The MacNeil/Lehrer NewsHour

MR. MacNeil: Good evening. Leading the news this Thursday, George Bush was named in court papers as an intermediary in a secret plan to aid Nicaraguan Contras, agreement was reached to sell Eastern Airlines to Peter Ueberroth and Eastern employees, Israel's Shamir proposed free democratic elections in the occupied territories. We'll have details in our News Summary in a moment. Judy Woodruff is in Washington tonight. Judy.

MS. WOODRUFF: After the News Summary, we have updates on three major stories we're following, first, Oliver North on the witness stand. Nina Totenberg will be here to tell us about it, then the Lorenzo/Ueberroth deal over Eastern Airlines. Two analysts, Julius Maldutis and Harley Shaiken, will explain what happened, and third, the Alaskan oil spill. We have a special report, including excerpts from two hearings on Capitol Hill. Finally, folk art, some thoughts from essayist Amei Wallach.NEWS SUMMARY

MR. MacNeil: There were two developments at the Oliver North trial. George Bush was named in court as an intermediary in President Reagan's secret plan to help the Nicaraguan Contras. Attorneys read a long account of the administration's efforts to keep the Contra struggle alive. It said that Vice President Bush personally told the President of Honduras in 1985 that extra aid was being funneled to his country as payment for helping the Contras. The other development was that Oliver North took the witness stand in his own defense. His attorney began the questioning with the words, "So you're Col. North," and North replied, "Yes, sir, I am." The former White House aide said his superiors told him not to tell anybody about his role in getting aid to the Contras. We'll have more on the North trial after the News Summary. Judy.

MS. WOODRUFF: Eastern Airlines may have a new owner. Former baseball commissioner Peter Ueberroth has agreed to buy the $464 million in a deal that would give the employees a major share of the corporation. The arrangements still have to be approved by the bankruptcy court and Eastern's creditors, but as a news conference today, Ueberroth said he is confident the deal can be made to work.

PETER UEBERROTH, Prospective Eastern Buyer: It's a new concept in aviation, the concept where over 60 percent of this company will be owned by people that work for the company and we think that's what it needs to bring back, to bring back Eastern Airlines to where it was and to move it forward.

MS. WOODRUFF: The sale is also conditioned on Eastern's reaching new work agreements with its striking unions by next Monday. When some 500 Machinists heard of the deal this afternoon, they broke into cheers.

MR. MacNeil: President Bush welcomed Israeli Prime Minister Yitzhak Shamir to the White House today. He arrived with a new plan to bring peace between Israel and Palestinians living in the occupied territories. He promised the greatest possible efforts to achieve peace, including talks with anyone, anytime, anywhere, without pre-conditions. Mr. Bush agreed in principle to Shamir's proposal for Palestinian elections and he agreed that a Palestinian state would be unacceptable, but the President also reiterated hisopposition to Israel's continued occupation of the West Bank and Gaza.

MS. WOODRUFF: Soviet Leader Mikhail Gorbachev held spirited talks with British Prime Minister Margaret Thatcher today in London. One issue Thatcher raised was the disclosure yesterday by the U.S. that the Soviets have sold advanced bombers to Libya. A Soviet spokesman accused the U.S. of timing the report so as to disrupt Gorbachev's visit. We have a report from John Snow of Independent Television News.

JOHN SNOW: The two leaders settled into the room where Mrs. Thatcher normally meets her ministers. British sources described the four hour exchange as very convivial. In that spirit, Mr. Gorbachev responded to the British complaints that the Soviets dramatically understate the size of their chemical weapons arsenal. He promised greater openness, a full information exchange, and visits by inspectors. Both leaders emerged to give nothing on detail. They exposed only one disagreement on how long their talks had lasted.

MIKHAIL GORBACHEV: [Through Translator] Mrs. Thatcher said that we talked for two and a half hours, but I must deny that. I must say that we began talking at 10 AM, and then we continued till this very moment, without even breaking up for lunch, breaking our conversation for lunch.

JOHN SNOW: If there was one point of conflict today, it was at talks between Foreign Minister Shevardnadze and the Foreign Secretary. Mr. Shevardnadze seemed to confirm that Moscow had recently sold advanced Soviet fighter aircraft to Libya.

JOHN SNOW: Is it true that Russian fighter jets are being sold to Libya?

MR. SHEVARDNADZE: I hadn't heard about this.

JOHN SNOW: And that ambiguous response on the Libyan sale continued inside. British sources say that during an otherwise positive meeting, Mr. Shevardnadze did not deny the Libyan deal.

MS. WOODRUFF: Late today a spokesman traveling with Gorbachev said the Soviet leader told Thatcher he is concerned that President Bush's extended review of U.S. foreign policy will hurt the momentum in U.S./Soviet arms control talks. In Moscow, an official government newspaper today praised the agreement reached yesterday in Poland between authorities and the Solidarity Union. While in Poland, Solidarity Leader Lech Walesa at a news conference called the new arrangement a victory but said it poses serious challenges. He also said he plans to visit Moscow soon to reassure the Soviets that Solidarity did not intend to undermine Gorbachev's own reform program.

MR. MacNeil: Cleaning up the oil spill in Alaska could take a thousand days and cost up to $200 million. Those were estimates today as Congress launched double hearings into the disaster. Coast Guard Commandant Admiral Paul Yost said 11 million gallons from the Exxon tanker went into the waters of Prince William Sound and only 1/2 million had been cleaned up. Yost said the Coast Guard would now direct the cleanup, but he wants Exxon to pay the bill. Transportation Secretary Samuel Skinner said government and industry never had a contingency plan adequate to clean up a spill of this size.

