The MacNeil/Lehrer NewsHour

MR. MacNeil: Good evening. I'm Robert MacNeil in New York.

MS. WOODRUFF: And I'm Judy Woodruff in Washington. After our News Summary, we have a Newsmaker interview with Egyptian President Hosni Mubarak, then the situation in Bosnia, and the U.S. response to it, next, the Senate's filibuster politics, and cut rate brand name cigarettes. NEWS SUMMARY

MS. WOODRUFF: President Clinton and Egyptian President Hosni Mubarak said today they were optimistic about prospects for a Middle East peace agreement. They discussed the upcoming round of negotiations between Israel and its Arab neighbors and other matters at a White House meeting this morning. Both men said recent discussions with Israeli Prime Minister Yitzhak Rabin and comments by Arab leaders showed a determination to solve the region's longstanding disputes. They spoke to reporters in the White House East Room.

PRESIDENT CLINTON: For the Middle East, the year 1993 can determine whether the new century is consumed by old enmities or used to unlock the human and material potential of the people. Our historic mission is to make this a year of peace, and I'm delighted to have President Mubarak as a partner in pursuing this mission.

PRESIDENT HOSNI MUBARAK, Egypt: Together we can make the ends meet and bridge existing gaps. Equally important is the task of removing the remaining obstacles, especially that of the deportees. I was pleased to hear from President Clinton that significant progress has been on this issue and that he recognized the importance of the Middle East peace talks. He is committed to the influence of the United States to achieve meaningful progress in these talks, when they are resumed on April the 20th.

MS. WOODRUFF: The two leaders also said they were sharing intelligence information about fundamentalist Islamic terrorism. Mr. Clinton said he had ordered a review to see if the U.S. had received any information which could have tipped off authorities about the World Trade Center bombing. We'll have a Newsmaker interview with President Mubarak later in the program. The retrial of Sheih Omar Abdel-Rahman began in Egypt today. He is the cleric many Egyptian militants proclaim as their spiritual leader. He and 48 others are charged with inciting violence. They were acquitted at an earlier trial. Egyptian authorities say the Sheikh's followers have waged a 16-month terror campaign in which 150 people have been killed, including many foreign tourists. The Sheikh has lived in the United States since 1990 and suspects in the World Trade Center bombing worship at his New Jersey mosque. Robin.

MR. MacNeil: Today marked the one-year point in the civil war in Bosnia. Residents of the capital Sarajevo placed wreaths at several sites, including one where twenty-one people were killed by a mortar while waiting in line for bread last May. In Eastern Bosnia, U.N. convoys brought supplies to the besieged town of Srebrenica, but Muslim authorities refused to let them evacuate refugees. The authorities believe the evacuations will help Serb efforts to permanently remove Muslims from the region. Serbian President Slobodan Milosevic today praised President Clinton's policy towards Bosnia even though the U.S. has denounced Serbian aggression against Bosnian Muslims. In an interview with the Washington Post, Milosevic said, "I appreciate very much that the U.S. will not be the world policeman to put everything in order in its own view." He went on to say, "This administration is oriented to the essential problems of the United States and will not try to hide internal problems by opening international problems." Mr. Clinton was asked about Milosevic's praise during a White House photo opportunity.

PRESIDENT CLINTON: That's sort of like, that was like the Iraqi charm offense, if he's just trying to head off tougher sanctions, if the Vance-Owen Plan is not embraced.

REPORTER: Is it going to work?

PRESIDENT CLINTON: No, it won't work. Of course not.

REPORTER: Well, do you think he's getting the wrong message though, sir?

PRESIDENT CLINTON: No. It's pure politics. He's trying to, if he's trying to head off tougher sanctions in the U.N., if the Serbs don't sign off on Vance-Owen, that's all that's going on there, and it won't work.

REPORTER: But don't you think he's sending a message that this is actually, you know, this is great, you're not going to pound us?

