The MacNeil/Lehrer NewsHour

MR. LEHRER: Good evening. I'm Jim Lehrer in New York.

MR. MUDD: I'm Roger Mudd in Washington. After our summary of the day's news, we look at the pros and cons of today's decision to airlift aid to the former Soviet republics. The State Department's No. 2 man plus four experts join us. Then Tom Bearden reports on a city that refused to come to the aid of the school system, and finally a Clarence Page essay on conspiracy theories. NEWS SUMMARY

MR. LEHRER: The U.S. Air Force will begin flying emergency food and medical supplies to the former Soviet republics next month. Sec. of State Baker announced the operation at the conclusion of a Washington conference on aiding the new republics. He said the first of fifty-four flights would be February 10th. He said shipments will go to all 12 states.

JAMES BAKER, Secretary of State: Of course, no airlift could ever come close to meeting all the needs of the people of the new independent states. But this airlift that we are calling Operation Provide Hope can help deliver the food and medical supplies that are critically needed. Above all, Operation Provide Hope can vividly show the peoples of the former Soviet Union that those that once prepared for war with them now have the courage and conviction to use their militaries to say we will wage a new peace.

MR. LEHRER: A spokesman for Russian President Boris Yeltsin said today's announcement contained nothing surprising. He said Russia had similar agreements already with Italy and Germany. Yeltsin, himself, said in a message delivered to the conference he had suspended all import restrictions in his republic. He declared it open to foreign investment. The defense minister of Ukraine today said his republic might sell arms to foreign nations unless it gets more aid from the West. Michael Nicholson of Independent Television News reports.

MR. NICHOLSON: They're going to melt down the glory to Communism's statue overlooking Kiev. Withtitanium the price it is, this could be the one Soviet investment that's paid dividends here. But there are others. At a military display museum there are artillery, aircraft and tanks still being used by the various republican armies. They include the SS-20 missile, the T-64 tank, the Shilka anti-air defense system, the hind attack helicopter, the MiG 23. It could easily pass as Kiev's permanent trade figure and military show ground because these could soon be on offer to weapon hungry nations and arms dealers if the bankrupt Ukrainian government is forced to sell its vast stocks. Some buyers might be interested in more than tanks and planes and guns. Deep inside its secret forest site at Velaya Serkov, 40 miles South of Kiev, a nuclear warhead is carefully removed from its missile and launch pad. It's not large, but it's equal to the bomb that demolished Hiroshima. The Ukraine is pledged to destroy 136 of its 176 missiles under the START disarmament program. But no one is certain what happens to the remaining forty, or what their price is on the open market. But all such anxiety about arms sales could end, says Defense Minister Viktor Antonov if only the West would help out with cash. And that it refuses to do.

VIKTOR ANTONOV, Defense Minister, Ukraine: [Speaking through Interpreter] Our economy, like the other republics, is in the state of crisis, and, yes, we'll sell arms if we have to. And I confirm we have potential customers already, but no, Saddam Hussein is not among them, or any regime like his.

MR. LEHRER: Ukraine is one of four republics to have an arsenal of former Soviet nuclear weapons. The Governor of the Baltic republic of Estonia resigned today. It had failed to win parliamentary support for its efforts to solve Estonia's economic crisis. Estonia won independence from the Soviet Union last September, but has since suffered food and energy shortages. We'll have more on the aid issue right after this News Summary. Roger.

MR. MUDD: The U.S. is reportedly considering deep new cuts in its nuclear arsenal. The New York Times today quoted administration officials who said the cuts could sharply reduce or eliminate long range missiles with multiple warheads which are the core of the U.S. nuclear force. Many of the cuts could be made unilaterally. The President is expected to propose the cuts in his state of the union address next week. A deputy defense minister of Russia said today his republic must cut its army in half. He said it can no longer afford to support the force of almost 4 million. He predicted it could be cut by 2 million soldiers in the next two years.

MR. LEHRER: The U.S. Labor Department today reported an increase in the number of Americans filing new claims for unemployment benefits. They said 447,000 people filed during the week ending January 11th, 46,000 more than the week before. A House committee began hearings today on a $4.5 billion bill to extend jobless benefits. Last year, similar legislation was vetoed by President Bush for budget reasons. He later agreed to a compromise version. At today's hearing, Democratic Congressman Tom Downey of New York called on the President to support the new plan.

REP. THOMAS DOWNEY, [D] New York: Can anyone doubt the need for further extension of unemployment benefits? The President has acknowledged that many American workers are hurting. I wish I could be here today to hear from those who have come to tell their stories. They too want jobs, jobs, jobs. But until those jobs are forthcoming, they want an extension of benefits so that they and their families can survive.

MR. LEHRER: A report in today's Washington Post said Mr. Bush plans to endorse some kind of extension. At a White House photo session, reporters asked him today if that support represented an election year conversion.

PRES. BUSH: What we did before is to guarantee that the extensions were within the federal budget, because you see I think the American people are also concerned about the federal government spending too much. And what I did was stand for a program that would alleviate the suffering and would get the checks to individuals, but did it inside the budget agreement. But it wasn't a conversion; it was fighting for what was right for the taxpayer, as well as those who were hurting, and we've prevailed. We've prevailed in both instances. But you stay tuned for the next chapter; it'll becoming up.

MR. LEHRER: Mr. Bush has said he will reveal his economic plans in his state of the union address.

MR. MUDD: Los Angeles officials have cancelled a $122 million contract with a Japanese company to build rail cars for a new mass transit system. Public protests arose when the city's transportation commission awarded the contract to the Sumitomo Corporation in spite of a lower bid by an American firm. Local citizens complained that city tax dollars should be used to create American jobs, not Japanese ones. Vice President Dan Quayle said today Americans should avoid bashing Japan. He said the relationship between the two countries is getting better, not worse. He made his remarks in a speech at Arizona State University.

