The NewsHour with Jim Lehrer

RAY SUAREZ: Good evening. I`m Ray Suarez. Jim Lehrer is away.

On the NewsHour tonight: the news of this Friday; then, the latest on European efforts to assemble a peacekeeping force for Lebanon; a look at the verdicts in two high-profile Chinese court cases dealing with state secrets and human rights; the second of our NewsHour reports on Katrina, a year later; tonight, we focus on the Mississippi Gulf Coast; and the weekly analysis of Mark Shields and Ramesh Ponnuru, substituting for David Brooks.

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RAY SUAREZ: U.N. Secretary-General Annan announced today Europe will make up the backbone of a peacekeeping force in southern Lebanon. He and European foreign ministers met today in Brussels, Belgium. They settled on a total European contribution of around 7,000; that`s nearly half of the 15,000-strong force the U.N. wants. Annan stressed the peacekeepers aren`t going in to disarm Hezbollah by force.

KOFI ANNAN, U.N. Secretary General: The understanding was that it would be the Lebanese who will disarm. It, I think, is also generally accepted that disarmament of Hezbollah cannot be done by force. It has to be a political agreement between the Lebanese; there has to be a Lebanese consensus.

RAY SUAREZ: Annan also noted the U.N. has firm troop commitments from Malaysia, Indonesia and Bangladesh. But Israel has indicated it doesn`t want troops in Lebanon from Muslim nations without diplomatic ties to Israel.

In southern Lebanon today, the peacekeeping force continued to take shape. Some 150 French soldiers and military construction vehicles arrived by ship; 2,200 of the U.N. force are now on the ground in the border region. We`ll have more on this story right after the news summary.

The U.S. State Department confirmed today it has launched an investigation into Israel`s use of U.S.-made cluster bombs. The U.N. and relief agencies have reported high numbers of unexploded cluster bombs in civilian parts of Lebanon. That`s restricted under the Geneva Convention. The use of cluster bombs against enemy fighters is legal.

There were promising signs in the effort to free two FOX News journalists today. That word came from the Palestinian interior minister. Correspondent Steve Centanni and cameraman Olaf Wiig were seized in Gaza City nearly two weeks ago. A previously unknown group, the Holy Jihad Brigades, claimed responsibility.

Palestinian Prime Minister Ismail Haniyeh said he was working hard for their release.

ISMAIL HANIYEH, Prime Minister, Palestinian National Authority (through translator): The issue of the kidnapped reporters is at the top of our agenda and is fully occupying our attention. The interior minister and security commanders are investigating every aspect, and I`ve appealed to the kidnappers not to harm the journalists and to release them immediately.

RAY SUAREZ: The group has demanded the release of all Muslims held by the U.S. by midnight Saturday in exchange for the two men.

Afghan President Hamid Karzai ordered an investigation today into the recent deaths of an Afghan child and seven other people. They were killed yesterday in eastern Afghanistan during a joint raid by U.S. and Afghan forces. The U.S. military said they`d targeted al-Qaida operatives; local police insisted the victims were civilians.

In Iraq, a former British military base 200 miles southeast of Baghdad was looted today. Local Iraqis stripped it virtually bare, carting off door and window frames and steel beams. British forces left the base yesterday, and only a small group of Iraqi forces were on hand to guard it. When the British were in control, the base came under almost daily attack.

Russia today ruled out the idea of sanctions against Iran for its nuclear program. Russian Defense Minister Sergei Ivanov said historically sanctions haven`t worked. He pushed for more diplomatic talks to solve the issue.

The head of foreign policy for the European Union, Javier Solana, said he expected new talks with the Iranians in days. The U.N. Security Council has given Iran until the end of the month to stop enriching uranium or face penalties.

A Chinese court convicted a New York Times researcher today of fraud. Zhao Yan was sentenced to three years in prison. He was cleared on charges of leaking state secrets because there wasn`t enough evidence. Zhao Yan has been held since 2004. The case stemmed from an article on former Chinese leader Jiang Zemin`s plans to leave his military post. We`ll have more on this story later in the program.

An Aer Lingus flight from New York to Dublin was evacuated today during a stop in western Ireland. Dublin police received a bomb threat by phone. All 239 passengers deplaned, and all the luggage was rechecked. A search found no explosives, and the flight continued onto Dublin.

Also today, there was a security problem on an American Airlines flight from Manchester, England, to Chicago. The plane was diverted to Bangor, Maine.

A spokesman for former President Ford said he was resting comfortably today, one day after undergoing an angioplasty. The procedure was performed at the Mayo Clinic in Rochester, Minnesota. Doctors placed stents into two of his coronary arteries to increase blood flow.

It was President Ford`s second heart procedure this week. On Monday, he was fitted with a pacemaker to regulate his heartbeat.

On Wall Street today, the Dow Jones Industrial Average lost 20 points to close at 11,284. The Nasdaq rose three points to close at 2,140. For the week, the Dow lost 0.9 percent. The Nasdaq fell more than 1 percent.

That`s it for the news summary tonight. Now, a peacekeeping force for Lebanon; verdicts in two high-profile Chinese cases; the Mississippi Gulf Coast after Katrina; and Shields and Ponnuru.

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RAY SUAREZ: The peacekeeping force for Lebanon. Margaret Warner has that story.

MARGARET WARNER: Today`s meeting in Brussels capped weeks of tense negotiations at the U.N. and world capitals. The issues: the composition and precise role of a U.N. peacekeeping force in southern Lebanon.

