The MacNeil/Lehrer NewsHour

Intro

ROBERT MacNEIL: Good evening. The top story today is the verdict in the John DeLorean case. The former car maker was acquitted on all eight counts in a $24 million cocaine conspiracy. The Republicans completed their platform work in Dallas with conservatives carrying the day. Another tanker hit a mine in the Red Sea. Housing starts dropped and factory use was up in July. Jim Lehrer is off tonight and Judy Woodruff is in Washington. Judy?

JUDY WOODRUFF: The day's biggest stories get most of our attention on the NewsHour. On the DeLorean acquittal, a journalist and legal expert joins us to try to explain why the verdict went the way it did. On the drop in housing construction we talk with a homebuilder's official about what it means for consumers. On 11th-hour efforts by Republican moderates to change the party platform, we hear from congressmen from both wings of the party. And on the political turmoil in Iran, we get a documentary report and hear from a former official in the revolutionary government.John DeLorean: Grounds for Acquittal

MacNEIL: John DeLorean, once the golden boy of the automobile industry, walked into a federal courthouse in Los Angeles this afternoon facing a possible 67 years in jail. He walked out a free man, sobbing "Praise the Lord." After deliberating for 29 hours over six days, the jury of six men and six women found DeLorean not guilty on all eight counts in a $24 million cocaine conspiracy. The prosecution claimed he entered the conspiracy with FBI undercover men posing as drug dealers to import the cocaine to finance his failling car company in northern Ireland. DeLorean's attorneys claimed he was set up by a government informant and entrapped by government agents. This morning the jury notified Judge Robert Takasugi that they had a verdict, and DeLorean arrived at the federal district courthouse shortly after noon to heart the result. He put his arm around his wife, Christina Ferrare, as they walked up the steps through a crowd of reporters and photographers and approached the end of an ordeal that began when he was arrested more than a year and a half ago in October 1982. He had spent 11 days in jail before he was freed on a bail of $10 million. The trial went on for four months and amassed 18,000 pages of testimony. The jury heard testimony from 17 witnesses, saw 200 exhibits and reviewed six hours of video and audio tape which had been recorded secretly by FBI agents. In one of them the jury saw DeLorean a few minutes before he was arrested, looking at a suitcase said to be full of cocaine with FBI agents posing as drug dealers. Here is a part of that tape.

FBI AGENT: This is the other half that's going out of here as soon in -- as we're done. And between this and the other, it'll generate about four and a half -- not less than four and a half mill.

JOHN DeLOREAN: Better than gold. Gold weighs more than this, for God's sakes!

MacNEIL: When DeLorean was asked about the suitcase in a proceeding before the trial, he said he was afraid he would not be allowed to leave the room alive, implying that he was telling the agents what they wanted to hear. DeLorean did not testify at the trial and so was not asked about the tape. To discuss what DeLorean's total acquittal signifies for future government efforts of this kind, we have Steven Brill, who's been following the case closely as editor and publisher of The American Lawyer magazine.

Mr. Brill, in view of the evidence, including that tape we just saw an excerpt of, was the verdict a surprise to you?

STEVEN BRILL: It wasn't really a surprise to me at all. I had -- I had thought that he would be acquitted, and especially after the jury took so long, it just became clear. Of course, this is a supposition -- it became clear to me that they were debating the government's tactics, not debating what they'd seen on that film. What they saw on that film was very clear, but they were debating tactics.

MacNEIL: You in fact wrote a front-page article in your magazine in January 1983 predicting that DeLorean would be acquitted. What made you so certain that early?

Mr. BRILL: I make a lot of predictions. It's nice to be right once in a while. I had read the indictment; I had read the papers involved with the case; I had talked to some of the agents involved. And it just seemed that what the government had done was create a crime. That doesn't mean that John DeLorean should be up for an appointment to the Supreme Court or that he should want to show that film to his children or his grandchildren as one of the great moments of his life. What it means is that they created this crime. They created the drug dealer who was getting the drugs for him; they created the banker who was going to finance the deal. And if you or I were walking down the street and someone said to us, "How would you like to make $60 million dealing cocaine?," the fact that we might say "Well, I'd be interested in that" is not something the makes us very good people, but it is something that should not in our country make us susceptible to going to jail. And I think the jury decided that.

MacNEIL: The issue being that -- at least the question being, would there have been a crime if they hadn't created the circumstances for a crime?

Mr. BRILL: Well, if you boil it down, I think what you come to is you say, if John DeLorean, regardless of whether he's a terrific person, whether we like him, whether we don't like him, if the government hadn't put the banker there to give him the money and hadn't put the drug dealer there to get him the drugs, would John DeLorean have committed that crime? Looked at it that way, a jury probably says to itself, why can't the police go catch real criminals instead of creating criminals?

MacNEIL: Now, where do you think the government's case fell down? I mean, they had all the evidence, and before the jury may have made the supposition you just outlined, where do you think -- what was the hole in the government's case?

Mr. BRILL: Well, what the jury sees are FBI agents, drug agents, who are very eager to catch someone. What they see is an informant who in return for his testimony -- who has committed a crime, and in return for his testimony --

MacNEIL: That's Mr. Hoffman, the sort of star prosecution witness who was a former drug dealer himself.

Mr. BRILL: The only thing we know for sure about the characters in this case is that the person who nailed John DeLorean is a criminal, so we know that and the jury knows that. And they see that he's going to get off by saying that DeLorean approached him about a drug deal. Well, the entire case, the entire question of whether John DeLorean goes to prison or not, depends on whether we believe Hoffman the DeLorean approached him or that Hoffman approached DeLorean thinking "This is a way I can get off." And I think that on that standard, a jury decides -- it takes its charge from the judge very seriously and decides in this country we don't send people to prison on that basis. We do not have a government -- we don't think we have a government -- that does integrity tests of its critizens. We have a government that when a crime is committed tries to catch the criminal and put him in prison.