VICE PRESIDENT DAN QUAYLE: How many of the protectionists that we have have ever mentioned that Japan is the single largest market for American agricultural exports and our second largest market overall? Obviously, the trends are moving clearly and strongly in the right direction. And to suggest otherwise is simply mindless Japan bashing. That does not mean that Japan shouldn't open its market further. It will. And we will help them do it.

MR. MUDD: Japan's parliament announced today it too will try to persuade skeptical Japanese to buy American cars. As part of President Bush's so-called "action plan" to reduce Japan's trade surplus within the U.S., the parliament said it would buy two General Motors Buicks, Park Avenue model, for its official use.

MR. LEHRER: A major pharmaceutical company said today it will provide free heart drugs to Americans without health insurance. Bristol-Meyers-Squibb will make 17 drugs available beginning March 1st. The Australian Olympic basketball team is considering boycotting the games if "Magic" Johnson competes. The Australian team physician suggested the boycott because of Johnson's HIV infection. He said today other players risk contracting AIDS from Johnson through bleeding from an injury.

MR. MUDD: A military appeals panel in Israel today overturned an order to deport a Palestinian. He was one of twelve ordered out of the occupied territory for anti-Israeli activities. It's believed to be only the second time in 25 years a deportation order has been reversed. The deportation of the 11 others was upheld. That's it for the News Summary. Just ahead on the NewsHour, a winter airlift to the old Soviet republics, a school with a math problem, and another conspiracy theory. FOCUS - AID - RELIEF MISSION

MR. LEHRER: Coming to the aid of what used to be the Soviet Union is our lead story tonight. An international conference on what and how much to do ended today in Washington with the announcement U.S. planes will fly international food and medicine shipments to the newly independent republics beginning in February. The total U.S. aid pledge is about $5 billion, mostly in credits, to buy American agricultural products. Among other nations, the largest donor thus far is Germany, which has pledged or delivered $35 billion. Japan has pledged but not yet dispensed $2.5 billion of assistance. Its foreign minister said today that until territorial disputes were resolved with the former Soviet republics, no more large scale aid would be given. We begin our discussion about the aid conference with the No. 2 man in the U.S. State Department, Deputy Secretary of State Lawrence Eagleburger. Mr. Secretary, welcome.

SEC. EAGLEBURGER: Thank you.

MR. LEHRER: Do you and Sec. Baker consider this conference a success?

SEC. EAGLEBURGER: Well, I think quite substantially so. It's done a number of things, but most importantly I think what it's done is involve a number of countries in this whole question of assistance to the Soviet Union. It's a global matter now and before this conference, it was largely the U.S., the West Europeans and people like that who were doing things for the Soviet Union. Now we've got Japan, Mexico, you name them, almost everybody was there, and they've all agreed, more or less, to do things to try to assist the Soviet Union, or the former Soviet Union.

MR. LEHRER: On the "more or less" point, how much new real aid was actually pledged?

SEC. EAGLEBURGER: Well, I don't have a figure compiled in my head, but it ranges from Mexico agreeing to do some things with cities in the former Soviet Union to $50 million pledged by the Japanese to the 640 million that the President has asked from from the Congress. It's well in the billions but I couldn't tell you how much specifically.

MR. LEHRER: Why not, Mr. Secretary? I'm curious as to why somebody didn't sit down and figure out what is all involved here.

SEC. EAGLEBURGER: Well, they may have sat down and figured it out. I haven't figured it out is all I'm saying, beyond which a number of things that have been done I can't put a dollar figure on at this point. As I say, for instance, the Mexicans have said they're going to do some things in various cities throughout the former Soviet Union. I can't put a finger on that at this point. A number of other countries have said they would be providing assistance, but no dollar figures on all of it, so I don't have a total figure for it.

MR. LEHRER: How was the number -- I'm just curious -- how was the number of 54 U.S. flights arrived at? Was that based on a specific need and all of that?

SEC. EAGLEBURGER: It's based basically on the amount of food available that we have available to ship, plus the fact that we were trying to figure out exactly how many cities to put it all into, so it's essentially based on the quantity of food available that we're going to ship.

MR. LEHRER: How were the needs of these republics, these 12 republics, arrived at? Was a canvas on the ground over there? Did you get proposals from them, or how did that work?

SEC. EAGLEBURGER: Well, there's been a canvas in some of the republics, obviously not in all, because we haven't had enough people who've been able to do it. But there have been estimates of the kinds of food necessary and how much has been necessary. We have had contacts with each of the republics, and based on what we've been able either to establish ourselves or to get in the way of information from those republics, we decided essentially where the food would go and how much would go there.

MR. LEHRER: Do you have a feeling the people who are in the countries, in the organizations, 47 in all, that were at this conference, do you all have a feeling that you really do have a feel for what the needs are in very concrete terms?

SEC. EAGLEBURGER: We have a feel and I'm glad you used the word, we have a feel for the needs. One of the things I think that has come out of this conference is that by exchanging information amongst the more than 50 countries and organizations we have a better collective sense based on what each of us has been able to provide in the way of information. We have a better sense of what is needed beyond which there has been agreement at this conference that we will collectively be examining in much more detail exactly what is needed and sharing that information.

MR. LEHRER: The German foreign minister said today he was, he continued to be disappointed, as he was before the conference began, that the United States would not allow representatives of the 12 former Soviet republics to attend and participate in this conference. Why not?

SEC. EAGLEBURGER: Well, they'll be at the next conference, obviously, but at this stage the reason we decided to do it differently because at this stage we wanted to talk amongst the various donors and potential donors about the kinds of activities and things that might be granted without having to get into some sort of a competition or, you know, some sort of Monopoly Game, if I may say so, at a conference in which the potential recipients were being played off the potential donors. What we did this time was get a far better sense of what the donors are prepared to do.