SAMUEL SKINNER, Secretary of Transportation: While I'm confident that human error will be dealt with appropriately, we would miss the larger point if we were to leave it at that. My mind is not closed on that, but my impression is that a somewhat over optimistic attitude crept into our readiness and ability to deal with a spill of this magnitude, or even that an accident of this size would occur.

MR. MacNeil: In Valdez, the Coast Guard said it was investigating a report that the super tanker was sailing on auto pilot when it ran aground. The tanker has been refloated to be towed away for repairs. A New York State Supreme Court judge today reduced bail on the tanker's captain, Joseph Hazelwood, from a million dollars to twenty-five thousand, saying the higher bail was unconstitutionally excessive. Hazelwood faces a misdemeanor charger after tests showed he was legally drunk at the time of the accident.

MS. WOODRUFF: There was more heavy fighting between South African led troops and guerrillas in the Southwest African nation of Namibia. The fighting threatens an agreement to end South Africa's rule over that country. U.S. and Soviet officials will join emergency talks there this weekend to try to stop the fighting, and African leaders from neighboring states met on the crisis today. We have a report from David Simmons of Worldwide Television News.

DAVID SIMMONS: Zimbabwe's Robert Nugabe was one of the first front line state leaders to arrive at the Angolan capital, Luwanda. The six leaders had been called to the emergency meeting by Namibian President Kenneth Coender. Concern is growing among black African states over the fighting between South African security forces and SWAPO guerrillas which began almost a week ago. SWAPO Leader Sam Nujoma had arrived from Herari to put the rebel case. He insists his guerrillas have not invaded; they were already in Namibia. Traveling with him was Oliver Tambeau, the leader of the exiled African national congress. In Northern Namibia, the fighting continued with Bush battles. The worst of the action was concentrated in Central Ovamboland. South African forces have pushed within 56 miles of the Angolan border. Military intelligence says that more guerrilla troops are continuing to cross into Namibia, and there's no evidence of SWAPO forces accepting South Africa's offer of safe passage back to Angola. It's the worst fighting since SWAPO began its struggle against South African rule in 1966. The death toll has now exceeded 200.

MR. MacNeil: South Africa's President, P.W. Botha, said he plans to retire later this year. Botha's fellow party leaders had been urging him to resign since he had a stroke in January, but he'd been resisting those demands. Botha is expected to be replaced by Education Minister F. W. DeClerque, who is considered more likely to initiate negotiations with major black leader.

MS. WOODRUFF: That' it for the News Summary. just ahead on the Newshour, Oliver North points a guilty finger, the Lorenzo/Ueberroth deal over Eastern Airlines, an update on the Alaskan oil spill and an essay folk art.

MS. WOODRUFF: Our lead story tonight is Oliver North. The former White House aide took the stand at his trial for the first time today and under direct questioning from his own lawyer staunchly defended his role in the Iran/Contra affair. North's testimony came after his lawyers read a 42 page document outlining classified information about the Reagan administration's role in aiding the Nicaraguan Contras. Here to tell us more about today's dramatic events is Nina Totenberg, Legal Affairs Correspondent for National Public Radio. Nina, what was the thrust of North's testimony today?

NINA TOTENBERG, National Public Radio: Basically what he said was this. In 1984, as it became clear that Congress was going to cut off aid to the Contras and going to forbid the CIA to help the Contras, the Director of the CIA, Mr. Casey, told Oliver North, you are the person who is going to take over what we have been doing; you will replace the CIA. It will be a hand-off, said Oliver North, it was a hand-off just like it is in basketball, and he said he had the specific authorization of his boss, the National Security Adviser, to do that, and that he then undertook a series of events to keep the Contras alive, and that every step he took was authorized by either McFarlane or Poindexter, Admiral Poindexter, McFarlane's deputy, with usually the concurrence of the CIA Director, Mr. Casey.

MS. WOODRUFF: So what he was saying in so many words was it wasn't me, folks, it was them?

MS. TOTENBERG: That's right. He was saying we were losing what the CIA was doing for the Contras. The President was adamant that the people that we had put in the field would not be abandoned. And the way to do that, he said, Mr. Casey told me was that I was to replace the CIA.

MS. WOODRUFF: Now how did North handle himself under questioning? Here you have the primary figure in this trial. He's been sitting here listening for testimony over the last how many weeks and today it's his turn. How did he come across?

MS. TOTENBERG: He was I thought somewhat different than he was at the Iran/Contra hearings. He now is wearing a blue blazer, not the emblazoned, medal emblazoned uniform.

MS. WOODRUFF: Now that he's retired from the Marines.

MS. TOTENBERG: Now that he's retired from the Marines. And he looks much smaller. He's grayer. He was quite pale today. When he began his testimony, his voice quavered a bit. He was obviously nervous. He soon grew more confident and testified in a husky, soft, but firm voice. He I think is not the domineering figure that he was in the Iran/Contra hearings. He is much more of a witness in his own defense. He is a very good witness but he's still just a witness, but not this enormous presence. He does make real contact with that jury and he did it today perhaps never more clearly than when he gave his famous slide show, the one that he wanted to give at the Iran/Contra hearings, that the Congress wouldn't let him give, wouldn't let him give that slide show. He gave it today, a half hour show.

MS. WOODRUFF: This is the slide show that he had shown to potential Contra contributors.

MS. TOTENBERG: That's right. And I'm here to tell you our business is broadcasting, we could never give a presentation as well as he did. Not one "umm", not one "err", standing there with a pointer, with the room darkened, the courtroom darkened, he showed pictures of Sandinista Communist leaders meeting with Moammar Gadhafi and Fidel Castro of Cuba. He showed a very badly scarred Pentecostal leader from Nicaragua who he said was the victim of brutal repression in Nicaragua. He showed pictures of captured weapons that he said were funding, were going to other Communist guerrilla forces in the rest of Central America, and lastly he showed a cross that was over a grave of resistance soldiers and he noted that only among the resistance is there a cross, that when Sandinista soldiers were buried, there was no evidence that they were Christians.