Today, U.N. Secretary-General Kofi Annan praised Europe`s decision to officially commit a combined 7,000 troops.

KOFI ANNAN, U.N. Secretary-General: Europe has lived up to its responsibility, provided the backbone to the force, and we can look forward confidently we`re building a credible force that will help the international community achieve its goals in the region.

MARGARET WARNER: Annan did stress that the U.N. force would not be expected to disarm Hezbollah.

The promise of a robust international force was key to winning the U.N. cease-fire resolution that ended 34 days of fighting. The conflict between Israel and Hezbollah killed 1,200 Lebanese and 160 Israelis.

The resolution envisioned 15,000 international troops supplementing 15,000 Lebanese soldiers to keep the peace and serve as a buffer on the Lebanese-Israeli border. But setting up the force and agreeing on its rules of engagement was trickier than originally anticipated.

A major stumbling block was the reluctance of France to send a large contingent of soldiers. Last week, French President Jacques Chirac offered just 400. Italian Prime Minister Romano Prodi stepped in to pledge 3,000 troops and suggested Italy command the force. Yesterday, Chirac upped the French contribution to 2,000; he said France should command the force.

Annan announced today that the French would lead it until next February, when Italy would take over. Chirac did urge Annan to reconsider the total number of troops.

JACQUES CHIRAC, President of France (through translator): I can be honest, I can`t imagine that in a territory which is half of the size of a French province we could have 15,000 Lebanese troops deployed and 15,000 UNIFIL soldiers deployed. There is a big chance they would be bumping into each other.

MARGARET WARNER: Spain has already pledged 1,200, and Poland, Finland, and Belgium will send smaller contingents. Another 8,000 are supposed to come from outside Europe. The predominantly Muslim nations of Indonesia, Malaysia and Bangladesh have volunteered.

Officially, the beefed-up force will be a successor to a 2,000-man U.N. observer mission known as UNIFIL, which has been in Lebanon since 1978.

And for more on the Europeans` decision and role in the new U.N. force, we turn to Philip Gordon, senior fellow for U.S. foreign policy at the Brookings Institution. He was director for European affairs on the National Security Council in the Clinton administration.

And Augustus Richard Norton, professor of international relations at Boston University, a retired U.S. Army colonel, he served as an observer with the UNIFIL force in 1980 to `81 in Lebanon. He`s written widely about Lebanon and the Arab world.

Welcome to you both, gentlemen.

Philip Gordon, how big a commitment is this on the part of the Europeans?

PHILIP GORDON, Brookings Institution: It`s a pretty important commitment, because you remember that the cease-fire in southern Lebanon was contingent on an international force going in, as was the deployment of the Lebanese army to the south.

And for the past week, we`ve all been sitting around waiting to see if this key piece of the whole picture was going to happen. There was some doubts for a while, but now the fact that they were able to pledge 7,000 troops, which makes it easier for other countries, Muslim countries, to pledge the rest, it looks very positive.

MARGARET WARNER: So, Professor Norton, what is your take on why this proved so hard to get done? I mean, we should say it`s only been two weeks since the U.N. resolution was passed, but still there did seem to be some real hesitation.

AUGUSTUS RICHARD NORTON, Boston University: Well, these forces certainly don`t come into being instantly. The commanders and, for that matter, defense ministers and prime ministers are very concerned to make sure they know what it is their troops are going to be doing, in other words, what the rules of engagement are.

Under what circumstances can force be used? Under what circumstances should restraint, but not force, be used? The French and the Americans learned to their pain in Lebanon in 1983 that sending in a force that becomes a part of the conflict can turn into a disaster. And I`m sure that the French and other European contributors certainly want to avoid that kind of result.

MARGARET WARNER: So, Philip Gordon, explain Jacques Chirac and what happened with France, though. Last week, he was almost ridiculed for proposing just to double their current UNIFIL contribution from 200 to 400, after saying that they wanted to leave the force, they were behind the U.N. resolution. Yesterday, he said 2,000. What happened?

PHILIP GORDON: There was a big disconnect between what people were expecting from France and thought they understood from France and what the reality was. Everyone assumed that France would be delighted to lead this force and send lots of troops.

They have a historic role in Lebanon. People assume that Jacques Chirac wants to show France`s world role, the importance of the European Union. He has been tough on Iran and Syria, which assassinated his friend, the former prime minister of Lebanon, Rafik Hariri, all sorts of reasons that people were just assuming. France`s role at the U.N., France was key in negotiating the cease-fire and the U.N. resolution.

So we were all sitting around, figuring and assuming that France would lead this force. Nobody really checked with the French military and the French defense ministry which was going to have to send these troops.

And when they did, it also had to do with the particular mandate. If you remember, the first U.N. Security Council resolution was under Chapter Seven of the U.N. charter which means force could be used...

MARGARET WARNER: The original draft?

PHILIP GORDON: ... and it was pretty tough, the original draft that the United States and France proposed and agreed to. And then, when the Lebanese government resisted that and it was watered down a little bit, the French military said, "Well, hang on a minute, let us look at the fine print before you send us back into this situation where we might not have the robust rules of engagement and mandate to protect ourselves. And we`ve been there before."

And they remember Bosnia and the 80 some peacekeepers who were killed, and they remember Lebanon, where 50-some French soldiers were also killed. So there was a lot of resistance, and we just assumed it would be easier than it was.

MARGARET WARNER: So, Professor Norton, what`s your understanding of what they -- what will be the rules of engagement, how those concerns were met?