MR. LEHRER: So it was more of a means conference than it was a needs conference?

SEC. EAGLEBURGER: Well, it was, obviously, we had to judge the means against what we thought the needs were and we're obviously going to have to do more to establish exactly what needs are there of an emergency nature. I emphasize this conference was on emergency assistance. But the fact of the matter is we were basically trying to discover what the donors, potential donors, knew about what was needed, how we would coordinate our activities in terms of providing that assistance, and to go beyond that, how we would then go further to see what we could do to establish the needs more clearly and what was the Soviet Union.

MR. LEHRER: What is your reaction to the statements? We had 'em in the News Summary a moment ago. You saw them from the Ukraine's defense minister, that if the West, this conference, the United States and other countries, do not provide aid, and he's talking cash, then Ukraine may have to sell some of those tanks and weapons that we saw a moment ago.

SEC. EAGLEBURGER: Well, I have several reactions to it, the first of which it's a very bad idea, the second of which is that would strike me at least a bit as sort of one method of trying to convince us we ought to provide aid. I don't think that's the way to establish the need, much less to persuade the West to provide the assistance. We will do that based on what we think is necessary, not on somebody's threat that they will sell something if we don't provide money.

MR. LEHRER: You don't think that's a legitimate -- in other words, you don't think that should influence the decision on aiding Ukraine specifically?

SEC. EAGLEBURGER: No, I don't think it should influence our decisions on what we provide. I will concede that if I were the defense minister of Ukraine, I might well make the same statement, but that doesn't mean that it's something we ought to pay too much attention to. For us, the issueis what's necessary, not that we prevent somebody from selling arms by paying money to make it, to avoid it.

MR. LEHRER: But do you have any sympathy for the Ukraine's basic position that all right, the United States and the West wants us to get rid of these weapons, we need money more than -- we've got an economic crisis on our hands, so why not sell our things -- I mean, are you saying they shouldn't sell it or they shouldn't say they're going to sell them?

SEC. EAGLEBURGER: I'm saying that there is no need to sell it. They should not sell it. The fact of the matter is we have agreements on the reduction of conventional arms. Clearly, we also would be very unhappy if they were to talk about selling nuclear weapons. The fact of the matter is, yes, I have sympathy for their economic problems and yes, we ought to be doing something about it. The sale of arms, if we don't provide assistance, does not seem to me to be a very sensible way of persuading the West that it ought, in fact, to be assisting them economically.

MR. LEHRER: All right. The Japanese foreign minister said today that Japan wasn't prepared to do any more right now until they resolve some territorial problems with these former Soviet republics. What's that all about?

SEC. EAGLEBURGER: Well, I think that's a slight exaggeration on what he said, because as a matter of fact, the Japanese have indicated that they are prepared to provide $50 million for the Red Cross and the Red Crescent. The Japanese have also offered to host a third conference, the third aid conference, and I think that, by the way, is a fairly significant step on the part of the Japanese, but it is also clear that the Japanese have a specific problem with regard to the former Soviet Union, which is the Kurile Island, and until that is resolved, as far as their position is concerned, there are going to be limits on what they're prepared to do.

MR. LEHRER: Is that a position supported by the United States?

SEC. EAGLEBURGER: That's a position that's the Japanese business. We don't support it; we obviously, on the other hand, understand why they said it.

MR. LEHRER: How would you respond, Mr. Secretary, to Americans in Congress and elsewhere who say hey, this is -- we understand that the 12 former Soviet republics got bad economic problems, but so does the United States of America, we're in a recession, why should we help those people before we help our own?

SEC. EAGLEBURGER: Well, you know, there's a great deal to be said for that position and no one in this administration would argue for one moment that there isn't a great deal that needs to be done at home. But I think the basic argument here is that the United States for the better part of the last 50 years has expended some hundreds of billions of dollars to arrive at precisely the point we now are, namely that the former Soviet Union is no longer the strategic threat it was to the West. We have gotten to the point where that is now an accomplished fact. It would be tragic after having invested all of that money if we were not prepared to spend the money necessary to make sure that the process of democratization continues in the Soviet Union, the former Soviet Union, that the process of economic change and certainly toward a market economy does not succeed, it would be a tragedy if we let that fail now. We can get into arguments about how much ought to be done, and I suspect before the evening is out we will, but the issue is not, at least in my mind, whether we should do something. The American people I think understand that. I think, infact, you could well argue that the investment that will be made and has been made in trying to assist the former Soviet Union to change to become a democracy, to become a market economy is as much in the interests of the well being of the average American citizen as anything we can do.

MR. LEHRER: In what way?

SEC. EAGLEBURGER: Well, in the sense that it helps, hopefully, to make sure that we do not face again the kind of threat that we faced for the better part of the post war period from an antagonistic Soviet Union that was prepared, if they had the chance, to move against the West.

MR. LEHRER: Do you think the stakes are that high in what was on the table at this aid conference?

SEC. EAGLEBURGER: Well, you know, obviously everybody at the aid conference understood all of this and everybody I think there recognized that in talking about the emergency relief that's necessary that a part of this was we do not want to see a collapse now of the reform process that is beginning to take place, and that should that happen, that the obvious answer would be some form of authoritarian government in those various republics and obviously thereafter the threat to us would again be a part of the problem we have to face. For the first time in the post war era, the United States and the democratic West does not have to face the threat of thermonuclear war from an antagonistic dictatorship run out of Moscow. We ought to be prepared to provide some investment to assure that we don't return to those days.

MR. LEHRER: All right. Mr. Secretary, thank you. Roger.