MS. WOODRUFF: Now was the courtroom darkened during all this?

MS. TOTENBERG: Mainly darkened, all but one set of lights.

MS. WOODRUFF: Could you see any of the reaction of the jury during this period?

MS. TOTENBERG: The jury was absolutely fascinated. It was show and tell, after all. It was absolutely fascinated for most of it. I would say it ran a little long and the last ten minutes of a half hour proceeding, I think he lost about half that jury.

MS. WOODRUFF: Overall, how believable would you say his presentation was? Obviously, that's a subjective judgment, but - -

MS.TOTENBERG: Well, the judge said to him, this has to be not a presentation to the jury, but a presentation like you gave to the potential donors, it has to duplicate what you did, and so that's what he was seeking to do. It was very believable. It was quite candidly propaganda, propaganda for our side, propaganda.

MS. WOODRUFF: What about the rest of his testimony?

MS. TOTENBERG: Well, it was very interesting. He said that at every turn he got permission for what he did and that he was specifically instructed, for example, not to tell anyone about third country contributions to the Contras. He said that CIA Director Casey even took him on a trip to Central America to meet the CIA station chiefs there in case something went wrong with his, North's operation, so that the CIA station chiefs would know who he was and he would know who they were, and he said that Casey is the one who provided him the name of Richard Secord; he didn't know Richard Secord, Casey was the one who gave him that name and many others.

MS. WOODRUFF: Which has come out before?

MS. TOTENBERG: Yes.

MS. WOODRUFF: But here he is saying it again from his own mouth.

MS. TOTENBERG: Right.

MS. WOODRUFF: Nina, what about this information that was released today by North's attorneys but with the acquiescence of the prosecution, this is what, a summary of classified information, is that correct?

MS. TOTENBERG: Let's sort of set the stage for what it is. The government, the special prosecutor, in order not to have reams of classified information put into evidence said, look, we'll agree to a summary that states the points that you, the defense, want to make, these points, A,B,C, and D, and they negotiated it out, and this was the fruit of that negotiated agreement, and it was read to the jury by one of the defense lawyers, and of course, the most newsworthy I suppose thing in it is that it revealed for the first time that then Vice President George Bush was the messenger, the courier to the President of Honduras, telling him, look, if you'll be good to the Contras, we'll give you lots of aid, we'll give you lots of military and economic aid that you want, so for the first time we know that the now President of the United States was fully aware of the quid pro quo arrangement.

MS. WOODRUFF: Now what do we think that the significance of that is?

MS. TOTENBERG: I'm not sure that it has, I'm not sure that it has an enormous significance in a policy sense. I mean, how could you be Vice President and sit in at all these big National Security Council meetings and not know that the President had authorized this, when many people, including the National Security Adviser to the President did know. In a trial significance, I can't be sure what the significance will be. Obviously, the defense is trying to point out that the Reagan administration was dealing with every Tom, Dick, and Harry in the foreign affairs sense.

MS. WOODRUFF: And that they were dealing from the very highest levels?

MS. TOTENBERG: And that they were dealing from the very highest levels, and this was all very secret and Oliver North wasn't doing anything unusual.

MS. WOODRUFF: Now another piece of information that came out from this classified summary had to do with Panama's Gen. Noriega. Do you want to tell us about that?

MS. TOTENBERG: This was the most fascinating one from my point of view. The summary read to the jury stipulated as true fact that in 1986 a representative of the infamous, and I think we can fairly call him that, Gen. Noriega contacted Col. North and said to him, look, we'll be happy to assassinate for you the leaders of the Sandinista Government, if you will help Gen. Noriega clean up his image in the United States, oh, and by the way sell us weapons again.

MS. WOODRUFF: North's reaction.

MS. TOTENBERG: North said, that's illegal, we can't authorize assassinations, and Poindexter, the National Security Adviser, also said that's illegal.

MS. WOODRUFF: North's boss?

MS. TOTENBERG: He was North's boss. But he also said, however, if you want to do some sabotage against the Sandinista Government, that's okay; we just can't have you assassinating their leaders, that's illegal. And apparently, according to the stipulation presented today, Noriega the year earlier had engaged in some sabotage against the Nicaraguans on our behalf.

MS. WOODRUFF: Nina, what was the reaction in the courtroom when some of this was being read? Were there gasps, or did people put their hands to their mouths? I mean, was this all sort of old hat to you folks who have been listening to it?

MS. TOTENBERG: First you have to understand that there were 42 pages of material read to that jury and it was really hard to follow it at times. I assume that if they want it, they will have a written copy to look at, and it certainly helps to look at a written copy. There were quite a bit of soto voce giggling in the press corps, but I think some of it went over the heads of the jury on first listening. Some of it went over my head until I looked at it to read it myself. I mean, it's very hard to concentrate on very concentrated detail, fact packed detail like this, for 42 pages, well over an hour and a half of reading.

MS. WOODRUFF: All right. Now what happens for the rest of this week? Tomorrow's Friday. Will North be cross-examined tomorrow?

MS. TOTENBERG: No. I doubt it. I'm not a perfect prognosticator, as well all know.

MS. WOODRUFF: We won't remind you of some of those things. You've been right 99 percent of the time, so that's all right.

MS. TOTENBERG: Tomorrow, the direct examination will continue, and I would doubt very much that Brendan Sullivan's mind over the weekend as the last thing they hear any cross-examination and that he will take the whole day to continue his direct examination, perhaps conclude it at the end of the day, and that we'll have cross-examination next week.

MS. WOODRUFF: Nina Totenberg, once again, thanks very much. Robin.