AUGUSTUS RICHARD NORTON: Well, as Philip Gordon said, there was a lot of perhaps exaggerated expectations about what this force would look like. From a lot of the commentary, it sounds like we were going to have UNIFIL on steroids. We have something rather short of that.

We have basically a stabilizing force that will have the authority to use deadly force so that they can accomplish this mission, but has clear instructions to use only proportional force, to minimize collateral damage, and to use the minimum level of force necessary to meet a threat.

Furthermore, this force is not charged with disarming Hezbollah. And, in fact, there`s a clause in the rules of engagement, which I`ve had an opportunity to read, which provide that, if a combatant is seen at a distance which is greater than the range of his weapon, then basically he is not considered a threat.

So basically, this is a stabilizing force with a clearly defined area of operations that would be an implement for diplomacy. That force will buy time. Now it will be the job of the diplomats to use that time wisely.

MARGARET WARNER: Philip Gordon, though, it sounds as if the force -- one way it will be different from some earlier ones is that they will have the power to or the authority not only to shoot to protect themselves, but if civilians seem to be coming under imminent threat.

PHILIP GORDON: Yes.

MARGARET WARNER: That`s different, isn`t it? I mean, we`ve had cases where U.N. peacekeepers stood by as civilians got massacred.

PHILIP GORDON: That`s right. And now they have rules of engagement that will allow them do it, but not necessarily mandate that they do it, and that`s why there`s still a little ambiguity here. And it`s going to be up to how the commanders of that force choose to implement it.

They`re going to be the ones on the grounds, and they`re going to be the ones taking the decisions, as Professor Norton just said. You know, is someone out of the range? Do I have the responsibility? Do I have the duty to protect that person? And what if I do? And so there`s a lot of wiggle room to see how robustly they`re going to want to do this.

Also on the disarmament role, everyone agrees that they`re not going to actively go after Hezbollah and look for their weapons and take them away. But if they come across Hezbollah weapons in the course of their patrols, they`re supposed to deal with it.

Will they choose to? Will they have that confrontation? What if it leads to a clash? As always, you can write these rules of engagement, but ultimately a human being on the ground is going to have to decide what risks they want to take.

MARGARET WARNER: Professor Norton, as we reported, President Chirac also questioned why 15,000 troops were needed. Kofi Annan didn`t seem to take up that suggestion today, but you`ve had experience. What is your feeling? Are 15,000 international troops needed in that small an area in addition to the 15,000 Lebanese army troops?

AUGUSTUS RICHARD NORTON: Well, this force is a stabilizing force that basically operates checkpoints, that conducts patrols on roads, that basically maintains the free movement of humanitarian workers, permits civilians to return to their villages, and so on. This can probably be done with 7,000 or 8,000 troops.

When I was with UNIFIL when it was much more robust, it had about 6,000 troops. So this would be a significant increment over the historic high.

However, there are clauses in the resolution which was passed a few weeks ago, 1701, that provides that this force will assist the Lebanese government in curtailing or stemming the flow of weapons into Lebanon, if that government makes the request.

So, if the Lebanese government were to make that sort of request, then this would require a lot of mobile forces, probably a lot more forces stationed in border areas along the coast, and so on, but it remains to be seen what the Lebanese government is going to do, with respect to the introduction of weapons into Lebanon.

MARGARET WARNER: And, Philip Gordon, what will be the definition of success for this mission? Annan said today -- I mean, he`s already foreseeing that it`s going to be there at least for a while, because the French are going to run it until February, and then the Italians are going to lead it.

PHILIP GORDON: Yes. I mean, just one thing on the size of the force. I listened to President Chirac. I have to say, I wish my biggest concern about the force was that they were bumping into each other on the ground and that there were too many soldiers there.

The success of this force would be if it manages to assist the Lebanese army in stopping the flow of weapons to Hezbollah. I mean, a true success would be disarming Hezbollah, but that`s not going to happen. Everyone realizes that. But short of that, if it could stop the flow of the re-supply of arms to Hezbollah and reassure the two sides that they don`t need to actively start a war again, that would be success.

And I think we`ll see that in the short term. It doesn`t look like anybody wants to restart the hot war. But in the longer run, at a minimum, success would be stopping weapons from coming in, and for that you couldn`t have too many forces.

MARGARET WARNER: I`d like to ask you both finally to sum up on this other point. And I`ll start with you, Professor Norton.

Today, the Italian foreign minister was in Israel, and he made some comments about how America`s aggressive approach in the Middle East was really misguided, and seemed to be suggesting that the Europeans would offer a different way. And he said this. He said, "Success would be the active presence of international and European diplomacy in the region, a presence that has been missing for many years."

I`m wondering if you think part of the Europeans` willingness to step up to this does have to do with a certain desire to either show up the United States or offer an alternative to the United States in that part of the world.

AUGUSTUS RICHARD NORTON: Well, unfortunately, the U.S. has showed a proclivity in some places, like Iraq, to it seems make more enemies than it actually deals with initially. So I share the concern that was expressed by the Italian prime minister.

I think the Italians and other Europeans have a legitimate interest here in ensuring that Lebanon and the broader Middle East does not become more unstable and therefore a source of even more refugees and even more extremism and violence.

And let`s remember that each of these European countries, Italy, France, for example, have significant Muslim populations, so they`re also concerned about these Muslim populations and how they see the role of their government in the Middle East. So I think the position of Mr. Prodi is very, very lucid and, for the most part, very justified.

MARGARET WARNER: Quick final word for you?