MR. MUDD: We'll get a sampling of reaction now to these current efforts to aid the former Soviet republics, reaction that is both economic and political. Here in the studio is Dr. Jeffrey Sachs. He's a professor of economics at Harvard University and also economic adviser to Boris Yeltsin's Russian government, and Dr. Judy Shelton, a senior research fellow at the Hoover Institution and the author of "The Coming Soviet Crash." On Capitol Hill, Congressman Sam Gejdenson, a Democrat from Connecticut, and a member of the House Foreign Affairs Committee and Rep. Henry Hyde, Republican from Illinois, also a member of the House Foreign Affairs Committee. Let me ask the four of you, beginning with Mr. Hyde, for your reaction to the announcement by Sec. Baker of the airlift to the former Soviet Union. Mr. Hyde, is that the right step to take?

REP. HYDE: Yes, I think it makes a lot of sense. I agree with what Larry Eagleburger said. We have a great stake in preserving the tentative steps towards democracy that the former Soviet Union is making. It would be a disaster if that failed because we didn't come forward with some aid, along with the rest of the world. This is a coalition of many countries and our contribution is modest in comparison to theirs. It's substantial by itself, but I think it's in our interest to see that this experiment in democracy works and doesn't fail today.

MR. MUDD: Mr. Gejdenson.

REP. GEJDENSON: Well, for 50 years we were told that Americans had to shoulder the burden for the defense of Western Europe because after all, the Germans having played the role they did in World War II couldn't do it. Now, we're being told that Americans have to borrow money from the Germans, because, remember, we're borrowing this money to do it, to finance what's happening in the Soviet Union. At the same time, the administration, and today I was just fighting the Commerce Department, is holding up $50 million for economic development funds for defense dependent communities. The President tells us don't look for a budget that has a lot of programs to help put people back to work in the United States because we don't have the money, but we have $600 million to send to the Soviet Union. It seems to me that the political agenda in Washington has to be one where we first see an administration ready to help American workers, defense dependent communities, people who are losing their homes be put back to work, and then I think you'll find the President and Mr. Eagleburger, the Secretary of State, find much more support in the Congress. I think what angers us is the fact that we've seen resistance to every program to revitalize the American economy. Last year, as the administration bottled up $200 million of diversification of funds, it supported $500 million of diversification funds for the Soviet Union, again, ready to help another economy elsewhere in the globe, but not here at home. That's the problem.

REP. HYDE: Sam, you're not for cutting out all foreign aid, are you, Sam?

MR. MUDD: Let me, Mr. Hyde.

REP. GEJDENSON: No, and I'm not for not helping the Soviet Union. What I'm against is an administration that seems not to recognize the crisis at home. The Commerce Department is sitting on $50 million that Congress passed and the President signed to help defense dependent communities. We had to hold hearings to dislodge the money in the first place. They're still sitting on it. Why can't they help American workers and American communities in trouble?

MR. MUDD: Mr. Gejdenson.

REP. GEJDENSON: It seems to me there's a crisis here.

MR. MUDD: Mr. Gejdenson.

REP. GEJDENSON: Yes.

MR. MUDD: I've got two other guests here and I'd like to ask each one of them. Dr. Sachs, tell me your reaction to the airlift. Is this a proper step?

DR. SACHS: Well, this is a very good step. I believe that what Sec. Eagleburger said and Congressman Hyde is just right. We have very big stakes in this and this is an important step forward. I believe that it's important to keep in mind that the Russian government is undertaking a comprehensive economic change. They need more than food. They need the kind of balance of payments support to help them have a meaningful, stable currency because that's really what's going to keep this new democratic government going. So I look forward to the next round of conferences that Sec. Eagleburger mentioned, and think that it's very important that this agenda be a good one to support the whole economic reform program. President Yeltsin has made very clear in recent days that in addition to food aid the Russians desperately need financial assistance for stabilization purposes of the sort that the Eastern European governments have received. I think we have to listen carefully to what President Yeltsin has said. He's right and he understands the fragility of the situation inside Russia.

MR. MUDD: Dr. Shelton, how about the airlift, a good step or not?

DR. SHELTON: I think it's a very generous package. I think it reflects well on the charitable spirit of taxpayers in the West who have been living under the Soviet nuclear threat all these years and who are going through tough times certainly in the United States. I would hate to see it followed up with a massive financial aid program and I think it's unseemly for the Russians to be demanding more at a time when I think the West has really pulled together to help them.

MR. MUDD: Well, going beyond the airlift, and going back a day to President Bush's pledge of $645 million in additional aid, are we now on the right step toward saving and stabilizing the old Soviet Union?

DR. SHELTON: Well, that's what I'm afraid of. I think we're stabilizing and reinforcing a kind of central command of the economy. Whenever G-7 governments get involved, especially through IMF, or World Bank programs, and try to dictate to the Russians and the other republics how they should carry out economic reform and take a very rigid supervisory role in saying, you must now do this, you must now do that, and basically picking up where central planning left off, that I think retards not just radical economic reform, but I think it offends the dignity of the Russians. They should be doing it in their own way, on their own terms, without being subject to a Simon Legre in the West saying if you want the money, here's how you have to do it.

MR. MUDD: Do you think aiding, our aid to the old Soviet Union is locking in the old Soviet system?

DR. SACHS: Just on the contrary. You have in place the most radical reforms. This is something maybe not properly understood in this country yet, but Boris Yeltsin not only has taken personal responsibility for radical reforms, but in late November, he elevated to power the most radical market-oriented reformers in the whole country. They've undertaken a stunning package of measures already. They are proceeding along the lines of radical change. No one's telling them what to do. They are following a path that they know was necessary to get out of a catastrophic mess left behind by the Communists. So they're following desperate actions because they're in a desperate financial situation. They have a hyperinflation on their hands. This is something of an absolute catastrophe. To solve that, it's well known that you need humanitarian assistance and you also need stabilization support. And this is decades long experience in the world that to get out of this kind of financial catastrophe, getting a sound money and getting some international backing in a situation where they have no foreign exchange reserves whatsoever right now, it is absolutely urgent.