MR. MacNeil: Still to come on the Newshour, Lorenzo and Ueberroth play ball on Eastern, learning from the Alaska oil spill and some home grown art. UPDATE - WINNING SALES PITCH

MR. MacNeil: As we reported, Frank Lorenzo has agreed to sell Eastern Airlines to a group of investors headed by former baseball commissioner Peter Ueberroth and Thomas Talbot, a former airline executive, for $464 million. If the deal goes through, it could bring the nation's seventh largest airline out of bankruptcy. The deal gives the management of Texas Air $200 million in cash and $264 million in financial notes. Ueberroth and Talbot would gain 30 percent of the company. Eastern employees, both union and non- union, would gain 30 percent, and 40 percent of the company would be held by new investors, including the Wall Street firm of Drexel Burnham Lambert. It would finance a major part of the deal with junk bonds. At a news conference today in New York, Lorenzo reviewed the options he considered before deciding to sell Eastern to Ueberroth and his group.

FRANK LORENZO, Chairman, Texas Air Corp.: We have attempted negotiations with the unions and indeed, there was a plan and indeed is a plan that could have brought Eastern back up over a period of time with or without agreements from the union given the support from the employees of the company that have been working. There was a second alternative, and that was a liquidation of all or a portion of Eastern Airlines, and a third alternative was a sale. We have studied and we have examined these alternatives, and I don't mind telling you that the alternative that we have chosen, are about to announce today, is not the alternative that provides the greatest return to Texas Air shareholders. In fact, a liquidation of the company would provide substantially greater amounts than the amount that is involved in the transaction that we're going to tell you about today.

PETER UEBERROTH, Prospective Eastern Buyer: We have hurdles ahead of us, and I caution you all that you remember these hurdles not so much for what you're writing down or putting on film, but remember these hurdles for the employees of Eastern Airlines, the 25,000 people and their families out there. We've got hurdles and I don't want them to go away with the message that they start work tomorrow, and the hurdles are two major ones and a whole bunch of minor ones, but the two major ones are the labor agreement with the three unions which Tom and I'll depart immediately to meet with them and they know we're coming just right after this meeting, and then the bankruptcy court, which will do its proceedings in a proper and ethical way and we hope in a way that has some speed to it also, some dispatch to it also.

REPORTER: A lot of the striking and non-striking employees I'm sure will be listening very carefully to what you have to say today. What message would you give them about the potential long- term success for them and for the airline if you had to guess?

PETER UEBERROTH: I hope that they don't make up any minds and get messages today since we have the hurdles. Tom, who's directing our effort, and I and others will talk to them personally. They have some communication systems set up that we can do that, and then the best way to do it is eyeball to eyeball and talk with them, so that's the way we'll hopefully get their ideas and we'll go forward from there.

MR. MacNeil: In return for 30 percent of the company, Eastern's unions and other employees would be required to make concessions in wages and work rules. Eastern's pilots issued a statement saying, " -- the Eastern Machinists remain on strike and Eastern pilots continue to honor the Machinists' picket lines, but our financial advisers have had preliminary talks with Mr. Ueberroth's team -- what we have heard so far leaves us cautiously optimistic." We have two views of the deal now from Wall Street Julius Maldutis, he's an airline analyst for Salomon Brothers, Harley Shaiken is a Professor of Work and Technology at the University of California in San Diego. Mr. Maldutis, on the face of it you might think everybody won. Lorenzo gets a profit, the unions get rid of Lorenzo, which they wanted, and the airline continues to fly, is that right?

JULIUS MALDUTIS, Airline Analyst: Well, I think we're close to that, but I think if the airline resumes service, the public will probably be the big winner in all of this and namely I think we will see a nice price war emerge as Eastern resumes service.

MR. MacNeil: I see. How do you describe how Mr. Lorenzo did and how the unions did out of this?

MR. MALDUTIS: Well, I think they all did well. This is one of the most labor conflicts I think Mr. Lorenzo's chances of succeeding in beating the union became quite negligible, so I think Mr. Lorenzo does come out quite well. I think also the unions will do well. Namely, they will have an equity position in the company as well as rebuilding a stake in Eastern Airlines.

MR. MacNeil: Mr. Shaiken, how do you think the unions and Mr. Lorenzo did respectively?

HARLEY SHAIKEN, Labor Relations Expert: [San Diego] Well, I would have a somewhat different view. I think the unions scored a significant victory, but if we recall on March 5th, the conventional wisdom was that the unions were writing their own obituary, that they really wouldn't survive the strike, and not only have they survived the strike, but they've seen one of their most significant demands met, that is, that Frank Lorenzo sell the airline. I think from Mr. Lorenzo's point of view, he certainly comes out okay financially, but this is hardly what he had anticipated going into the strike. In effect, he provoked the strike with the idea that the unions would be severely weakened or perhaps even destroyed, and in a showdown, he was the first one to blink and has come out of this financially richer but in a different position.

MR. MacNeil: A big victory for the unions you say. Won't they have to make concessions even greater for Mr. Ueberroth than they were being asked to do and refused Mr. Lorenzo?

MR. SHAIKEN: Well, I think what we're seeing now is the beginning of collective bargaining. Certainly Mr. Ueberroth is asking for greater concessions, but he's also offering something in return.

MR. MacNeil: He's asking for concessions totalling $210 million, as I understand it, and Mr. Lorenzo had gone down to 150 million.

MR. SHAIKEN: Yes, that's correct, but the 210 million figure I would assume is the beginning of the bargaining process, not its end. The unions really all along I think have been willing to make certain concessions. The concessions weren't the issue. I think the issue was what would they receive in return, and I think chief on their list was someone that would build the airline, that is, if they are going to make sacrifices, then they have an interest in single sacrifices applied to the growth of the airline. That social compact between employees and management simply wasn't there with Mr. Lorenzo, so with Mr. Ueberroth I think there really is a very difficult road to down in the next several days or perhaps week, but there is I think some possibility for a good settlement here.