PRESIDENT CLINTON: Well, we are. We're going to press for tougher sanctions. We'll see.

MR. MacNeil: We'll have more on the Bosnia story later in the program.

MS. WOODRUFF: President Clinton said today he was willing to compromise on his economic stimulus package. The plan has been stalled in the Senate by a Republican filibuster. Late last night Senators gave up on trying to end the deadlock and adjourned for their two-week spring recess. During the break, Mr. Clinton said he was willing to discuss what he described as "legitimate expressed objections." White House Press Sec. Dee Dee Myers confirmed today that Mr. Clintonwill seek to reverse a ban on abortion coverage in health insurance policies for federal workers. The ban was in effect during the Reagan and Bush administrations.

MR. MacNeil: A government report released today said the Medicare trust fund may run out of money as early as 1998. It blames the problem on rising health care costs. The Medicare fund pays hospital bills for senior citizens and the disabled. The report was issued by its board of trustees. HUD Secretary Henry Cisneros said today that America's cities were smoldering and could ignite into riots like the Los Angeles riots of last year. He said the main problem was racism. He said the poor and minority groups were becoming the majority in many cities and cities were becoming modern versions of reservations. He made the remarks in a speech to the Police Foundation in Washington.

MS. WOODRUFF: A launch of the space shuttle Discovery was scrubbed before dawn this morning. NASA officials said computers detected a problem in Discovery's propulsion system and stopped the countdown 11 seconds before liftoff. It was the second time in two weeks that a shuttle launch has been aborted in the final seconds. NASA scheduled another launch attempt Thursday for Discovery's mission to study the earth's ozone layer.

MR. MacNeil: That's our summary of the day's news. Now it's on to Egypt's President Mubarak, a Bosnia update, the fate of the Clinton stimulus package, and new strategies for cigarette makers. NEWSMAKER

MS. WOODRUFF: First tonight, a Newsmaker interview with the President of Egypt, Hosni Mubarak, a key figure in Middle East diplomacy but a political leader under increasing pressure at home. Hosni Mubarak was at the White House today for his first meeting with President Clinton. Diplomacy and aid were on the Mubarak- Clinton agenda as usual for these Oval Office settings, but some other issues also were intruding, high among them terrorism and Islamic fundamentalism. In Egypt, as elsewhere throughout the Middle East and North Africa, fundamentalism as a religious and political expression is rapidly gaining force, especially among the young, who have grown disillusioned with both Western style secularism and their inability to climb out of poverty. But in Egypt, these manifestations have taken a particularly bitter and violent edge. There have been attacks, some fatal, by fundamentalists on Western tourists, who are a major source of money, and also on Egyptian Christians, who make up 10 percent of Egypt's 56 million people, as well as on Westerners living in Egypt. The Egyptian government has cracked down on the fundamentalists with police raids on mosques and social clubs and other punitive measures, which have drawn criticism from human rights monitoring organizations. Scores of civilians and police have been killed since the crackdown began in December. On February 26th, Americans were brutally reminded of an alleged link between terrorism in Egypt and in this country with the bombing of the World Trade Center in New York City. Six people were killed and a thousand injured. Five of the men charged in the case were followers of the Egyptian fundamentalist leader Sheikh Omar Abdel-Rahman, now based in Jersey City, New Jersey, and Brooklyn, New York. The 54-year-old blind theologian managed to enter the United States despite being on a U.S. government terrorist list. Rahman was placed on that list following the Sadat assassination when many of his followers were convicted by special tribunals. Rahman was among those acquitted. The U.S. government has taken steps to deport Rahman back to Egypt. But meanwhile he continues to preach and give interviews and rally his followers in the United States.

SHEIKH OMAR ABDEL-RAHMAN: [speaking through interpreter] We have truth on our side. We will continue the struggle to the last drop of blood, until we get what we are fighting for. Victory from God Almighty will come to those who are faithful to Him.