MR. MUDD: Let me ask Mr. Hyde, if I may, the other day after President Bush made his pledge, Majority Leader Gephardt said that the President must take the lead in explaining to the American people what their self interest is. Is that a problem in Chicago? I mean, generations of American constituents have been convinced by generations of politicians that the Soviet Union is their economy?

REP. HYDE: It's a big problem and Mr. Gephardt is quite right. Although not just the President, I think those members of Congress on both sides of the aisle have got to do some leading to explain to the American people why it is in our interest that the Soviet Union not regress into some fascist state. They still have 27,000 nuclear weapons, an awful lot of people, and when they're hungry, the rules go out the window. The Soviet Union is a treasure trove of oil, gold and minerals. It's one of the most resource rich places on the earth and they one day will be able to be a very good trading partner with everybody. There are all kinds of reasons why we must seize the moment and not let her go down the drain. I think we're doing the right thing, but the American people are not quite that far along on the curb. They see a conflict between our own domestic needs, which are inexhaustible and forever, and $645 million for the Soviet Union. But we have billions that we give other countries and so $645 million to save, for democracy and the market system in the Soviet Union seems to me a good investment. But it requires leadership from the President and from Mr. Gephardt, and yes, Mr. Gejdenson.

MR. MUDD: Mr. Gejdenson, tell me the answer. Given the current political situation, is our national interest here or over there?

REP. GEJDENSON: Well, I think our national interest is to make a decision and what our government is presently doing is we're spending -- next year, we'll spend $30 billion roughly in Europe on operation and maintenance of a ground force to protect West Germany and the rest of Europe from a Soviet invasion, $140 billion being spent on that. We're borrowing all that money from Germans and others to pay for it. Now we're told we should borrow more money to help feed the Soviets. I'm not against what Prof. Sachs is doing, but I don't think the education is that we need to explain to people that we want the new Russia to succeed and we want these countries to democratize. I think what we've got to understand is that we've had an administration that turns a blind eye to hungry, unhoused people in America and there seems to be unlimited resources, if we've got to put tanks and soldiers in Germany to stop the Soviet Union. We're going to continue to do that. We're going to borrow more money to feed them and ship the stuff over there. We had 165 million in USDA to send to the Soviet Union, it never got out of the United States because the administration couldn't get its program together. What I'm upset about, and I think Americans are going to resist, is as long as this President says we can't, you know, spend any money on domestic programs because that would increase the deficit, but it's okay to continue to spend $140 billion defending Western Europe and Japan from whom we can't figure out, plus we've got to take on this new responsibility. We near bankrupted this country to bring the Soviet Union to its knees. It's now time for the Germans and the Japanese to pay for far more.

REP. HYDE: Can I ask Sam a question?

REP. GEJDENSON: Anything.

REP. HYDE: Sam, do you support the $10 billion guarantee for housing on the West Bank?

REP. GEJDENSON: No. I think it's too large, and I think that's why the President pulled it. He understood it was good politics, and it's not just good politics in the Middle East.

REP. HYDE: You're against it.

REP. GEJDENSON: I think it's too large. I think that we --

REP. HYDE: Well, how about 5 billion?

REP. GEJDENSON: I think what we need to do is not send them money but help them get the lower interest rates so that they can execute that program.

MR. MUDD: Why don't you revise and extend this for a minute and let me ask Dr. Shelton, this afternoon the German foreign minister, Genscher, said that the value of today's conference was that the United States is now locked into the process and that he indicated that if the old Soviet Union is admitted to the IMF and the World Bank that it will allow the United States to give even more money to the old Soviet Union, and using the IMF as a cover. Now what do you think of that?

DR. SHELTON: Well --

MR. MUDD: "Cover" was not his word.

DR. SHELTON: Well, I think there is some cover though. People can say that this big price tag to extend financial aid to the Soviet Union is only 1 percent of U.S. defense expenditures, but, in fact, when it is channeled to the IMF and the World Bank, the United States as a major member and contributor and supporter of those organizations will be socked with the bill. We'll have to pick up at least 12 billion of the 60 billion allotment that IMF is currently seeking. In fact, we're behind on that payment. So my feeling is that the IMF and the World Bank may not have the proper answers for Russia. I think it's very important that Russia as a rich country solve some of these problems on her own terms. Yes, she needs sound money, but instead of looking to the West to put up money to stabilize that ruble, all Russia has to do is quit printing rubles, they have to present a reasonable budget, balanced. That means cutting military even more, down to nothing. When people are starving, as they claim they are, it's very important to devote national resources to that. They have to privatize. The system that's being hailed now as free market reform all it's done is put the government, which owns the stores, in a position of collecting much higher prices for the food that it sells to the citizens. The problem is the government is still in the business of providing 90 percent of the food in Russia. And until they privatize, it really doesn't make sense to talk about free market reform and liberalized prices.

MR. MUDD: Tell me what your reaction is to that.

DR. SACHS: I agree with all of that as the agenda and that is the government's very explicit agenda, but when you come out of 75 years of Communism, you've had three weeks to get your program together and you have a hyper inflation on your hands, you don't have everything set in place all at once. Eastern Europe also started this way and then they get privatization on a rapid schedule. And that's exactly what the Russians are going to do. So everything that Dr. Shelton said is absolutely part of this economic program. And that's what the Russians wanted. And the Russians have also asked -- it's they who are asking for some financial support to help get the stabilization, because you need political stabilization and time for the riches which are undoubtedly present to manifest themselves.