PHILIP GORDON: Very briefly, absolutely it`s about Europe stepping up to the plate, but I don`t think that`s a bad thing.

MARGARET WARNER: All right. Philip Gordon, Professor Norton, thank you both.

AUGUSTUS RICHARD NORTON: My pleasure.

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RAY SUAREZ: Now, information on trial in China. Jeffrey Brown has our Media Unit update.

JEFFREY BROWN: Two closely watched court rulings have just been handed down by the Chinese justice system. Forty-four-year-old Zhao Yan, a researcher for the New York Times who`s been held since 2004, was today cleared of a charge of revealing state secrets. But the same court convicted Zhao of fraud in a separate matter that predated his tenure with the Times. For that, he was sentenced to three years in prison.

Yesterday, a court convicted Chen Guangcheng, a 34-year-old, blind human rights activist who had documented allegations of forced abortions in villages around China. He was sentenced to four years, three months in prison, on charges of destroying property and organizing a mob.

And joining me to look at these cases is James Feinerman, professor of Asian legal studies at Georgetown University. He`s just returned from a five- month Fulbright scholarship in China.

Welcome to you.

First, tell us about the case of Mr. Zhao. Remind us, this happened because of an article that appeared in the New York Times?

JAMES FEINERMAN, Georgetown University: The article appeared in the New York Times in 2004, and it predicted correctly that the former leader of China, Jiang Zemin, was going to hand down the last of his three important positions to his successor, Hu Jintao, the chairmanship of the Central Military Commission. And for revealing that, Zhao was charged with violating China`s state secrets law.

JEFFREY BROWN: So the story turned out to be right but it got people upset?

JAMES FEINERMAN: That`s correct. And apparently what was even more upsetting than just the report that he was turning over that position was some additional commentary about the fact that there was a struggle about how it would be handed over and what exactly the succession plans would be, that they were more worried about the contention of the top leadership getting out than just the story that he was handing over the position.

JEFFREY BROWN: The case went through various twists and turns. At one point, the charges were dropped, reinstated.

JAMES FEINERMAN: Yes, well, first of all, an additional charge was added sometime after the original charge of violating the state secrets law of fraud. And the fraud that was alleged was something that was supposedly committed by Zhao before he joined the New York Times` Beijing bureau, when he was a crusading Chinese journalist, and accused of promising to help somebody in a case or a suit that they had by fabricating a story and helping him avoid a possible sentence to the Chinese prison labor camps.

And those charges were subsequently dropped, just shortly before the case then went to trial. They were reinstated. The case went to trial a couple of months ago, and the decision just came down today in China.

JEFFREY BROWN: Now, it was seen as quite unusual that he was acquitted of the major charge, on the state secrets act. Why is that unusual?

JAMES FEINERMAN: Well, it`s very unusual for any case that gets as far as an actual trial, especially a high-profile case like this with a kind of foreign connection, of not having an iron-clad surety of a conviction on the original charges once the case gets that far. Cases are usually dropped out of the system earlier on if they`re not going to lead to a conviction on those original charges.

But here, I think, the scrutiny that the case had received required the court -- and, again, this is a sophisticated court in Beijing, the center of Chinese governmental power and the capital city -- basically saying that, in their legal analysis, the facts just didn`t support the state secrets charge. But they had this additional peg on which to hang a conviction, and they did.

JEFFREY BROWN: The scrutiny that you`re referring to, does that include the outside world looking in?

JAMES FEINERMAN: Oh, definitely. I think that one of the things that is a positive development of the last 25 years of opening to the outside world in China`s case is that we now know much more about these cases.

Obviously, a case involving someone who worked in the Times Beijing bureau was going to receive a lot of scrutiny. But because of the work of people like Zhao and his counterparts at the Times and other foreign newspapers and journalists, there is a lot coverage of cases that go on even outside of Beijing, all over China, cases that never would have been heard of in the outside world beforehand.

JEFFREY BROWN: But the fraud charge on which he was convicted, I saw that interpreted by some as a kind of face-saving measure almost by the Chinese authorities.

JAMES FEINERMAN: I think it`s fair to say that. The fact that it was added after the original charge, so long after the original charges were brought and seemingly unconnected to the events for which the original charge was brought, speak of some sort of attempt to either save face or to just find a graceful way of exiting for the legal officials who had already brought these charges against Mr. Zhao.

JEFFREY BROWN: When you put this case in a larger context, was it seen as sending a message to journalists in China and the international journalists reporting from there?

JAMES FEINERMAN: Definitely. It sends a message, especially to Chinese journalists, that no matter who you work for, even some place like the New York Times, you will not be protected by your employer. In fact, they can`t protect you because you`re still a citizen of the Chinese state.

But it also sends a chilling message to the foreign journalists who work with these people and rely on them for a lot of their legwork in China that they`re putting them at risk, that any time that they make a story that goes forward with information they receive from one of these Chinese co-workers, they`re putting them at risk. The foreign journalists at worst will be deported, but the Chinese journalists will spend maybe years in prison.

JEFFREY BROWN: Now, the case of Chen Guangcheng, tell us about him, a prominent human rights activist?

JAMES FEINERMAN: Yes, he`s sometimes described as a barefoot lawyer. He was blind because of an early childhood illness. He taught himself law, and he started representing individual claimants in China who felt that they were denied various welfare benefits to which they were entitled.

But his misfortune came from trying to take another step in his process of representing people who were wrongfully treated in China and attempting to bring a class action on the part of people who were forced to undergo abortions or sterilizations in China. And the local officials cracked down very heavily on him for this.