MR. MacNeil: Do you see it as a big victory for the unions?

MR. MALDUTIS: No, I don't think so. I think that they had very little choice and the longer that the strike continued, the less likelihood that a viable Eastern could be rebuilt and as you correctly point out, Mr. Lorenzo wanted only 150 million in concessions and the concessions will indeed be 200 million and above.

MR. MacNeil: So for these, is this a perique victory for the unions? I mean, are they going to be ending out taking home less money as their price for getting rid of Lorenzo, whom apparently they hated so much?

MR. MALDUTIS: Well, I think they will be taking home less, but they also will have a significant equity stake in the company, so overall, I think everybody comes out a winner in this situation.

MR. MacNeil: How is co-ownership, can it work in a union like this? We heard Mr. Ueberroth say this is a new concept in aviation. How do you think from a union point of view, Mr. Shaiken, it can work?

MR. SHAIKEN: Well, it's not entirely a new concept. When the Machinists and other unions gave concessions previously at Eastern, they won four seats on the board of directors and also a stock position in the company. We're seeing that resurrected at least in terms of the equity position. The specifics of how it will work I think remain very open and will be resolved in the collective bargaining process, but I think clearly the employees all along have had an important stake in rebuilding Eastern as an airline. The strike wasn't so much against Eastern as against Frank Lorenzo's management and operating methods, and in terms of the union scoring a significant victory here, I would say that that, in fact, is the case, particularly given the conventional wisdom at the beginning of the strike that the unions had effectively committed collective suicide by going out on strike. In effect, they saw no alternative, would have preferred to avoid it, but once they went out on strike I think have already, regardless of how things turn out in the next several days or weeks, won an important part of their demands.

MR. MacNeil: Mr. Lorenzo had changed the shape of the airlines to some extent by really getting the unions to reduce -- either getting rid of the union in the case of Continental or getting the unions to give them concessions. Is that at an end now. I mean, has that phase ended with the unions standing up to him in this case? Is that the end of the big concessions for the airlines?

MR. MALDUTIS: I think we're at a very important turning point in the airline industry, namely that the political power of airline labor has increased significantly and several airlines a year or a year and a half ago already noticed this trend and went out of their way to sign long-term collective good agreements. Mr. Lorenzo attempted, in effect, to try to repeat what he did in 1983 with Continental Airlines and the unions were successful in resisting that attempt.

MR. MacNeil: And some so-called "high cost" airlines, airlines with long history of senior union people like American and United, continue to do quite well, don't they?

MR. MALDUTIS: Absolutely, and they will do well.

MR. MacNeil: Is this the deal now, or could it still change? I mean, is this fixed and settled now, assuming the bankruptcy judge approves?

MR. MALDUTIS: Well, once the reorganization plan is filed, any other party could technically come in and submit their own reorganization plan, so it would be possible for outsiders who wanted to acquire Eastern if obviously they came up with a better deal to submit it to the bankruptcy judge.

MR. MacNeil: Someone like Carl Icahn of TWA for instance?

MR. MALDUTIS: Well, Mr. Icahn has been noted to be thinking about Eastern Airlines.

MR. MacNeil: So it isn't impossible that there could still be some more moves on this board.

MR. MALDUTIS: I think until we see Judge Liftland approve the reorganization, it is a possibility.

MR. MacNeil: How do you read that, Mr. Shaiken?

MR. SHAIKEN: Well, I think very much. There are a lot of issues that remain unresolved. I don't see it as the two road blocks or hurdles that Mr. Ueberroth pointed out. I don't think there will be much problems from the bankruptcy judge, Judge Liftland. He's already indicated that he wants to see this airline flying, but, in effect, the terms that are going to be laid out to the unions haven't been done in any detail yet. There are three unions involved, the relative shares could be important. Also, the role of the unions in operating the airline is important, so I think cautiously optimistic would be a good phrase to use in this regard. I think there are some real possibilities, but this story is by no means over. The part of it that has to do with Mr. Lorenzo is done. The rest of it is very much an open question.

MR. MacNeil: How viable is an Eastern Airlines now with one of its most profitable pieces, the Air Shuttle, Eastern -- Air Shuttle sold off to Donald Trump?

MR. MALDUTIS: Well, I think that question will be answered in terms of the public reaction when Eastern starts flying again, and it could be built into a profitable airline, but it will depend on the high level of concessions and a high level of public acceptance of Eastern Airlines.

MR. MacNeil: And the public has gone away from Eastern as a result of this?

MR. MALDUTIS: That is correct.

MR. MacNeil: What about the very large debt position that Eastern is saddled with, what kind of posture is that going to put it in?

MR. MALDUTIS: Well, I think the Ueberroth group in order to get the creditor approval is going to have to assume all of that debt.

MR. MacNeil: Well, spell that out for those of us who aren't financial wizards.

MR. MALDUTIS: Well, that is about $2.3 billion of long-term debt.

MR. MacNeil: And how does that compare with other airlines that Eastern will be competing with?

MR. MALDUTIS: Well, other airlines have I think much lower levels of debt and I think it will continue to bear heavy interest payments. Consequently, it will be very important to return Eastern to profitability.

MR. MacNeil: And what will Eastern have to do to get passengers to come back?

MR. MALDUTIS: Well, we come back to 59 or 69 dollar fares to Florida, I think.

MR. MacNeil: And what will that do to the rest of the industry?

MR. MALDUTIS: Well, I think the rest of the industry will be very careful in terms of how they treat the new Eastern Airlines. I think there's growing concern in Congress over the high degree of concentration and I think the rest of the industry will be quite careful in how they price their product, and I think the last thing that they would want to see is this effort fail.

