confident enough to anoint one of its own. It isn't always looking over its shoulder to see what New York thinks. The action centers on the big museums. The most lively and controversial is the Museum of Contemporary Art. Nearly three years old, MOCA, as it's known to its friends, has been peppering the city with art that's marvelous and esoteric like the surrealist obsession with mussels of the Belgian artist Broders. But MOCA makes a point too of the Pollock, the Mirot, the Calder and the Giacameti that are part of its hey, look what we've got brand name, permanent collections. The biggest museum is the LA County, which almost doubled its size recently. Over the last three years, it has added a new courtyard, a new wing for 20th century art, and a new Japanese pavilion, but the county museum will be eclipsed when the J. Paul Getty expands from its Roman villa on the Pacific into the art center going up on a 110 acre wind swept hill. It's hard to quarrel with the impact of $3 billion which is the size of the Getty's endowment. In addition to world class art, the Getty Trust is already bringing world class scholars to town in droves. It can't help but have a world class impact. Not only are the scholars coming, the artists are staying. At the start of the decade, most headed East to make it, and some made it big, but others, like John Baldecari stayed. Baldecari makes art from urban debris, which in Los Angeles happens to be things like movie stills. He juxtaposes oddly assorted images into art that startles and challenges. And now, MOCA is giving Baldecari his own touring retrospective. The burgeoning art scene has spilled into the galleries that can now support themselves in Santa Monica and West Hollywood but not by selling to LA's handful of big time collectors. They still buy blue chip names like Liechtenstein and Warhol in New York. They haven't quite rallied around downtown alternative spaces like LACE. It's one of the few places where the avant garde can get its start and still those collectors snub it. But they're wrong. It's daring and diversity and the dollars to nurture them that make an art scene last, not just buildings and brand names. RECAP

MR. MUDD: Once again, the main stories of this Monday, officials now believe as many as 200 people may have died in Saturday's suspected arson fire aboard a Scandinavian ferry boat. And in the Soviet Union, President Gorbachev's ruling council threatened new economic and political pressure against Lithuania, while thousands of Soviet Georgians demonstrated for independence. Good night, Robin.

MR. MacNeil: Good night, Roger. That's the Newshour tonight and we'll be back tomorrow night. I'm Robert MacNeil. Good night.