JEFFREY BROWN: So this is a local case. This is what I`m trying to distinguish here. What law or what legal authority or what officialdom is he bumping up against here?

JAMES FEINERMAN: Well, in his case, he was bumping up against local and provincial officials in Shandong Province, which is a province east of Beijing.

And I think one of these things that these cases reveal is that what the party and the leadership -- maybe even more at the local and lower levels than at the higher levels -- are really most concerned about is any attempt to try and wrest power from them, to create independent sources of power or people who can bring any kind of meaningful complaint against the government and show that the emperor has no clothes, show that the party and the individual members and government officials who pretend to be representing the interests of the Chinese people really don`t do that.

JEFFREY BROWN: There was a period when it looked as though many press and legal rights were opening up a bit in China. Where are we now? What do these cases suggest?

JAMES FEINERMAN: Well, it`s hard to say. On the one hand, it`s clear that the glass is half-full, because in many places all around China there`s considerable reporting of controversial cases, revelations of government misdeeds. And this continues to go on, despite the outcome in these several cases.

On the other hand, it`s clear that, if you get too close, too close to the really sensitive issues or too close to the center of power, as in the case of Mr. Zhao, that then you`ve entered a forbidden zone. And there`s no way of knowing exactly where the line is. So people will self-censor, they`ll try and stay back of that line, well back of that line, and not cross over it, because the peril is so great.

JEFFREY BROWN: OK, James Feinerman, thanks very much.

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RAY SUAREZ: Now, a year after Katrina on the Mississippi Gulf Coast. NewsHour correspondent Spencer Michels travels to three coastal communities and reports on the rebuilding effort.

SPENCER MICHELS, NewsHour Correspondent: Looking at the coast today - - peaceful, calm and inviting -- it`s hard to imagine that a year ago, spurred on by 130-mile-an-hour winds, the water rose up with unrelenting force and practically wrecked the entire Mississippi Gulf Coast.

Just across the highway, reminders of Katrina area easy to find: 65,000 homes along the Gulf Coast were completely destroyed.

We wanted to see what had changed, what`s improved, what hasn`t, and we wanted to see what people were thinking. So we drove along coastal Highway 90, along the Gulf of Mexico. Right after Katrina, you couldn`t drive from New Orleans to Bay St. Louis, to Pass Christian, to Biloxi. This road was just too much of a mess.

The road is passable, and most of the debris has been cleaned up, leaving large areas where weeds have grown up, covering over sites of disappeared homes and stores and offices.

MAYOR TOMMY LONGO, Waveland, Mississippi: This was a steakhouse right here. We had two bed and breakfasts right here.

SPENCER MICHELS: Tommy Longo, mayor of the little coastal town of Waveland -- 58 miles east of New Orleans, where Hurricane Katrina scored a direct hit -- can`t get used to the changed face of the place he grew up in and lived in all his life. The town government is now being run out of trailers. And other than Wal-Mart and this little market, there is no major grocery store nearby.

MAYOR TOMMY LONGO: All of these streets were lined with houses. I mean, these are all...

SPENCER MICHELS: Waveland, with low housing prices, was the fastest- growing town on the Gulf Coast, and its mostly blue-collar population had jumped to 10,000 before the storm. Now, just 2,500 people remain, and all 41 businesses are gone.

MAYOR TOMMY LONGO: We still have 300 demolitions to do. And, you know, when you have 95 percent substantial destruction of every structure in the city, and 60 percent of them was like this, reduced to nothing but a slab, then you just have a lot more work to do.

SPENCER MICHELS: On the street across from where city hall used to be, Brian Mollere, whose mother drowned in the storm, is living in a FEMA- supplied trailer trying to plan for a future that seems far off.

BRIAN MOLLERE, Waveland Resident: Psychologically you go through different stages, you know? If you were to talk to me right after the storm, I probably would have told you, "I never want to build back," or whatever. You know, it`s just natural progression. This is a beautiful little area. It`s home.

SPENCER MICHELS: You`re not depressed anymore?

BRIAN MOLLERE: Well, you have highs and lows, you know, days, but I want to get back.

SPENCER MICHELS: But as they discovered in nearby Pass Christian, 22 miles from Waveland, it is hard to bring back residents without places to live.

JIM SCHMITT, Contractor, Pass Christian: This house has been gutted.

SPENCER MICHELS: Contractor Jim Schmitt showed us one of many homes waiting to be fixed. He has far more work than he can do.

JIM SCHMITT: There is 10 years` worth of work to be done here, and everyone`s trying to get it done in six months. A lot of the people that are coming in are not skilled, but to find skilled people is difficult.

You know, this city used to sell about 60 to 70 building permits in a year. They`ve sold 1,060 so far since the storm this year.

SPENCER MICHELS: While Schmidt could use three times as many workers in order to keep up with the demand, he sees a silver lining in the devastation. Even with lower tax revenues, he sees a chance for Pass Christian to re-plan its community.

JIM SCHMITT: We want to get some commercial back here in town. We had lost all that over the years, the shops, the restaurants, the art galleries. Everything had moved out, and we`ve just become strictly a bedroom community.

SPENCER MICHELS: For now, Pass Christian has very little commercial activity.

Lee Giac, a Vietnamese-born resident, sells the shrimp his son catches in the Gulf. Since the demand for shrimp is down and large wholesalers say there are not enough restaurants open to buy the shrimp, he parks his truck across from the only functioning gas station and waits for customers.