MS. WOODRUFF: The issues of fundamentalism and terrorism managed to force their way into the Clinton-Mubarak talks as the two leaders indicated at a news conference following their meeting.

HOSNI MUBARAK, President, Egypt: Unfortunately, violence is increasingly being used by certain misguided elements in many parts of the world, including the Middle East, and huge social and economic problems are being exploited in order to breed violence and anarchy. At the same time, foreign countries are interfering in the domestic affairs of other nations under false pretext.

PRESIDENT CLINTON: I think President Mubarak would support my contention that we have tried to step up our cooperation with the Egyptians in combating international terrorism since I've been President, and the United States has to review a lot of its policies in view of what happened at the World Trade Center to try to make sure we are doing everything we can to minimize the impact of terrorism in this country.

MS. WOODRUFF: But following custom, the two leaders began their statement stressing the friendship between the U.S. and Egypt and their hopes for Middle East peace. Shortly after that session, I interviewed President Mubarak at the Blair House.

MS. WOODRUFF: President Mubarak, thank you for being with us. You met with President Clinton earlier today. You're the first Arab leader to be invited to the White House. What will you tell other Arab leaders of what your impressions are of Mr. Clinton?

PRESIDENT MUBARAK: Really, it's the first time for me to meet with President Clinton. I find he's a very knowledgeable man. He listens. He discusses and I think he's a very reliable man, this from the first meeting. I used to contact him several times by phone, we contact each other, even once before the deliberation and another time when those problems in the deportees, of the problem in the Middle East, we had some contacts.

MS. WOODRUFF: By telephone?

PRESIDENT MUBARAK: By telephone.

MS. WOODRUFF: Anything surprise you about him in particular?

PRESIDENT MUBARAK: He's a very charming man. You like to speak with him, discuss with him, and he is very flexible on all the issues which we discussed.

MS. WOODRUFF: There was a senior Egyptian news editor and some others in your country who were quoted in the Washington Post today as saying that the Clinton administration appeared biased toward israel. Did you have a concern in that direction before you met with him?

PRESIDENT MUBARAK: No, I didn't have this concern at all. I think the man's fair and have discussed with him the problem of the Middle East from different aspects, and other problems, but I didn't that the man is biased.

MS. WOODRUFF: Before you met with the President, you told reporters that you would try to persuade Mr. Clinton to urge the Israelis to speed up the timetable for returning the Palestinian deportees to Israel but the President said today in the news conference, in essence, that he's satisfied with what Israel has done so far.

PRESIDENT MUBARAK: I may not have said this exactly as you mentioned. I may have some small proposals to try to help moving this process much more quickly, and still I discussed some points with the President, and I'm going to discuss with Mr Rabin, because there's a package been done or agreed upon between Mr. Rabin and the President of the United States. And we know the package. You may, you have been informal about that, but I'm not in a position to tell about it, but we are trying to find some small points which --

MS. WOODRUFF: Speeding up the return of the deportees, is that a part of it?

PRESIDENT MUBARAK: Some small points to encourage the negotiations start on the 20th of April.

MS. WOODRUFF: I want to turn you to another subject which we understand you said today you talked to President Clinton about this, the rise of Islamic fundamentalism, terrorist incidents in your country. You said in an interview with the New York Times a couple of days ago that the World Trade Center bombing could have been prevented if the United States had listened to the advice that your country was giving.

PRESIDENT MUBARAK: Really, this was not so active. I said we have cooperation with the United States concerning terrorists, and we have informed them about so many informations, but different information that something was going to happen. In the World Trade Center, we would be mistaken if we knew that beforehand and didn't inform the United States.

MS. WOODRUFF: Do you think the bombing could have been prevented?

PRESIDENT MUBARAK: Nobody knew where the bombing was going to take place, even here or there. But we are speaking about terrorism as a whole. If they knew beforehand that something was going to happen in the World Trade Center, I think we would have avoided that, and I don't think that the police or the intelligence knew beforehand this and left the situation, left these people to do this bombing. I don't think that.