MacNEIL: But the government notoriously did integrity tests of a number of congressmen in the Abscam cases, with a lot of similarities here, and they were convicted.

Mr. BRILL: I think the difference is that -- and I predicted that some of those people would be acquitted too, I should disclose.

MacNEIL: And you were wrong.

Mr. BRILL: I was dead wrong.The difference is that I think jurors will tolerate more even from an auto magnate than they will from a congressman. Someone sees Senator Williams in a film like that; they say this is terrible for a senator to be doing, and I don't think they're as sensitive as they should be to how he got in the room to have that film taken. I might add --

MacNEIL: You mean prejudiced against politicians, blinded then to the issue of entrapment?

Mr. BRILL: I think they hold politicians to a much higher standard, and if you looked at the summations to the jury in the Abscam cases, the prosecutors talked a lot about the special public trust that politicians have, which they do. But that is a public trust having to do with whether we vote for them, not whether we send them to prison. If you look at that tape, by the way, all our viewers can notice one thing: it's in black and white. I don't know anyone else in the world who videotapes things in black and white except for the FBI, and the reason is it just looks so much more seedy if it's in black and white. They have the same capability they you have; they could have done that in color.

MacNEIL: It's true that when you do things in color, it's hard to make them look seedy.

Mr. BRILL: Do you know any videotapes that are in black and white?

MacNEIL: I don't know. I'm not technically accomplished there. Let me ask you finally, wht is this going to do to future government resort to undercover efforts, which the government says is a very important part of law enforcement, to get at the sort of people they wouldn't be otherwise able to get at?

Mr. BRILL: Those undercover efforts are very important. They're very important in going after organized crime people, people who are known to be corrupt or thought to be engaging in ongoing criminal activity. I don't think it will do anything to hamper those investigations. It will probably make prosecutors think twice -- I hope it does -- about situations where they decide that someone's not a good guy, let's test him and see if we're right.

MacNEIL: Yeah, okay. Mr. Brill, thank you for joining us. Judy?

WOODRUFF: If anyone doubted that the debate over the budget deficit has turned totally political, all doubts should end after today. Treasury Secretary Donald Regan attacked Democratic presidential nominee Walter Mondale for calling the Reagan administration's newly released budget forecast "garbage."

DONALD REGAN, Secretary Treasury: Walter Mondale calls ours garbage and has the nerve not to publish his. He's had over a month to come out with his forecast of what his budget deficits are going to be. I'd like to see his to see what his forecast is going to be. Is he going to call for a Mondale term of office that's going to increase interest rates over now, or is he going to call for a Mondale term in office that would reduce interest rates? What does he think he could do in four years with interest rates? What does he think he could do with deficits if he's going to increase spending? And he says that he'll raise taxes. Well, by how much and how, and what effect does that have on deficits? I don't think he could just throw ill-chosen words at our forecast and not come out with his own.

WOODRUFF: Meanwhile, the Democratic vice presidential candidate, Geraldine Ferraro, was out on the campaign trail today, attacking the Reagan administration's economic policies for benefiting what she called only the privileged few. But as usual lately, questions about her own finances continued to dominate her press coverage. Answering reporters' questions today, she said she is not stonewalling by not releasing her husband's tax returns but that her disclosures next Monday will be absolutely accurate. Her husband, New York realtor John Zaccaro, said yesterday that he is reconsidering his earlier decision not to make the returns public. Today Ms. Ferraro was asked about the matter at a news conference in Seattle. Here's part of what she said.

Rep. GERALDINE FERRARO: My husband will make his decision and we will have a full disclosure statement on Monday.

REPORTER: What will that decision be? He seemed to indicate yesterday he might release them.

Rep. FERRARO: Well, I will wait for my husband to make the decision and release that information.

2nd REPORTER: Is that saying that he hasn't made it yet?

Rep. FERRARO: No, it's saying that the decision will be his and we will make the decision.

2nd REPORTER: Has he made the decision?

Rep. FERRARO: I'm not my husband, obviously, and I don't know whether --

2nd REPORTER: But you've talked to him, evidently.

Rep. FERRARO: What I discuss with my husband, quite frankly, is private between me and my husband. We will --

2nd REPORTER: This is a public issue. I mean this is not a private --

Rep. FERRARO: Well, then we will release tot he public on Monday all the information that we feel that we not only should --

2nd REPORTER: Mrs. Ferraro, you must realize that a lot of people are charging you with stonewalling. That is not a response at this point.

Rep. FERRARO: Well, let me suggest to you that perhaps it may not be a response that pleases you, but it's a response that is absolutely accurate. We are not stonewalling.We have 30 days under the law in which to submit a disclosure statement. I intend to take the full 30 days prior to doing that, and we will let the public know on Monday. Not only will they know, but they'll be perfectly satisfied.

WOODRUFF: Vice President George Bush has told the Associated Press that while he thinks John Zaccaro should release his tax returns, Bush will not release his own. Bush told a reporter that his assets had been part of a blind trust arrangement since he took office, and he sees no need to break that in order to make his finances public. Bush and his wife released their 1979 tax returns during the 1980 campaign.

President Reagan made a joking reference today to the joke he cracked over the weekend about bombing the Soviet Union. One of a group of Jewish leaders who met with the President briefly today said Mr. Reagan told his visitors that he had to go off to a Cabinet meeting and that he wanted to assure everybody he was not going to bomb the Soviet Union in five minutes. The account of the President's remark came from the president of the World Jewish Congress, Edgar Bronfman, who talked with reporters afterwards.