LEE GIAC, Shrimper, Pass Christian: No, no company buys shrimp right now. And I try to sell raw, because, after work, nobody buys.

SPENCER MICHELS: That`s too bad. So are you making any money at all?

LEE GIAC: Not much. Not much.

SPENCER MICHELS: Twenty-three miles east, Biloxi has long depended on tourism, and it`s hoping visitors are its salvation.

ANNOUNCER: Welcome aboard the Biloxi Tour Train...

SPENCER MICHELS: That was obvious from a trip we took on the Biloxi Tour Train, a former tourist attraction whose operator, Carla Beaugez, has transformed her ride into a short course in devastation and people`s courage. We and a handful of tourists passed the sites of homes no longer there...

CARLA BEAUGEZ, Tour Guide, Biloxi: Now, when they come through, it`s like, "My god, what these people went through." And it took me a long time to where I didn`t cry coming through here. And that pretty much is the underlying message of when tell people, that the essence of this town is not gone. The buildings are gone; some things we appreciated are gone. The people here usually don`t give up.

SPENCER MICHELS: Beaugez guided us through downtown and by the casinos, whose recovery, many Biloxians believe, will rescue them. The casinos played that role once before. They were a crucial part of the so- called "Mississippi Miracle," whose revenues bolstered the entire Gulf Coast in the 1990s.

Before Katrina, gambling was allowed only on boats and barges off- shore. After the hurricane tossed those casinos around like matchsticks, the Mississippi legislature voted to allow gambling on-shore up to 800 feet from the water. Jon Lucas runs the Imperial Palace along Biloxi Bay, which was among the first to reopen.

JON LUCAS, GM, IMPERIAL PALACE HOTEL AND CASINO: The rebirth and the re-growth has begun, and the rebuilding has begun, but we`ve just begun. I mean, yes, it`s encouraging. It`s nice.

What better way to rebuild the economy than to employ 2,600 people? What better way to start rebuilding the economy than to bring back tourism, as we`ve done? We have over a thousand hotel rooms. The demand for them has been incredible. I think that that`s encouraging, but it`s only a start.

SPENCER MICHELS: Allowing gambling on land has spurred a quick revival of the industry and a land rush for properties near the beach, which have quadrupled in value. The crowds, even in the hot and humid summer, have been extraordinary. By July, five casinos were doing as much business as nine had done a year before.

But the "Mississippi Miracle" has yet to reach some Biloxi residents. Demolition is still in full swing in many areas, with little rebuilding going on.

James Lee and Frank Brown, both retired lifelong Biloxi residents, live in FEMA trailers next to their flooded homes. They still have not seen any of the money that many officials say is coming from a $20 billion aid package. They think there`s been too much emphasis on the casinos` coming.

JAMES LEE, Biloxi Resident: The mayor, he`s saying about getting these boats ready. He ain`t saying about these poor class people down here. That`s what`s happening. They`re worried about the casinos. They ain`t worried about us.

SPENCER MICHELS: People who run Biloxi public housing have similar concerns. Practically every public housing unit was damaged or destroyed. This development, Oakwood Village, housed a hundred poor families, now scattered to the winds. Using limited funds, the housing authority is fixing up some units while it waits for federal funds.

Delmar Robinson is chairman of the housing commission.

DELMAR ROBINSON, Chair, Biloxi Housing Authority: We`re supposed to get $100 million for the housing authorities that are down here on the coast for initial recovery.

SPENCER MICHELS: So where is that money?

DELMAR ROBINSON: I don`t know. I don`t know. I know that we do not have it. We have not been able to get our houses rehabbed to give people a place to live. And the spin-off is that the economy of Biloxi, if something is not done, is going to suffer. Housing is a part of any economic equation.

SPENCER MICHELS: Among the bright spots in the housing picture is the success of volunteer agencies, which have descended upon the Gulf Coast to help. Students, young people, and even seniors have made their way to Biloxi to help longtime residents like Pat and Sandra Thornton, whose home half a mile from the beach was uninhabitable.

Volunteers from Hands On Network, an Atlanta-based group, have gutted the Thornton`s house and hope to have it livable in a few weeks.

PAT THORNTON, Biloxi Resident: We didn`t know where we were going to turn to or who we were going to turn to. And she and I sat on the front steps there, and we just looked at one another and cried, hugged one another, and said, "We`ll get through it." And by the grace of God, we are getting through it.

SPENCER MICHELS: How?

SANDRA THORNTON, Biloxi Resident: Volunteers.

PAT THORNTON: Volunteers.

SANDRA THORNTON: Volunteers.

PAT THORNTON: Hands On has been here from start to finish.

SPENCER MICHELS: The music hasn`t died at Biloxi High either, where a football jamboree brought together kids from four high schools along the coast. The coach at St. Stanislaus High, whose school suffered $19 million damage and whose football season was cancelled last year, has used the rebuilding theme for his team this year.

Coach Casey Wittmann says being able to put a team on the field is a big step towards recovery.

CASEY WITTMANN, Coach, St. Stanislaus: There`s probably more FEMA trailers in this area than there are homes right now. And I live in one, and Erik Rizzo (ph), there`s a lot of people on our team living in one. But like I said, this gives us an opportunity to come back and kind of put our lives back together as best we can and then look forward to the future.

SPENCER MICHELS: Between the revival of football, the casino comeback and the volunteers` efforts, the mayor of Biloxi sees reason for hope.