MR. MacNeil: Careful how they price this product, what does that mean? They'll make their fares less and low too?

MR. MALDUTIS: Well, I don't think that they will go out and try to match Eastern's fares dollar for dollar.

MR. MacNeil: Mr. Shaiken, finally, what kind of broader implications, if any, does this have for organized labor? When we talked before, when the strike first began, there was a lot of talk about how unprecedented it was in recent years for all of organized labor to get behind such a strike and come out in Solidarity. What does this say?

MR. SHAIKEN: Well, I think there are really two themes that come out of this, regardless of whatever happens next. One of themes is that a certain message has been sent that ways of competing are not unlimited, that certain methods to increase competitiveness which come directly and totally at the expense of the employees, will, in fact, be resisted and resisted strongly. The second message that comes out of this is that the solidarity of the unions within the industry, and it wasn't simply the pilots and the machinists, it was also the flight attendants who in many ways were most vulnerable, but stuck very strongly to that cause, that that solidarity can, in fact, make a strike work. We've often seen the obituaries written for strikes in the 1980s with plenty of compelling evidence in that regard. Here we've seen a unified labor movement within an industry and a unified labor movement in general supporting very effectively an important cause from the point of view of labor, so I think that has sent also a very broad message. This by no means solves the problems of a labor movement, they're very really, but I think it could prove to be an important shot in the arm.

MR. MacNeil: Mr. Maldutis said this was a turning point in the airline evolution. Until now, it's been regarded that the American labor movement, particularly in the Reagan years, was in something of a decline. Is this a symbolic turning point?

MR. SHAIKEN: I think it's clearly a symbolic turning point. Whether it remains a turning point in fact will remain to be seen in the coming years, but the unions at Eastern have really made a very visible and a very effective statement, and they've done so under extremely difficult conditions. I think the importance of that can only be fully appreciated if we look back and see what would have happened if Frank Lorenzo had, in fact, won this one? It would have really meant the decimation not simply of the unions at Eastern, but also a very powerful message that a good way to compete is simply to slash costs and to go directly at the heart of the professionalism of the employees involved. Had that occurred, we would have seen I think a move in that direction, not simply in airlines, but throughout the economy.

MR. MacNeil: What do you think this is going to do to the unions, Mr. Maldutis, at the other airlines?

MR. MALDUTIS: I think the other managements will find it now quite difficult to obtain any further concessions. Several other airlines are in the process of negotiating right now and it's become quite clear that they are finding it quite difficult in obtaining any significant concessions.

MR. MacNeil: Well, Mr. Maldutis and Mr. Shaiken, thank you both for joining us. UPDATE - TROUBLED WATERS

MS. WOODRUFF: Next tonight the impact of the Alaskan oil spill as seen on Capitol Hill. Committees on the House and Senate focused today on the disaster, specifically how it happened and how the federal government and the Exxon Corporation responded to the accident. Kwame Holman reports on the two sets of hearings that heard testimony from the head of Exxon and top federal, state and local officials.

MAYOR JOHN DEVENS, Valdez, Alaska: Had this same disaster occurred off Long Island or off LA or San Francisco, I guarantee you that a declaration of disaster would have been called, but it happened in Alaska, and we didn't get the declaration of disaster. And we need it.

KWAME HOLMAN: Desperation seemed apparent in the words of John Devens, the part-time Mayor of Valdez, Alaska. It's been almost two weeks since the Exxon oil tanker ran aground on a reef in Alaska's Prince William Sound, and today the effects of that massive 10 million gallon oil spill reached Capitol Hill.

REP. CLAUDINE SCHNEIDER, [R] Rhode Island: The environmental doomsdayers have been warning about such a catastrophe for the Congress and the American public has been assured by the oil industry that there was nothing to be concerned about.

REP. DON YOUNG, [R] Alaska: Mr. Chairman, I don't think it's correct at this time to cast blame on anyone or point fingers when we all share in that blame. It is up to this committee and up to the industry in the State of Alaska, to make sure that we expedite and learn what has happened and take care for those that have lost.

MR. HOLMAN: The House Merchant Marine subcommittee raised questions about how such a disaster could have occurred, how that disaster is handled, and what can be done to prevent such spills from happening again. Admiral Paul Yost, commandant of the U.S. Coast Guard, was the first witness and admitted no one had prepared for a spill of this size.

ADM. PAUL YOST, JR., Commandant, U.S. Coast Guard: The Alieska plan provided for the biggest spill that either Alieska or the state frankly could imagine. The worst case scenario for that plan was one-fourth of the amount that was actually spilled in this case. In other words, the plan was built on a worst case scenario of about 2 1/2 million gallons. In fact, we had 10 million gallons or four times that much actually spilled, so the plan to begin with was, had a major fault, completely inadequate, and it's not surprising that the response has not been as effective as the American people and the Congress would like it to be, or me either. Now of that 10 million that spilled, we had about 3 million evaporate. Of the 7 million then that's still in the water, we cleaned up about, by "we", all the agencies at Exxon and what have you, about 1/2 million gallons. Now that's 1/2 million gallons out of 7 million. That's all been picked up. That is the same amount that clings to the sides of the tanks in this tanker. There's 1/2 million gallons in the tanker that's just clinging that you can't get out, so it's a very small amount that we've been able to clean up in the last week or two. Frankly, that will become less and less and less as a rate of pick up, because the oil is harder and harder to pick up as it weathers, scatters, spreads, so the 1/2 million we've already picked up is more than we can expect to pick up in the immediate future. What you're going to clean up now is going to come off the beach, going to come off of rocks, going to come in booms. It's going to be very very difficult to get much of the rest of the 7 million gallons out of the water.