EDGAR BRONFMAN, president, World Jewish Congress: He said it was very -- he had to go to a Cabinet meeting. He wanted to assure everybody that he was not going to bomb the Soviet Union in the next five minutes.

REPORTER: Ten minutes?

WOODRUFF: Bronfman said Mr. Reagan made the comment in an offhanded way with a smile on his face. Since the report surfaced of the comment made before his Saturday radio address, the President has been criticized in this country and abroad.

Also today, Mr. Reagan signed legislation providing for the mandatory withholding of wages from parents who don't make child support payments. Speaking to a national symposium on child support, the President noted that millions of American children are deprived needlessly because of lack of support by an absent parent.

Pres. RONALD REAGAN: The failure of some parents to support their children is a blemish on America. As a decent and caring people it behooves us to come to grips with the devil-may-care attitude of some of our citizens that has left too many children in dire straits.

WOODRUFF: Mr. Reagan added, "The legislation will make a difference not only in the lives of many children, but also for many women, who have been forced," he said, "through no fault of their own, onto welfare rolls due to abandonment."

Robin? Republican Platform: Moderates' Last Stand?

MacNEIL: Meanwhile, in Dallas, the full Republican Platform Committee was winding up its work with the conservative majority defeating moves by moderates to alter the draft language. The first move came in an effort by Connecticut Senator Lowell Weicker, a leader of the moderate faction, to change the draft wording on voluntary school prayer.

Sen. LOWELL WEICKER, (R) Connecticut: I know as far as our children are concerned, they have what you can't give to them and what you can't take away from them, which is the individual right to address their maker, their supreme being, wherever they want to, however they want to. That's nothing you can give them, that's nothing to be taken away from them. That's guaranteed to them. And all I've stated here in this amendment today is really the obvious and is the law, and in the hopes that the emotions of these times will now cool down and that both parties and all philosophies on the subject ought to knock it off, knock it off. Let us who believe -- and that's all of us certainly in this room -- do it our own way. I thank you, Mr. Chairman.

Rep. TRENT LOTT, (R) Mississippi: The delegate from Alaska is recognized.

ALASKA DELEGATE: Mr. Chairman, I move to table.

VOICES: Second. Second.

Sen WEICKER: Mr. Chairman, I wonder why there's such a fast table to motion. We haven't done that here today.

CONGRESSMAN: Point of order, Mr. Chairman. There's no debate.

Sen. WEICKER: Mr. Chairman, we've been fair with each other. I don't understand an immediate tabling motion.

Rep. LOTT: The delegate from Connecticut knows that a motion to table is not debatable. Those in favor of the motion to table will raise their hand and hold them until counted. If you will help me, count it carefully.

Rep. HENRY HYDE, (R) Illinois: Yeah. Mr. Chairman, before you announce the vote I have a parliamentary inquiry. I would like to make a unanimous consent request that two people, whomsoever, debate the gentleman from Connecticut's amendment one more and two on the other side. In other words, we limit debate but not foreclose debate.

Rep. JACK KEMP, (R) New York: If it's going to be debated, Mr. Chairman, it ought to be debated by everybody. There ought not to be just one or two people. We don't want to turn this into a MacNeil/Lehrer Report. That's for television.

Rep. HYDE: If I may recapture my time for just a second.

ELEANOR RICE, Virginia delegate: Yesterday this body set the record and there were people who wanted to have their concerns debated and discussed. They were tabled and they died. when we did that yesterday we should have known that this day might come, and I object and I feel we ought to live by the rules. We set them yesterday and let's live by them today.

Rep. LOTT: Objections heard. The motion to table by a vote of 66 to 26 is passed, and so it is tabled.

MacNEIL: Later there was an attempt to drop the platform's call for enactment of a human life amendment to the Constitution, which would overturn the Supreme Court ruling permitting abortions. This was also defeated by tabling. And Mary Louise Smith, an Iowa delegate and former GOP national chairman, backed several attempts to reaffirm the party's historic support for the Equal Rights Amendment, support which was dropped from the platform in 1980. All were defeated.

Judy?

WOODRUFF: For a better understanding of what happened at today's platform meeting we have joining us a representative of the moderate wing of the party, Congressman Jim Leach of Iowa. He's head of a group called the Republican Mainstream Committee. And representing the more conservative Republican majority, Congressman Newt Gingrich of Georgia, who is a member of the platform committee.They join us from public station KERA in Dallas.

Thank you. First of all, Congressman Leach, what did the moderates accomplish today, do you think, on making this sort of last-ditch effort on the platform?

Rep. JIM LEACH: Well, I think the moderates recognized to begin with that this wasn't going to be a platform of, by and for moderates. What we're concerned with is making a point that the Republican camp is broader than many perceive it to be. Frankly, our main --

WOODRUFF: Do you think you made that point?

Rep. LEACH: We made that point. We made it very clear that there's going to be another convention another day. Ten of the last 11 Republican platforms have endorsed Equal Rights Amendment. The 12th will not, but we'll be darned if maybe the 13th might. And we're laying a philosophical framework, because the pendulum swings in American politics. Perhaps the moderates will be a little bit more in command at the next convention.

WOODRUFF: I'm sorry, I don't understand how you say that this demonstrates that you have a broad platform, when you were defeated on virtually every proposal here today.

Rep. LEACH: We're not arguing we have a broad platform. We're arguing we have a broad tent, that there are moderate perspectives as well as conservative in the party. At this time the dominant voice is rather conservative. We would like to bring the party a little bit more back to the center, back to its mainstream tradition. We recognize we're not likely to have prevailed at this convention. It was, frankly, over before it began. But there is another day, there'll be another convention, other candidates, and we're going to stick with the Reagan-Bush ticket, enthusiastically endorse it. By the same token, we're going to hope that the ideas of the Republican Party shift a little bit towards the center in he next election.