MR. MUDD: In --

DR. SACHS: It will take years to get parts of this economy going again. This year oil production is going to fall several more metric tons. This is a disaster. They may lose the modest earnings that they're now getting on exports, because there's really a catastrophic situation in the oil fields. They have to get in foreign investment, but any oil company will make clear that it requires billions of dollars for secondary recovery, and new investment and so forth. And this takes time. The question, as Congressman Hyde has said, absolutely correctly, is: Are we going to help this new government stay afloat? This is the real issue right now. And I think that Congressman Gejdenson would also agree that if we really want to achieve the peace dividend, if we really want to get major cutbacks on our NATO burden, we have to have a democratic, stable government in Russia. We have a remarkable government doing all the things that Dr. Shelton wants them to do. That's what they're struggling to do, but under extraordinarily arduous conditions because she was right in her book, there was a coming crash. The crash is now. It's a catastrophe financially. They're fighting to get under control and now we have a chance to help. This conference was an important step. It's important to expand the help to tie in explicitly to the economic reforms. If we can do that, link the help to the reforms, get the government to stabilize, get the economy stabilized, with our help, but with their actions, then we really will achieve the savings of tens of billions of dollars on the peace dividend, which we all need for this country.

MR. MUDD: Are you giving, are you allowing the Soviet Union more time to get its act together than you allowed Poland, the Polish government? I thought -- in Poland, I thought you were an overnight reformer.

DR. SACHS: Well, Russia, by the way, not the Soviet Union, but Russia started out on January 1st just like Poland did, freed the prices, let the exchange rate be determined on a market basis. It's the same steps exactly. The difference is that Poland on January 1st had a stabilization fund in place that the United States government had taken the leadership on. President Bush had rounded up a billion dollars from the international community to make it possible for Poland to move directly to a stable exchange rate. That's what's needed here. That's what President Yeltsin asked the G-7 for last month, and he's gotten a "no" so far on that. That's a shame. Poland had an IMF balance of payments support program the day that it started. That's also not present in Russia by definition, because they're not members yet. So pieces of the international assistance that were crucial for Poland's program are not yet in place in Russia. There's a desperate need to get them in place quickly. This conference handled one part of what's very important to make this government and the economic reform succeed, but there's another crucial part that would have been handled were Russia a member of the International Monetary Fund, but it's not. So that means that the G-7 government must take some special leadership on this to get that other piece in place so that Russia can do what Poland was able to accomplish.

MR. MUDD: We've got one minute and Sec. Eagleburger has listened to every word that's been said and I want to give him --

SEC. EAGLEBURGER: Carefully.

MR. MUDD: Carefully -- give a chance to make any sort of ex cathedra comment.

SEC. EAGLEBURGER: I'm not sure I know where to begin. I think - - I may not look like it, but I begin to feel like Goldie Locks. For Sam Gejdenson, the porridge is much too hot, for others it's too cold. I think it's just about right. A couple of points I think need to be made, the first of which is this is not just about Russia. Let's remember that. This is about all of the republics of the former Soviet Union and they range the gamut from reasonably well developed to not well developed at all. That's the first point. Secondly, for Sam Gejdenson, I would point out that the Germans have spent a lot more money than we have so far in terms of assistance to the former Soviet Union, and particularly Russia. At the same time, I would say to Foreign Minister Genscher, history didn't begin yesterday. The United States has spent the last 50 years investing in this whole process, and I don't think you can wipe out most of that last 50 years. We've spent a lot of money. We've spent a lot of blood, and I think that needs to be kept in mind. And finally, I guess I would say I don't think we're centralizing again by assisting, as we're trying to do, in what was the Soviet Union. The Soviet Union doesn't exist. These are separate republics now. I happen to think myself that before we can make the kinds of decisions that I know Dr. Sachs would like to see us make they do have to get into the IMF, we do have to make sure exactly what their reform programs are.

MR. MUDD: Okay. May I stop you there.

SEC. EAGLEBURGER: You certainly can.

MR. MUDD: Thank you, Dr. Shelton. Thank you, gentlemen. Jim.

MR. LEHRER: Still to come on the NewsHour tonight hard economic times in the U.S. public schools and a Clarence Page essay. FOCUS - MATH PROBLEM

MR. LEHRER: All across this country bad times are forcing states to cut financial aid to local communities. We look now at the impact of such cuts on the public schools in Holyoke, Massachusetts. Tom Bearden reports.

MR. BEARDEN: On the 218th anniversary of the Boston Tea Party, students, parents and educators from all over Massachusetts came not to protest onerous taxes but to protest not enough tax money. An ongoing budget crisis had caused Gov. William Well to slash aid to the local government, resulting in drastic cutbacks in some school budgets. As Horace Mann, the great champion of public education in America, stood silently by, the protesters vented their anger over the cutbacks. George Counter is superintendent of schools in Holyoke, Massachusetts.

GEORGE COUNTER, Superintendent of Schools: [speaking at demonstration] We're here today to tell our representatives that we've had it! We've had it! There's a famous saying out of Boston. It's wait till next year. Well, we're not going to wait till next year!

MR. BEARDEN: The state cuts hit Counter's schools particularly hard. Holyoke, an old industrial city, has been experiencing economic problems ever since the mid 1950s when its principal employer, the paper mills, began shutting down. The city had budgeted a bare bones $29 million for its 1991-92 school year, an amount well below the state per pupil average. But last spring, as a result of the state cuts, that was slashed by $5 million. And to make matters worse, city officials handed the schools more than $2 million in repair and utility bills that the city normally paid.

GEORGE COUNTER, Superintendent of Schools: I said where's the money for those? You were paying them for years, why don't you transfer the money over. Oh, no. Take it out of your budget. So we got a $5 million direction hit Cruise Missile, and 2.6 of a SCUD Missile to pick up all the bills and everything else.

MR. BEARDEN: The results were devastating; 221 teachers, a third of all the city's teachers, and half of all the administrators were let go. And that was just for starters. David Dupont is principal at Lynch Middle School.