MAYOR A.J. HOLLOWAY, Biloxi, Mississippi: I feel good where we are today in the city of Biloxi. I wish we were further along that what we are. A lot of people still cannot make up their mind what they want to do, if they want to come back or if they want to leave.

SPENCER MICHELS: For some residents and businesses, the recovery is well under way; for others, it remains a long way off. All this week and next, there will be ceremonies, and concerts, and religious services like this one to remember what happened, to mourn what was lost, and to plan and pray for the future.

RAY SUAREZ: On Monday, I`ll have a conversation with New Orleanians about the pace of recovery so far and their visions for the city.

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RAY SUAREZ: Now, to the analysis of Shields and Ponnuru, syndicated columnist Mark Shields and National Review senior editor Ramesh Ponnuru. David Brooks is off tonight.

Ramesh, at the beginning of the week, the president had a news conference, and the talking point seems to have shifted from, "We`re making progress," to, "It could be worse."

RAMESH PONNURU, National Review Senior Editor: Yes, that`s right. I think that the administration has belatedly moved away from a "stay the course" message, several months after it probably should have, for its own political health. And I think those months have taken a real toll on the administration`s credibility.

There have been too many corners allegedly turned, too many attempts by the administration to say, "Don`t believe what you`re seeing on TV, we`re actually making a lot of progress." I think this is a more successful tact the administration is taking; it may be a little late in the game.

RAY SUAREZ: But is it also risky to, after having one basic message about the war for a long time, to just come up with a new one without making any remark about it, not saying, "We used to say this, and now we`re saying that," but just say this new thing and sort of just go with it?

RAMESH PONNURU: Well, it`s a little bit more of a transition since, you know, he`s always said that we are adapting our tactics to meet the circumstances of the moment. And, you know, he`s still saying we have a strategy in place for dealing with this threat, so it`s not a total 180- degree shift.

RAY SUAREZ: Mark?

MARK SHIELDS, Syndicated Columnist: No longer is it the press`s fault. That`s good to hear. I mean, we were told that there was a lot of good news, it was just going unreported. Things were getting better, except those nervous Nellies and negativists in the press failed to report it.

Now the president, you know, as you put it, has frankly confronted -- I agree with Ramesh that the president is in a little bit of a problem. He faced a serious problem, and I think the damage may already have been inflicted, Ray, and that was he could look delusional or deceitful and not credible. And that was the problem that they had politically going into the fall of 2006.

RAY SUAREZ: Is there a difficulty for a president who has based so much of his public communications on optimism, being forward-looking, to say things like, "These are times that are straining the psyche of our country"?

RAMESH PONNURU: It is not a formulation one associates with this least therapeutic of presidents, but I do think that there`s always been a measure of warning in the administration`s rhetoric about national security from the very beginning.

I mean, it`s a fear-based message, right? It`s a message that, "Unless we stick with the president and his policies, bad things are going to happen to us." So I think it`s a very natural progression on the part of this administration.

RAY SUAREZ: How does that fit with the strategy for the upcoming midterm elections?

RAMESH PONNURU: Well, I think that it`s a perfect fit in a way that, you know, the Republicans are going to succeed to the extent that they make people worried about the threat of terrorism and to the extent they make people think that Democratic policies would be less likely to protect them here at home.

And that`s the negative message that they need to promote. It`s not just a referendum; it`s not just a question, "Do you like what`s going on in this country?" Do you think the Democrats have a better plan than the Republicans for making things better?

RAY SUAREZ: Mark?

MARK SHIELDS: It`s not an option, Ray. On every single measure of public opinion, the administration, the president, the Republican Party, the Republican Congress get failing marks. They get failing marks on foreign affairs handling; they get failing marks on the economy; they get failing marks on the war in Iraq. The president`s latest was 30 percent favorable, 65 percent unfavorable.

The only bright spot is the president`s record, rating on terrorism. It`s not the best card they hold; it`s the only card they hold. So going into the elections of 2006, they have to make this election about terrorism.

They can`t let it be about the environment; they can`t let it be about health care; they can`t be about No Child Left Behind. That`s all it can be.

And I think the president was ill-served by the decision very early on when they went to war to say that there would be no sacrifice. You will pay no price; you will bear no burden. That was the message from this White House.

Make no mistake about it: I mean, we`re going straight ahead with the tax cuts. Abraham Lincoln imposed the first income tax and inheritance tax to finance the Civil War. William McKinley passed taxes to finance the Spanish-American War. That`s always been the American way.

But they made the decision that all the sacrifice would be borne only by those in uniform. And for those of us at home, it would be business as usual and let the good times roll. And I think now it`s late in the game to go back and say, "Boy, sacrifice is going to be tough."

RAY SUAREZ: So, from what you`re both saying, it sounds like it makes perfect sense that the president, for instance, got a bump out of the British arrests of the Pakistani conspirators who were working to put together a plan to bomb planes.

MARK SHIELDS: He did. And given the direction of everything else going south, it really must have been manna from heaven to those in the White House and the Republican National Committee.

The question is, of course, how long it lasts. I mean, will it be like the Zarqawi capture or murder, that it`s just a blip, or even the capture of Saddam Hussein? We don`t know that, but that`s their only hope, Ray.

RAY SUAREZ: Well, this week, also, Ramesh, we heard John McCain in almost scornful terms throwing out some of the phrases that had been used early in the war and in the run-up to war. Also, Christopher Shays who`s got a very tough re-election campaign in Connecticut backing off of his previous support of the "stay the course" approach. What do you make of that?