WOODRUFF: Mr. Gingrich, do you think that's going to happen?

Rep. NEWT GINGRICH: Judy, let me say first of all, I agree with Jim that we're in a situation right now where the moderates don't have the votes, but it's good for the country to have this very broad base for a party. And I think that it's clear that Lowell Weicker, Jim Leach, other moderates, had more influence and a greater chance to fight out in the open in our party convention that the conservatives and moderates had in San Francisco in the Democratic convention. And in that sense I think that there's a legitimate case for the Republican Party having a broader tent I think now than the Democratic Party does.

WOODRUFF: I don't understand how you can say that when the moderates were defeated on virtually every point they tried to raise.

Rep. GINGRICH: Well, I think first of all there's a difference between -- on key symbolic ideological issues whether or not they have the votes. But they were given more courtesy, a greater opportunity to make their case in the Republican Party convention than the Democrats gave the conservative and moderate wing of their party in San Francisco. Second, let me say that I think for example on a very significant amendment which Senator Weicker offered on aid to help educate handicapped Americans, the entire platform committee, after a vigorous debate, agreed to accept it and enthusiastically felt that Senator Weicker had increased substantially our commitment in that area. So I think that it's not fair to say that we are not seeing a significant input by the moderate wing of the party. I think rather it's fair to say that while they are a minority in the party, they're a very vigorous and very important minority and that it's healthy for the Republican Party to have a Lowell Weicker and a Jim Leach and a number of other people, a Mac Mathias, if you will, making a decisive contribution.

WOODRUFF: Congressman Leach, then you don't feel the moderates and others who believe as you do have been shut out of the process?

Rep. LEACH: We have lost a battle, but we haven't been shut out, Judy. I would differ slightly with my good friend Newt. I think the moderate perspective on arms control, on the Equal Rights Amendment, on environmental issues is probably the majority in the party at the grassroots level, although it's certainly not the majority reflected at this convention.

WOODRUFF: Well, now why is that? I mean if it does reflect the majority view across the country of Republicans everywhere, why isn't it being reflected in Dallas?

Rep. LEACH: I think two broad reasons. The conservative wing of the party has done a better job articulating new ideas in recent years than the moderates. And secondly, frankly, the conservatives have had better candidates. Newt Gingrich, Ronald Reagan, Jack Kemp have been dynamite candidates that the Republican moderates have not competed well against. Now, maybe at another convention at another time you're going to see a moderate Jack Kemp come to the fore and with a precise and well-defined and well-articulated philosophy that will carry the day. But for this convention at this time, this is Ronald Reagan's party, it's Ronald Reagan's convention, and we in the moderate wing are not going to like some of the ideas being generated, but we're not going to leave this party. Someone suggested that we should. By gosh, this is our party, we're going to stick with it and we'regoing to fight for our leadership.

Rep. GINGRICH: Let me mention real briefly, Judy, two key areas where the moderates I think did win and that are serious. They clearly rewrote and strengthened the party's traditional commitment to a Theodore Roosevelt kind of conservation and environmental position. A much stronger environmental plank than anyone could have expected, I think, when we came to Dallas. Second, I think through their leadership there's a very strong commitment to continue the fight against any sexual discrimination in Title IX.

WOODRUFF: But you still had leading people in the party, like Senator Percy of Illinois, saying today that he was going to dissociate himself from this platform because it was far too conservative. Is that healthy for the party?

Rep. GINGRICH: Well, I would hope that when Chunk looks at the entire platform he's going to find that there are an awful lot of very very good issues he can run on all across Illinois. I don't think that it'd be wise for him to dissociate it. And I would say to you that even for most of our moderates, our platform is more acceptable, with the exception possibly of one or two of the social issues, than the Democratic platform would be to any of its conservative moderates when they read that platform, which is probably the most radical platform we've adopted in this country.

WOODRUFF: Mr. Leach, you keep saying you have no interest in leaving the party, and I don't mean this to be facetious, but why not? I mean you and your fellow moderates are so badly outnumbered, what is the point in staying in when your viewpoints are not being represented?

Rep. LEACH: Well, one, we have to look at the alternative. The Democratic Party today has shifted to the left; it has not produced energizing leaders that I can identify with, and I don't think that the American public can. Beyond that, if you look at the philosophical base of the Republican Party, there are honest tensions in many, but they're tensions that exist within a Republican tent that differ with the Democratic Party.The Republican Party historically is a party of civil rights -- that's the Lincoln heritage. It's the party of environment -- Teddy Roosevelt founded the park system. We're going to stick with these mainstream Republican traditions and try to build upon them. We didn't win at this convention, but that doesn't mean because you suffer a defeat or two that you fold up your tent and die. We are Republicans.

WOODRUFF: But you're not uncomfortable with some of the language in this platform that has to do with some of the social issues -- school prayer, abortion, the fact that the Equal Rights Amendment is not in there?

Rep. LEACH: I am profoundly disappointed with this platform. I think the platform should have been more consensus Republicanism. Having said that, and frankly, there are other issues that I'm even more disappointed with. I think we're a little too aggressive in our foreign policy planks. I think we're not forthcoming enough on arms control. We bash the U.N. a little bit too unnecessarily. But having said all of that, I think the issue for those of us in the moderate wing of the party is not to do a back flip and punt, but instead to just march straightforwardly on, look to 1988, and look to try to work with our leaders of our own party to make a better party and a better country.

WOODRUFF: Mr. Gingrich, one last quick question. Wouldn't it have been smarter just to let the moderates win a couple?