DAVID DUPONT, Principal, Lynch Middle School: The Holyoke public schools were hit by a nuclear blast and the middle schools were ground zero, and I mean ground zero. We took the biggest hit.

MR. BEARDEN: How many teachers did you use?

DAVID DUPONT: Twenty-six teachers out of a staff of fifty-four.

MR. BEARDEN: Almost half.

DAVID DUPONT: Almost half.

MR. BEARDEN: All of the ancillary programs were cut. There's no physical education, no computer science, no print shop, no music class, no industrial arts.

DAVID DUPONT: The teacher who did the industrial arts class here for us last year would stay after school with kids, thirty to forty kids at a time, and they'd stay here for an hour, an hour and a half, do their projects. That's all gone. So instead of them being on the streets, they would be here. Now they're on the streets.

MR. BEARDEN: Lynch also lost four of its five buses. Last year, 240 students were bused, this year only 35. At Holyoke High School, students are now required to pay $100 to participate in team sports. At Sullivan Elementary, enrollment was increased from four to seven hundred after two other schools were closed. Some classes now have as many as 40 students. Superintendent Counter tried to stretch his remaining dollars and save some teachers by instituting a longer school day and a shorter four day week. The state said no, you've got to have the standard 180 days.

SUPERINTENDENT COUNTER: This is like Saigon. This is just like Vietnam. We declared ourselves a winner and left. I'm goingto declare this year that we had education in Holyoke this year, 180 days, we went 180 days, we had it. We had education here. We stacked them and we packed them in, we controlled them, we managed them, we kept them quiet. We had education here this year.

MR. BEARDEN: You called it 180 days of garbage. Is that what it is?

SUPERINTENDENT COUNTER: That's what it's turned out to be.

MR. BEARDEN: The state cutbacks affected all municipal services, although the schools were hardest hit. Holyokers had the option to raise property taxes to make up for the loss. But to do that, they had to override a state law limiting increases to 2.5 percent. Holyoke held two override referendums. Firemen, police, and teachers all took to the streets to ask taxpayers for their support.

SPOKESPERSON: We're here this morning to ask the citizens of Holyoke to vote yes on questions one and two for education.

MR. BEARDEN: In the end, recession strapped taxpayers said yes to increases for the fire department, the police, senior citizens, and trash collection, but no to the schools. Kris Kos, a local jewelry store owner, voted against the school tax increase. She says voters were trying to send a message to school administrators.

KRIS KOS, School Tax Opponent: We're very unhappy with the SAT scores, we're unhappy with the dropout rate, we're unhappy we are second highest in the state of Massachusetts for teenage pregnancies, and we have programs coming out of our ears for this stuff. You know, obviously, the money is not being well spent. When money is not being well spent, if it was a private corporation, they would revamp it and spend it where it would be beneficial.

MR. BEARDEN: Lillian Santiago, a Puerto Rican-American with two sons in Holyoke schools, says complaints about SAT scores and dropout rates are a smoke screen for the principal reason the school override failed, racism. The school system is more than 2/3 Puerto Rican; the taxpayers are mostly white.

LILLIAN SANTIAGO, Parent: When the override didn't pass, I really felt that, I felt not wanted. And I thought about all those kids in school and I really had a real hard time trying to accept what people voted for, trying to understand the white community, and trying not to build up hate, trying to be objective.

MR. BEARDEN: Do you think the vote would have been different if the school system was 70 percent Anglo?

LILLIAN SANTIAGO: Definitely, oh, yes.

MR. BEARDEN: If there's an ethnic split in the Holyoke community, there's also a generational one. Many of Holyoke's voters are older, with no kids in school, just like many of the customers at Lukini's, a popular breakfast and lunch spot, in a predominantly Irish section of town. We spoke to some of the customers about their reasons for voting against the tax increase.

JOHN YOUNG: The average age of Holyokers has increased in the last ten to fifteen years, of the homeowner, the taxpayer per se, and a lot of people unfortunately tragically or realistically have perceived that they do not have the money at their disposal, extra income, to pay for something like the school system.

CUSTOMER: They're wasting a lot of money. I'd like to see 'em be more intelligent with the money they have and then we can give them more. I'm a retired guy. I can't afford to pay 'em more money.

RICHARD PAGE: Well, our schools are becoming predominantly Hispanic and we're seeing these kids get out of school, they're not, for the most part, they're not doing anything. They're coming out and they're just, again, they're not educated. The people that are paying the bill are not Hispanic and are looking at it and saying, why should we be paying to have some kids that can't even speak English when they get out of school.

MR. BEARDEN: Superintendent Counter has heard the same question many times before.

GEORGE COUNTER, Superintendent of Schools: Elected politicians say, why should the taxpayers of this city have to pay for all these poor kids, why? And I say, hmm, maybe because in the year 2030, they're going to be leading the city and maybe it would be good if they were educated, or maybe, maybe if we spend some money now, we'll save ourselves some money at the other end, violence, jails, et cetera, et cetera, et cetera.

MR. BEARDEN: But clearly they're not listening.

SUPERINTENDENT COUNTER: No.

MR. BEARDEN: If you had to pin the school tax defeat on one issue, it probably would be bilingual education. In this polyglot community made up largely of children of Irish, Polish, French and Puerto Rican immigrants, the language issue is particularly charged.

KRIS KOS: I would like to see bilingual education programs removed from our system. Other states that have the same bilingual programs that we have have abandoned them, gone into this English immersion, and their students are doing so much better.

MR. BEARDEN: The assertion is made that bilingual education is a failure and that the kids ought to be mainstreamed and put into English immersion.