MR. HOLMAN: Questions were raised as to why steps weren't taken more quickly to contain the spill.

REP. HERBERT BATEMAN, [R] Virginia: It looks like to me there's almost a day and a half, two days before there's anything on site to begin the off loading operations. Is there a problem there that we should be concerned about?

ADM. PAUL YOST, JR.: Well, I think there are a couple of problems there. One, the tanker's piping system was damaged to the extent it couldn't be used, and when that happens, the only way of getting oil out is out the top and you have to have submersible tanks. Within hours of being notified of the problem, we had a C-130 airborne with pumps and people from our Pacific strike team and when they got aboard, by that time, very shortly after, tankers and barges were available. Before we started pumping, Exxon brought an architect on board and the Naval architect said stop, don't do anything till I analyze the damage here because if you people start pumping this thing in the wrong sequence, you're going to break the back of this ship and you're going to have not 10 million in the water, you're going to have 53 million in the water.

MR. HOLMAN: Joseph Hazelwood, the ship's captain, was released on bond today from a New York jail. He faces a list of charges resulting from the accident. Some committee members said they couldn't understand how someone who had lost his driver's license for driving while intoxicated could be allowed to pilot a ship carrying 60 million gallons of oil.

MR. TAUZIN: How is it that Capt. Hazelwood was in command of this vessel?

ADM. PAUL YOST, JR.: Capt. Hazelwood had a license. The requirement to have a license in addition to being qualified, you submit an application and on that application you must list any convictions that you have had prior to this, and that includes anything except minor traffic convictions. Now we've reviewed the application for renewal of this merchant mariner's license. He did not list the kinds of things that Mrs. Lowey mentioned were in his record. Those things were not listed. Had they been listed, there would have perhaps been a very different result on his ability to renew this license.

MR. TAUZIN: Let me interrupt quickly. DWI is not a listed offense on the application for renewal of license?

ADAM. PAUL YOST, JR.: DWI is an included offense in that it asks, have you had any convictions other than minor traffic expenses in the last x number of years, in five years. He listed none when, in fact, we've heard testimony here in an opening statement, we've seen it in the newspapers, there have been some convictions very recently.

MR. HOLMAN: On the other side of the capital, the Senate Commerce Committee questioned Transportation Secretary Samuel Skinner. An angry Ted Stevens of Alaska stopped just short of demanding the federal government take over the current cleanup operation from Exxon.

SEN. TED STEVENS, [R] Alaska: We ought to have an emergency group. We've asked the President to declare an emergency under the SBA Act. We've asked now for the Coast Guard to coordinate this effort as it leaves Prince William Sound. Without question, it should be a federal responsibility now. And Mr. Secretary, if we don't get that, I'm going to ask the chairman and ranking member to join me in an emergency bill to demand it. We've got to have federal control now.

SAMUEL SKINNER, Secretary of Transportation: First of all, let me say that the President has met virtually daily on this situation. He met with us both before and after we've come back. He met with Sen. Stevens and Sen. McCoskey and the Congressman yesterday in the White House for an hour. We met, I talked to the White House last night. We put together a contingency plan to escalate the effort even significantly beyond what's already present here. That is under review right now. I plan, when we're done, I plan to be meeting with the White House along with Administrator Reilly and Adm. Yost, again with the President, so we are daily assessing this situation. It is an extremely complex problem at this stage that as Sen. Stevens properly indicates is going to take months to remedy to any degree of certainty. We knew that going in, and when I say going in, we knew that on Tuesday when we were in Alaska, it continues to be true today. Let's realistically look at the problem and then put whatever resources are in it. If we have to increase resources, I'm sure the administration will do so.

MR. HOLMAN: Coast Guard Adm. Yost also appearing before the Senate Committee argued that federalizing the cleanup effort might let Exxon off the hook.

ADAM. PAUL YOST, JR.: I want to do something short of federalization. We will assume the responsibility for on-scene guidance and direction to Exxon in doing this. We'll take basically a lot more control than we have now, but we want to stop short of federalization. That might require legally Exxon to close their checkbooks to the fishermen and everybody else. I don't want to do that and I don't think the Governor does either.

MR. HOLMAN: It's too early to assess the damage the oil spill will cause to Alaska's multi-million dollar fishing industry, but some local fishermen have labeled it nothing less than disastrous. Members of the House Committee heard their cry for help.

LT. GOV. STEVE McALPINE, Alaska: Let me conclude my opening by just saying one thing, and that is expressing the mood of the people ofValdez, Alaska, a community that you could have polled five years ago and they would have shown 92 percent favorable disposition to the oil companies and to the operation there. The one word that I heard more than any other word when I was home as betrayal. We've been betrayed. And ladies and gentlemen, as policy makers in this nation, certainly as policy makers in our state and policy makers at the local level, we are going to have to take the trust that we've held heretofore away and begin to undertake the action ourselves.

MAYOR JOHN DEVENS, Valdez, Alaska: For some reason I'm leaving here not totally convinced that there is a real plan that is going to take care of the victims of this problem. and that bothers me greatly. The cleanup has a blank check. Why don't the victims have something? We're not asking to let Exxon off on this. What we're asking for is something's got to be done to keep from forcing not just the fishermen, the fishermen are going to be heard, but the processors, the people that are involved in tourism, the support industries that are there, there's got to be done something to support these people.

MR. HOLMAN: L.G. Rawl, the Chairman of Exxon, tried to allay those concerns.

L.G. RAWL, Chairman, Exxon: They're, I'm sure, very angry. Certainly we don't feel, obviously, betrayal wouldn't be a word. It was a tragic accident, shouldn't have happened. We're going to clean up the damage, we've said that. We're responsible for peoples, you know, if they lost their fishing season or two seasons, whatever it is or whatever we have to do, we accept the responsibility for that. We are using a large number of these people now on the ground and on boats, and we've got a large number of local people employed. We'll have to employ more and we can once, now that we've got this ship out of our hair, so to speak, and if we can get that return out of there, and we've been moving forward on all fronts on this thing.