Rep. GINGRICH: Judy, I think that there are some profound differencesthat are the very base of the Reagan coalition. I think on voluntary school prayer, for example, and the strong anticrime bill and a number of issues, it would have been impossible for the very core of the Reagan coalition to have accepted it. On the other hand, in my own case on the education subcommittee, I offered several amendments that Steve Gunderson, who is a moderate from Wisconsin, had drafted, who's one of our experts in education. And we tried in a number of specific places to accommodate our friends who are more moderate on specific issues but who share with us a belief that in general the Republican Party is a much better vehicle for the future than is Walter Mondale and the kind of radicalism that came out of San Francisco.

WOODRUFF: We'll be hearing a lot more about all of this next week. Thank you both, Congressman Leach, Congressman Gingrich, for joining us. Robin?

MacNEIL: The United States Jaycees voted today to allow women to join the organization as full members after a 12-year million-dollar fight that was decided by the Supreme Court. Until now membership has been limited to men between the ages of 18 and 36. The Supreme Court ruled recently against the Jaycees in a case involving their Minnesota branch. The Jaycees have already complied in Minnesota, and today a national meeting of the organization followed suit at a special meeting in Tulsa, Oklahoma.

Judy?

WOODRUFF: Ahead on the NewsHour, we take a rare look inside Iran and hear from a former official in the revolutionary government. And with the news that housing starts are down, we talk to a home builder about the impact on consumers.

[Video Postcard -- New York, New York]

WOODRUFF: In the Middle East, Israeli jets attacked a suspected Palestinian guerrilla camp in Lebanon's Bekaa Valley. The Israeli military command said the target was a guerrilla regional headquarters. And Lebanese radio reported that Senegalese troops in a U.N. peackeeping unit created a buffer zone to separate Israeli troops from the residents of a Shiite Moslem town in southern Lebanon. The Israelis were reportedly searching for suspected guerrillas.

In the Red Sea mystery mine hunt, Egypt has expanded its search for mines in the area near the Aswan Dam. A U.S. helicopter force has arrived at the southern end of the Red Sea and will take up mine-clearing duties on Saturday. In Washington, Pentagon spokesman Dean Birch today labeled Libya a suspect in the mining incident.

Robin? Inside Iran

MacNEIL: The news coming from Iran is beginning to show signs of division among the Moslem clerics who dominate the government and set its policy of total victory in the war against Iraq. This week five Cabinet ministers were replaced after a bitter debate in the Parliament. Some observers see the changes as a move toward moderation in foreign policy and a more practical way of dealing with problems at home. Nevertheless, the ideology of Moslem fundamentalism as expressed in the rigid rules of the Shiite sect remain a powerful force in the life of every Iranian and in shaping the aims of the Iranian revolution. And the man who writes the rules in both religion and politics remains Ayatollah Ruhollah Khomeini. Here is a documentary report on his role and the force of Islam in Iran from Julian O'Halloran of the BBC.

IRANIAN: As long as the Iranian people preserve their basic power, which is spiritual power, and attain their goals with the cries of Allah-Akbar, their calls with be ensured by God.

JULIAN O'HALLORAN, BBC [voice-over]: It's not just the vision of God that has ensured the course of the Iranian revolution. It's the dynamic power and charisma of Ayatollah Khomeini. Five years after he returned to the country in triumph, it's still the power of Islam as reflected in him that holds the country together. People and politicians in Iran may disagree about the details of how to run this life. But they all, at least the vast majority, agree on the next. The hundreds of thousands who crowd into the grounds of Teheran University for Friday prayers are the same people who mobbed Khomeini in 1979, exclaiming, "The doors of Paradise have been opened again." For them, Friday prayers is still the big event, this week and every week. It's broadcast live to millions, and it's a regular opportunity for the country's leaders, like President Ali Khamenei, to address the people directly. For Iran's top clergymen tend to be the leading politicians as well. Among the congregation, those who've been doing battle with Iraq on behalf of God and the revolution are given pride of place. And with them the boys, who've pledged themselves to die at the war front in the belief that this will guarantee them a place in heaven. But if the immediate enemy is the Baathist regime in Baghdad, people are not quick to forget the bigger enemies of the past and present. Indeed, the major achievement of the revolution is seen as throwing off the chains of foreign domination.

Dr. MOHAMMED ALI HADI, chairman, Foreign Relations Committee: We take our decisions inside of the country, not in Washington or Moscow or Paris or London. Even it was not London during Shah; it was Washington. But we take decisions over here. We are economically independent, socially independent, and no foreign power has any sort of influence inside of our country. This is a very very big achievement for our country after five years.

O'HALLORAN [voice-over]: The anger encouraged and expressed about foreign powers, even if it's justified by Iran's history, isn't always 100% logical.

VOICE: America is worse than Britain. Britain is worse than America. Russia is worse than both of them. And each one is worse and uglier than the others.

O'HALLORAN [voice-over]: The Soviet Union is still winning its place in the big league of condemnation, especially while it supplies a helping to fuel the Iraqi war machine. The sloganizing isn't reserved for wars. Ritualistic denunciation of a list of enemy nations is likely to occur whenever a patriotic Iranian crowd alights upon a suitable audience.In institutions that are basically prerevolutionary, like the regular army, it's done more self-consciously or not at all.

ANCHORWOMAN, IRIB News: In the name of God the compassionate, the merciful, good afternoon. An Iraqi Soviet-made MIG-23 was shot down by the air force jetfighters of the Islamic republic over the northwestern Iranian border region of Malivan at 10:08 hours local time Saturday, said the joint staff commands communique number 1,710. Also . . .

O'HALLORAN [voice-over]: The war dominates almost everything in Iran, especially the news bulletins. The afternoon news in English is a measure of the importance the government attaches to getting its message across to everyone, including foreign visitors, through a medium which of course it tightly controls. Defending the revolution against threats, divisions and terrorist attacks at home is the job of the Pasdaran, the revolutionary guards. From being an ad hoc force of about 30,000 in the vanguard of the revolution in 1979, they've now multiplied to many times that size. They make up a major part of the fighting forces. They guard the politicians and religious leaders and generally enforce the Islamization of society. They are loved or feared. They shun publicity, and if you value your liberty, you stay aclear of them. They and the more localized Komiteh security forces play a big part in imposing public decency.