SUPERINTENDENT COUNTER: Absolutely. Just like the did in the '30s and then they could all hit the wall in the eighth grade and go work in the mills. Only the mills now are in Southeast Asia; they're not here anymore. It isn't immersion; it's submersion. [MEETING]

MR. BEARDEN: If you ask most Holyokers who they blame for the current mess, they point to Gov. Weld and Superintendent Counter and the school board. Critics charge school administrators were unresponsive, ignored earlier demands for budget cuts and spent too much money on programs for the poor and disruptive students. Five out of the six school board members who faced opposition in last year's elections were, in fact, defeated. Ask school officials whom they blame and they'll tell you --

SUPERINTENDENT COUNTER: You can't run schools on referendum. Why are we deciding by referendum at the local level whether kids should have reading teachers, whether we should have athletic programs for kids, whether we should have reasonable class sizes. That's cuckoo; it's nuts; it's broke. It doesn't work. It needs to be fixed. You need to make a basic commitment to kids, period, in this country, but more specifically in Holyoke and in the state.

MR. BEARDEN: In response to all the protests, Gov. Weld has promised some emergency funding to help poor communities like Holyoke get through the rest of the year. But given the state's budget crisis, it's doubtful the kind of long-term commitment Superintendent Counter would like is going to happen anytime soon. ESSAY - CONSPIRACY THEORY

MR. MUDD: Finally tonight essayist Clarence Page, a columnist for the Chicago Tribune, has some thoughts about conspiracy theories.

MR. PAGE: Famous funny man, Bill Cosby recently had this to say on the subject of "Magic" Johnson and the mysterious origins of AIDS.

BILL COSBY: I, I have no proof, but I am allowed to just believe, and since I'm not blaming anybody in particular but I do think that this whole thing was, was human dealing induced to spread and to kill certain people.

MR. PAGE: What Cosby thinks is mild compared to what New York City College Prof. Leonard Jeffries thinks. Last summery, Jeffries blamed people who had Jewish and Italian surnames for what he called a conspiracy planned and programmed in Hollywood for the destruction of black people.

PROF. LEONARD JEFFRIES: For years I grew up as a youngster, just like you did, going to movies where the African peoples were completely denigrated. That was conspiracy planned and plotted and programmed out of Hollywood, with people called Greenberg and Nifeberg and Chigliani and what not. It's not being anti-semitic to mention who developed Hollywood. Their names are there.

MR. PAGE: Welcome to the world of the paranoid, where facts are never allowed to get in the way of a good conspiracy theory. Few African-Americans are as extreme or offensive as Jeffries, but suspicions of conspiracies by somebody, somewhere are rampant. Well over half of the black New Yorkers surveyed by a New York Times- CBS News Poll last year thought the government might deliberately be funneling drugs into poor black neighborhoods. And almost a third thought AIDS might have been deliberately created in a laboratory to infect black people. And the sensational drug bust of former Washington Mayor Marion Berry caused Benjamin Hooks, among others, to wonder aloud whether there was a government conspiracy against black elected officials. As black Americans try to make sense out of drugs, guns and other social plagues, some of us begin to sound like "Furious Styles," the colorfully named young father in the movie "Boys'N the Hood." In an echo of real life, Furious Styles blames the invasion of drugs and guns on a big, unidentified conspiracy. After all, he points out, we don't own any ships, we don't own any planes, they want us to kill each other off, he says. And what they couldn't do in slavery, they're making us do to ourselves. Of course, you don't have to be black to believe in conspiracy theories. Oliver Stone's movie, "JFK," offers a good example. Stone's throws journalistic integrity to the wind as he tries to inject new credibility into long discredited theories about the Kennedy assassination. Similar cults have grown up around the notion that the Pentagon has conspired to cover up the existence of American POWs in Southeast Asia, or the possibility that President Zachary Taylor may have been the victim of poison, instead of a batch of bad strawberries. But if the impulse to find outside conspirators gains strength among certain people at certain times, it has gained tremendous strength among African-Americans at a time when crack, AIDS, and gang wars have become leading killers of young black people. A bizarre idea? Well, history is full of bizarre notions that turned out to be true. Those who accused the late FBI Director, J. Edgar Hoover, of plotting against Martin Luther King and other movement leaders, turned out to be right. And the world was shocked to learn just 20 years ago that government researchers had used almost 400 black men, all syphilis victims, as human guinea pigs for almost 40 years in a notorious Tuskegee, Alabama medical experiment just to study the effects of the disease. We have learned from scandals involving the CIA, Asia's golden triangle, the Iran-contra Affair and the more recent BCCI scandals, to name a few, that our government occasionally maintains cozy relationships with disreputable people, including assassins, dictators, gun runners, and drug smugglers. As an old saying goes, even paranoiacs have enemies, those who don't believe our stuff because it's nearly impossible to prove that a conspiracy does not exist to those who are firmly convinced that it does. Unfortunately, conspiracy theorists can be their own worst enemy. History offers brutal examples of conspiratorial talk that ran out of control and led to scapegoating, witch hunts, and pogroms. Besides, conspiracy theories hide the much more obvious and horrible truth about drugs, AIDS, and the indictment of black officials. If it is a conspiracy, it's one in which we are accomplices. Drugs, guns and AIDS don't need conspirators to guide them. Supply follows demand. The real answers to urban social ills will come from public education, economic development and stronger police protection. Reduce the demand and the supply will dry up, or at least go elsewhere. Otherwise, as Furious Styles, angry father in "Boys'N the Hood" might say, we will be accomplices in our own enslavement. I'm Clarence Page. RECAP

MR. MUDD: Again the major stories of this Thursday, Sec. of State Baker says the U.S. will begin flights of food and medical supplies to the former Soviet republics next month and there were published reports the United States is considering deep cuts in its nuclear arsenal, including long range missiles. Good night, Jim.

MR. LEHRER: Good night, Roger. We'll see you tomorrow night with Gergen & Shields, among other things. I'm Jim Lehrer. Thank you and good night.