REP. JERRY STUDDS, [D] Massachusetts: Is Exxon willing to accept full liability for all reasonable cleanup costs and all provable economic and natural resource damages suffered as a result of this spell?

L.G. RAWL: All cleanup costs.

REP. JERRY STUDDS: All cleanup costs and all provable economic and natural resource damages.

L.G. RAWL: It depends on what you mean by economic, Congressman. I think, yes, if it's in that area. Now when you start getting into remote damages, which I'm not a lawyer, but I understand this could roll us around the world, I'm just going to have to say I don't understand that well enough to respond.

REP. JERRY STUDDS: Well, I understand your reluctance to precisely respond to that. The attorneys presumably behind you would have seizures if you did, but let me try to get at this. Is it possible for you to assure us now that notwithstanding your inability to give a precise answer which I understand to that first question, that you will not, that is to say Exxon will not at any point seek to prove that all or part of the damages result from the spill resulted from the negligence of the Coast Guard or any other agency of the U.S. Government?

L.G. RAWL: Yes.

REP. JERRY STUDDS: We have your unequivocal assurance on that?

L.G. RAWL: It depends on what -- my point is we ran a ship aground. We've said we did it and whether you get into debates as to whether the Coast Guard should have had on their radar, didn't have on their radar or what, we'll accept that responsibility, Congressman. Does that answer your question well enough?

REP. JERRY STUDS: I hope so.

MS. WOODRUFF: White House Spokesman Marlin Fitzwater said today that President Bush has received the request from Alaska's Congressional delegation to use the military to help clean up the oil spill. Fitzwater said a final decision on the idea was pending. He said the White House was looking for a comprehensive approach to long-term requirements of the oil spill cleanup. ESSAY - FOLK ART

MR. MacNeil: Finally tonight we have an essay about an exhibit of folk art making a multi city, multi year tour. New York Newsday Art Critic Amei Wallach visited the show while it was in New York.

AMEI WALLACH: Folk art is an art of, by and for the people, very often poor and disenfranchised people. That's precisely why it pulls so many a heart string. It's bright, beautiful, readily approachable, occasionally moving and very often a hoot. It never was meant for the rich and the mighty who could afford the latest and the most esoteric. The ladies and gentlemen of Boston and points South might submit to Gilbert Stewart's exacting brush, but the good folk of outlying villages and far flung farms were pleased with what they could get for $4. That would buy them the best an itinerant portrait painter could do, usually a self taught painter like Amy Phillips, one of the first of these artists that historians managed to identify. At the time, it didn't seem any more important for the artist to record their names on a painting than it was for a carpenter to sign a beam, but Amy Phillips's signature of delicate patterning is unmistakable, particularly in the five portraits of the Door Family of Chatham Center, New York. The Doors currently hang on the walls of New York's Whitney Museum of American Art. They're part of an exhibition on loan from the Abbey Aldridge Rockefeller Folk Art Center in Colonial Williamsburg that's touring the country. The length of the tour says everything about the current state of folk art's fortunes, but so does the name of the museum from which they come, Rockefeller. Abbey Aldridge Rockefeller was John D. Junior's wife. She's best known for helping found the Museum of Modern Art, but she also had a passion for this art of the backward back woods. In more recent years, folk portraits like these painted for people clinging by their fingertips to the bottom rungs of the middle class have become an emblem of power in Houston board rooms and Beverly Hills mansions. The quilts that whole villages of women gathered to sew to warm cold winter beds have become a badge of the best and high yuppie taste. William Shimmel was an itinerant German immigrant drunk in the nineteenth century who could carve an eagle in exchange for a drink and wooden toys for a night's lodging in a shed. What we get out of his carvings today is nostalgia for history and for simpler days. There's precious little here of the folk art still being made by those who are, as always, poor, untutored and disenfranchised, but you can travel up and down Appalachia and find the talented and the untutored. Here in the hills and hollers of Eastern Kentucky, people take naturally to painting and carving for pleasure, profit and healing. Charlie Kinney has lived all 83 years of his life within a hundred years of the log cabin where he was born raising corn, guinea hens and ducks. Although he paints a world of animals into his mystical landscapes, he's not very fond of them. He shot his brother Noah's white cat. Noah's been painting since he was 13, but the whittling began only 20 years ago. He started with his humans, as he calls them. He dressed one human in his wife, Hazel's wedding dress. "Every day," he says, "I feel I'm creating something that probably somebody else can't." After Ronald Cooper lost the grocery store, after his two heart attacks, after the automobile pile up when he was left for dead in a snowstorm, he started carving the devils and walking snakes of his nightmares in moral tales of hell and damnation. His wife, Jessee paints salvation. She crowds her fantastical boxes with scenes and sayings and peoples them with worshipers and sinners and with Christ, gloriously forgiving. They make their art for the reasons folk artists always have, to sing for their supper and to talk to someone in a language that needs no translation. RECAP

MS. WOODRUFF: Once again, Thursday's top stories, George Bush was named as an intermediary in former President Reagan's secret plan to aid the Nicaraguan Contras. That revelation came at today's session of the Iran/Contra trial in which Oliver North testified in his own defense. A group headed by former baseball commissioner Peter Ueberroth agreed to buy Eastern Airlines in a deal that would give employees a major share of the company. Israeli Prime Minister Yitzhak Shamir proposed elections in the occupied territories, and late today, the U.S. extended economic sanctions against Panama for one year, calling the Noriega regime corrupt, repressive and inept. Good night, Robin.

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