To Ayatollah Khomeini, it was the extent to which Westernization and loose morality had infected women in the Shah's time which was most shocking. Changing that was the key to rediscovering the true Islamic path.

VOICE: Women have their own characteristics. The good in society stems from good women, and a corrupt society results from corrupt women.

O'HALLORAN [voice-over]: It's that rigorous view that has to be lived with, even though the role and rights of women in Islam are the subject of endless debate and disagreement. The revolution has meant the strict imposition of segregation from men and the covering up of everything except the face. Reforms by the Shah which aim to give women more rights in marriage and family law have been thrown out. A woman can't walk in the street with a man who's not a close relative. Dissidents argue that all this has savagely reduced women to the status of chattels. Now, they say, a man can not only take four wives, but force a woman into temporary marriage, and that they allege is little short of prostitution.

HOJATOLESLAM MOHAMED MAJID JAME'I, Islamic scholar [through interpreter]: What is important is that the Western culture here are home in Iran among those very much associated with the West. It was never accepted by the people. I must add that in Iran the Islamic and national cultures are weighed rather equally, and therefore people's return to Islam was in fact a return to their original and national culture.

Dr. HADI: This revolution was staged by the people themselves. They are still supporting this revolution. We are sure that in case of the support of the people decreased from this government and the system, we cannot no more continue. So the people are supporting the government and they think that this is their own government.

O'HALLORAN [voice-over]: The people of Iran call their leader Ayatollah Khomeini Imam. That doesn't mean he's the hidden Imam for whom Shiite Moslems have been waiting for more than a thousand years, but it does mean they ascribe to him some of the characteristics of a savior come to purify the world. For his part, Imam Khomeini says until the real hidden Imam comes, no effort must be spared to reunite Islamic believers, to extend the government of God across the boundaries erected by nation-states.

VOICE: We shall export our revolution to the whole world, because our revolution is an Islamic one. Until the cry of "There is no God but God" and "Mohammed is the messenger of God" resound over the world, there will be a struggle against arrogance and we shall be present.

MacNEIL: With that background, we now pursue the meaning of the recent slight signs of a change of course. With us is Monsour Farhang, who represented the Ayatollah's government as ambassador to the United Nations until he resigned in protest against the holding of the U.S. hostages. Mr. Farhang was also foreign policy advisor to former President Bani-Sadr, who now lives in exile in Paris. Since his resignation, Mr. Farhang has been teaching, first at Princeton, now at Bennington College in Vermont.

Mr. Farhang, first of all, what is going on that would lead to the ousting of five Cabinet ministers last week?

MONSOUR FARHANG: Well, we have to understand that there are three sources of conflict and tension within the Islamic regime in Iran. One relates to the war, because it has reached a stalemate and it has drained the resources of the country, and there are many elements within the regime who are looking for scapegoats. And since Khomeini was personally responsible for continuation of the war after June 1982, when the Iraqi troops were expelled from Iran, and no one is capable of criticizing him directly, the criticism is directed at the lower-level fundamentalist extremist elements who continue to advocate a very militant position concerning the war. The second source of conflict is related to economic issues. There are certain militant fundamentalist elements who are advocating government control of the economy. That is, total nationalization of the economy. And there are others who maintain that Islam does not place any kind of limitation on private property, and in fact they advocate an open market and free-enterprise system. Khomeini has remained very neutral in his controversy, because he does not want to make any fundamental decision with regard to economic issues that would alienate one or the other faction.

MacNEIL: And a lot of the support in his revolution came from shopkeepers and people in that community.

Mr. FARHANG: And also the urban poor. In fact, he was very responsible for exaggerating the capability of the revolution to satisfy the needs of the urban poor. Therefore he does not want to take any decision, and this has led to confrontation and competition and a great deal of conflicts within the regime. The third source of conflict is sheer jockeying for position, that is, competition for positions of power and influence. Since Iran is perceived as a theocracy, the clerical elements are supposed to occupy all important positions of authority, and there simply are not enough positions for all the ones who consider themselves qualified for those important positions.

MacNEIL: And a certain amount of jockeying presumably, in view of the fact that the Ayatollah is so old and must ultimately pass from the scene.

Mr. FARHANG: Definitely. Khomeini does not have a successor in the sense of someone else being able to play his role. Various elements within the regime are trying to groom someone as the nominal Imam, or the nominal Hadi -- for example, Ayatollah Montazeri -- who would actually run the affairs of the states on their own.

MacNEIL: Okay, let's go over some of these points. One of the five sacked, Cabinet ministers sacked, was the defense minister. Does that mean that we -- was that just scapegoating or are we going to see some difference in the prosecution of the war with Iraq? Are they likely to seek peace or slow down?

Mr. FARHANG: The defense minister is completely powerless in the conduct of the war.

MacNEIL: So it was just scapegoating?

Mr. FARHANG: It's a scapegoat or it could even be competition for power on a very personal level, personal conflicts which led to his dismissal, or even his incompetence in administering the affairs of the defense department.

MacNEIL: So no change in the conduct of the wars?

Mr. FARHANG: No change. The conduct of the war will continue to be some form of continuing the war of attrition so long as Khomeini is alive.

MacNEIL: Now, is Khomeini himself still in charge in a literal, direct sense?