RAMESH PONNURU: Well, I`d make a distinction between Shays on the one hand and McCain on the other. McCain has been a hawk who`s consistently supported the Iraq war, and he`s been consistently critical of this administration for not taking the steps that, in his view, are needed to succeed there, including replacing Secretary Rumsfeld at the Pentagon and increasing our troop levels in Iraq.

Shays is a different story. Shays has actually now advocating withdrawal from Iraq, which is different from McCain`s point of view. In some ways, they`re complete opposites on this.

You know, with Chris Shays, Chris Shays is something of an outlier in the Republican Party, and I don`t think that anybody in the administration or the Republican National Committee are concerned that he`s doing this. If other congressmen who are more persuasive to their Republican colleagues and are thought of as being more down-the-line conservatives in more conservative states than Connecticut start echoing him, then that would create a real problem for this administration across the board.

RAY SUAREZ: I didn`t mean to suggest that they were saying the same thing, but they were definitely training their fire in some ways on the Bush White House.

RAMESH PONNURU: Well, you know, there is a temptation on the part of everybody in the Republican Party right now to distance themselves from a president whose ratings are low. The danger for them is that they would then help drag him lower.

And I think that any sensible Republican strategist who looks at this would say, "At the end of the day, whether you like it or not, your fate is tied to the president if you`re a Republican congressman. You need his numbers to go up."

RAY SUAREZ: Were either of those developments a surprise, Mark?

MARK SHIELDS: They were in this sense: John McCain was campaigning for Mike DeWine in Ohio, his Senate colleague. Mike DeWine was one of four United States senators who backed John McCain for president in 2000 against George W. Bush. He`s one of the 14 in the Gang of 14, the bipartisan group to break the impasse on Senate judicial nominations.

So it`s a personal thing. He was trying to help Mike DeWine, I think, quite frankly, because Mike DeWine is saddled not only by an unpopular administration in Washington, but a disastrously unpopular Republican administration in Ohio. He`s running behind Sherrod Brown, the Democratic congressman, in most recent polls.

And McCain could feel the anger boiling up in him. And look at it straightly. Politically, from McCain`s point of view, John McCain`s strength, has maverick strength, call what it you want, is not his eloquence, is not his towering intellect or his charisma personally. It`s his integrity, and I think that -- he had to make that known.

He was very -- I think he took the president to task for "mission accomplished," which was made before 2,600 Americans were killed. Dick Cheney said the "last throes." That was 16 months and 1,000 American deaths ago, Ray. So, I mean, there was -- I mean, he feels overly optimistic, unrealistic, and ill-preparing the American people.

On Chris Shays, I have to say this. He`s been to Iraq 14 times. There is nobody in the Congress of the United States who has more conscientiously devoted time, resources and energy to try to understand what`s going on in that war. He has been a staunch, stalwart supporter.

Yes, he`s in a tough to race, no doubt about it, in a state that has demonstrated its anti-war credentials, Connecticut. But it`s heartfelt, I believe. I mean, you know, maybe it`s a battlefield conversion on the eve of election.

But I spoke to a Wednesday Group, a group of moderate Republicans, a few months ago. We all do it from time to time. And I said at the time I thought the war was lost and irretrievably lost and we would end, you know, in retreat.

Chris Shays called me afterwards, and we had a conversation I could only call heartfelt. I mean, he went through and, why did I believe that? Did I really believe that? And he hoped it wasn`t true.

I mean, this has not been a position that has helped him at all in his congressional district to have been a supporter. I think the jury is out on whether it will help him in his re-election. He`s in a very, very tough race against Diane Farrell in that race, in that district, but I think it`s significant. I think it`s as significant almost, because he`s been such a strong supporter, as Tip O`Neill was when he broke with Lyndon Johnson and Vietnam.

RAY SUAREZ: Quick response, Ramesh?

RAMESH PONNURU: I don`t disagree with what he was saying about the reason Shays has adopted this position. I was just making the political point that the administration would be more worried if there was somebody else.

You know, one thing about McCain, I don`t think that his comments are going to cost him anything because I think a lot of conservatives would agree with what he was saying now. You know, especially in retrospect, a lot of that rhetoric was misguided. I mean, do you really think the administration would have the "mission accomplished" banner if they could do it over again? I don`t.

MARK SHIELDS: They wouldn`t try and blame it on the Navy again this time, would they? I don`t think.

RAY SUAREZ: Gentlemen, have a good weekend.

MARK SHIELDS: Thank you.

RAMESH PONNURU: Thank you.

(BREAK)

RAY SUAREZ: The musician Walter Maynard Ferguson died Wednesday in California. Ferguson was a legendary jazz trumpeter and band leader, born in Montreal, Canada, in 1928. He was also a Grammy nominee. This number is from his 1998 album, "Brass Attitude."

That was Maynard Ferguson`s performance of "Knee Deep in Rio." He died Wednesday at the age of 78.

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RAY SUAREZ: Again, the major developments of this day. U.N. Secretary-General Annan announced Europe will make up the backbone of a peacekeeping force in southern Lebanon. European countries will contribute nearly 7,000 troops to the force.

The U.S. State Department confirmed it has launched an investigation into Israel`s use of U.S.-made cluster bombs in Lebanon. And a spokesman for Gerald Ford said the former president was resting comfortably a day after undergoing an angioplasty.

A reminder: "Washington Week" can be seen on most PBS stations later this evening. We`ll see you online and again here Monday evening. I`m Ray Suarez. Thanks for watching. Good night.