Mr. FARHANG: Well, in making the fundamental decisions of the state, yes. The relations with the outside world, whether or not there should be negotiation with Iraq, whether or not there should be nationalization of industries and so forth, yes, he definitely makes those decisions. But in terms of day-to-day administration of the state, he is not in charge at all. And in fact, the educational, the security apparatus is very decentralized, and there are many men throughout the country who operate in a very anarchistic fashion.

MacNEIL: How do you interpret his very forthright statement in a speech the other day criticizing the official Iran radio for praising the mining of the Red Sea?

Mr. FARHANG: Well, we have to understand that Khomeini is both a crusader and a pragmatist. That is, he considers what can be accomplished in a given situation before he acts. But once the accomplishments satisfy him, then he is willing to pay the cost and consequences of his achievements. He knows that Iran is in a weak military position. He does not want to provoke the states in the region against Iran. But the lower-level functionaries, propagandists, who still continue to push the war as if it is two or three years ago, so they were the ones who responded to the mining of the Red Sea in a very militant fashion. And Khomeini, considering the implications of such a position, immediately condemned --

MacNEIL: You don't think that Iran is implicated in mining the Red Sea?

Mr. FARHANG: I don't know. I have no information.

MacNEIL: All right. We just have a moment left. How do you see it going from here? Do you see moderates coming into positions of power and an actual change in foreign policy that we would notice in the United States?

Mr. FARHANG: Yes. We have to understand that the clerical elements in Iran from the very beginning were united because of the common opposition to Western culture penetration of the Iranian society.

MacNEIL: Which we just saw in that film.

Mr. FARHANG: That's right. They have accomplished a great deal in the area of culture, entertainment, education, sexual mores, dress code and so forth. But once you go beyond those appearances and the achievements in the realm of culture and social mores, then they have very little in common. As politicians, as Iranians, they do not really represent a completely well-defined class interest or an economic perspective or even a foreign policy perspective. So it is very likely that in the power struggle following Khomeini's disappearance, within the regime I would say Iran might end up being a state like Pakistan or Saudi Arabia, which is culturally very conservative but economically committed to free-enterprise system, and a pro-Western foreign policy. It could also become a state like Libya, which is -- the economy is --

MacNEIL: More radical.

Mr. FARHANG: -- controlled by the state; and militant foreign policy position.

MacNEIL: I think I get the direction you're going in and we have to leave it there. Thank you very much for joining us.

Mr. FARHANG: Thank you.

MacNEIL: Judy?

WOODRUFF: There are reports of political turmoil in Honduras today. President Roberto Suazo Cordova has requested the resignations of his entire Cabinet and other top officials. One Honduran spokesman said the move was without precedent. Honduras is a key military ally of the United States in Central America and shares borders with both Nicaragua and El Salvador.

Robin?

MacNEIL: There were two scientific and medical stories in the news today. In London, doctors said they had successfully developed a new technique to help infertile men become fathers. They reported surgically extracting sperm from a husband with blocked tubes, putting it with eggs taken from his wife, replacing the fertilized egg in her womb. She is now pregnant. Dr. Malcolm Whitehead, consultant obstetrician at Kings College Hospital, said the new technique could also be applied to men who'd undergone so-called irreversible vasectomies.

In Atlanta, researchers at the Centers for Disease Control said that exposure to the herbicide Agent Orange does not appear to increase the likelihood that Vietnam veterans will father children with serious birth defects. The CDC based the conclusion, published in the Journal of the American Medical Association, on a study of more than 7,000 fathers, some of defective babies, some of normal. Nearly 700 of the fathers were Vietnam veterans. But the researchers said the evidence for their conclusion is weak, and proving it might never be possible.

Judy? House Market Sagging

WOODRUFF: There was mixed news on the economy today. The nation's factories, mines and utilities operated at 82 1/2% of capacity last month according to the Commerce Department. That's the highest level in four years, and the 20th straight monthly increase in factory use. But there was bad news for home builders and buyers. A sharp decline in construction of single-family homes forced housing starts nationwide to fall 6.6% in July. The drop in construction hit all parts of the country, with the biggest declines coming in the Northeast and the Midwest. Building of single-family homes fell just over 10%, the third consecutive monthly decline. Slightly less than one million single-family units are expected to be built this year, the lowest level since December 1982. Michael Summichrast, who is chief economist for the National Association of Home Builders, said the nation is clearly headed for a recession in housing. Treasury Secretary Donald Regan expressed disappointment but said mortgage rates could well move lower by the end of the year, bringing some relief to the industry. Well, to get a home builder's view on why housing starts dropped and what the outlook is for home buyers, we talk with Fred Napolitano. Mr. Napolitano runs a construction business in Virginia Beach, Virginia. He is a former president of the National Association of Home Builders.

Thank you for being with us. First of all, can you explain any more about why this continued drop?

FRED NAPOLITANO: Well, this didn't just start this month. We're seeing what's happened about five months ago when interest rates went up to about 15%. Now, when that happens people start to stay away from subdivisions, they don't go shopping anymore for homes, and we see the effect of that down the road. We call it a pipeline. People start at one end; by the time they buy a home and the home is completed and they move in, it can be five or six months later. So the houses that we have been building in the last four to five months, or for the most part all year, have been homes that were sold in advance, we had commitments for at lower rates, and we're seeing the result of that at this stage. Now, what's happened with the interest rate -- it's just come down recently within the last 30 days. And we will see the result of the lower interest rate, if it stays low and continues to stay at that point, we'll see the result of that with an upturn in housing probably four or five months down the road.

WOODRUFF: How much lower is it right now than what it was, the effective rate?

Mr. NAPOLITANO: Well, the FHA-VA rate, for instance, came down a half a point just about a week ago, and basically the conventional loans are down about one point. So they're somewhere in the neighborhood of 14 and 14 1/4 percent.

WOODRUFF: Is that enough to attract a significant number of more people back into the market?

Mr. NAPOLITANO: Well, no. Obviously the lower -- you know, it's very simple. The lower the rate goes down, more people qualify. For instance, for every one point in the interest rate, either up or down, roughly about a 1,300,000 families can qualify or not qualify, whichever the rate is -- whichever way the rate is going.

WOODRUFF: Okay. Well, you're sounding somewhat optimistic, and yet we heard from Mr. Sumichrast today with the home builders, was saying that we're headed for a recession in the housing business.

Mr. NAPOLITANO: Well, yes, we would be. What Mr. Sumichrast is seeing right now is that there has been a downturn in housing for the last three months. A single family especially has gone down tremendously. One of the statistics that you hadn't mentioned tonight which just came out today also, is building permits. They're down about 13%. Now, that tells us that builders are being very careful, very cautious, sales are off, so they're not taking out building permits. If you don't take out building permits, you don't build houses.

WOODRUFF: All right. So you don't -- would you agree then with his assessment?

Mr. NAPOLITANO. Well, yes. If nothing happens, if the rates stay about where they are and do not come down any further, I agree with his assessment that we're seeing the beginning of a decline that could get much worse. Now, I'm hoping that's not going to be the case. A lot of factors could enter into the picture to change that.

WOODRUFF: What would the factors be? I mean obviously if the rates keep coming down, but --

Mr. NAPOLITANO: Well, obviously the rates coming down. I would say that probably because of the election we're going to see moderation of rates between how and election time. That doesn't concern me as much as 1985.

WOODRUFF: Why do you say that?

Mr. NAPOLITANO: Well, I think everybody will try to do what they can to keep the rates down, especially --

WOODRUFF: You want to be any more specific?

Mr. NAPOLITANO: The present administration obviously would like to see them stay down, come down some more: I'm more concerned about 1985. If the administration, whoever it may be, Democrats or Republicans, if they don't start immediately to do something about the deficits, then we'll see interest rates start to go up again. And the higher they go, the fewer people can qualify.

WOODRUFF: All right, let me ask you about the current situation. Why such a discrepancy between the single-family home sales and the multi-family housing?

Mr. NAPOLITANO: It takes a lot longer to start a multi-family project, probably a year in advance, or in some cases even more than that, just to get off the ground with it. And once you start, you can't stop because the interest rates have changed. You have to continue. You can't stop in the middle of a multi-family project. Whereas single-family houses you can start to slow up, stop construction, finish what you have and then don't go any further at that stage. Plus the fact we're seeing that interest rates on multi-family construction has been lower as a result of two basic things -- one, syndication. There's been a lot of syndication, where you're getting a lot of people putting their money into it. And second, with the revenue bonds, which are tax free. When you get tax-free bonds, that's roughly 75 to 80 percent of what the rate should be.

WOODRUFF: All right. Now, one other discrepancy I noticed in reading over some of the material today, the Northeast and the Midwest have been hit much worse in terms of housing construction dropoff than the rest of the country. Now, why -- is that just because the Sunbelt continues to boom?

Mr. NAPOLITANO: Well, the Sunbelt obviously is the boom area. And even in some cases like down in Texas right now, they were overbuilt to some degree, because the boom has been very great. We cannot sustain the rate we were going at for the first six months of the year, which would have been about roughly 1.9 million units. And we'll probably come down at the end of the year now, we're liable to drop to about 1.7. Now, to give you a comparison on that, in 1982, which was the lowest rate we had, was about a million units. So you can see where we've gone up from that. But the Northeast and the Midwest, depending what the employment situation is, or unemployment, that has a definite effect on it.

WOODRUFF: But for everybody, interest rates are critical.

Mr. NAPOLITANO: Oh, definitely.

WOODRUFF: Okay. Mr. Napolitano, thank you for joining us.

Mr. NAPOLITANO: Thank you.

WOODRUFF: Robin?

MacNEIL: Once again the main stories of the day. John DeLorean, the automobile manufacturer, was acquitted to charges that he conspired to import cocaine into the United States to save his company.

Democratic vice presidential candidate Geraldine Ferraro was questioned once again about her husband's tax returns and declared with some annoyance that she's not stonewalling on the subject.

The Republican Party Platform Committee rejected moves by moderates to alter the language on school prayer, abortions and the Equal Rights Amendment.

Israeli jets attacked a Palestinian camp in Lebanon, and an American helicopter force arrived in the Red Sea to begin sweeping for mines.

And finally, Pete Rose, one of baseball's best-known players, returned to his hometown of Cincinnati today, but not merely as a player. At a news conference at the city's Riverfront Stadium, Rose was named player-manager of the Cincinnati Reds, the team with which he started his career in 1963.

PETE ROSE: To both jobs that are in front of me I think is very exciting. There's no question I'll make some mistakes. Everybody does, but who hasn't? But the mistakes will all come because I'm trying to do one thing, and that's trying to win.

MacNEIL: Rose spent 16 years as a star for his hometown team before leaving in 1978 for a higher salary in Philadelphia. This spring he signed with the Montreal Expos with the goal of staying an active player long enough to break Ty Cobb's all-time career record of 4,191 hits. Despite a fast start, Rose was slowed down by injuries, so he still needs 121 hits to break Cobb's record. With the Cincinnati team Rose will play occasionally, but his main job will be managing the team.

Mr. ROSE: My philosophy in playing baseball is to come to the ballpark, put the uniform on, enjoy putting the uniform on, go out there and give 110% and have fun. And there's only one way to have fun and that's to win.

MacNEIL: Pete Rose makes his managerial debut tomorrow night in a game in Cincinnati. Good night, Judy.

WOODRUFF: That's what I call persistence. Good night, Robin. That's our NewsHour for tonight. I'm Judy Woodruff. Thank you and good night.