MS. WOODRUFF: So you're saying it's not accurate to say that there was specific information that the United States had?

PRESIDENT MUBARAK: Either I am not accurate or it seemed that the correspondent didn't understand me perfectly well. I had no different information about what happened to the World Trade Center.

MS. WOODRUFF: There have been reports, as I know you're aware, that there may have been a motive involved in all this, a retaliation on the part of the Iraqis for U.S. attacks against Iraq. Do you have any information about that?

PRESIDENT MUBARAK: I have no information but I have it from different factions that this may be a retaliation to what happened in Iraq by the United States. But you are going to hear a lot of things. Everybody will say a retaliation from the Libyan, a retaliation from the Iraqis. Let us wait until the investigation comes down and then that thing will be very clear.

MS. WOODRUFF: Well, as you know, again, in connection with this bombing, Sheikh Omar Abdel-Rahman went on trial again in your country today. He's the gentleman who's considered to be the spiritual leader of these gentlemen who are accused, who are suspects in the bombing, went on trial again today in Egypt in absentia for organizing illegal demonstrations back, what, three or so years ago. How much of a threat is he to the United States, and to Egypt?

PRESIDENT MUBARAK: Look, I don't look on to Omar as an Egyptian. He's a northern man. He's welcome to come to Egypt. The retrial I just heard about it in the newspaper in Egypt, had no idea, because I'm not interfering in every small detail in the country and this man, his followers are very few. We don't fear him and he is not a threat. You are keeping him in the United States let him stay in the United States. If he wanted to go to another country, he could go. We don't consider him as a threat. He was living in Cairo and in one of the towns called Fayu. We don't think that he's a threat to us at all.

MS. WOODRUFF: So you're saying the media and maybe authorities in the U.S. have made him more important than he really is?

PRESIDENT MUBARAK: Your media made him very key figure but believe me he is not that famous figure as you mentioned in the CNN, for example. I remember that there was a dialogue with him. It was first -- I had never seen the man before. Even I heard about his name maybe one year ago. I had no idea about this man. His followers are very few.

MS. WOODRUFF: But even so U.S. authorities think he was the inspiration for some of this. He is saying, as you know, he is criticizing your government, saying you were putting people in jail without due process, that people have been tortured. He's talking about killing.

PRESIDENT MUBARAK: What do you expect a man like this who was being declared that there's going to be a reply? Like Mohalim who came here who said he was tortured --

MS. WOODRUFF: This is another suspect in the World Trade Center bombing?

PRESIDENT MUBARAK: Yes. He was tortured. Believe me, we have law and order in our country, and we have a good judicial system, and whoever think that the law is violated or been tortured is free to go to the court. We never prevent anybody that. This is one of the pillars of democracy. But just to keep saying, we were tortured. Go to the court. Some of these people sometimes they bring cigarettes and they burn their hands and then complain, and there was no proof. If there is any proof, I'll support that.

MS. WOODRUFF: But how do you explain then this organization, Middle East Watch, which is the human rights watch dog organization, which says, you know, you've documented and this has been in the news media, rounded up 700 suspects in recent weeks, 29 people have been killed in the last month, including some of your own, police officials, there have been torture of detainees and so on and so on?

PRESIDENT MUBARAK: Well, they are exaggerating in that sense. We have some of the police officers were killed. Some of the police soldiers were killed. That would give you an indication that these fundamentals are very cruel. We would not use such a thing. We were not used to killing, even our police are not used to it as well. These people who started their fight a long time with them, nowadays they, they're always with a machine gun and the bombs, and I think you may remember one of these people who have killed one of the tourists in upper Egypt has kept, he fled and went to Alexandria and some place. When the policeman went to catch him, he hold two children as shields to protect himself. The policeman didn't shoot at him. They wanted to catch him. So suddenly he put the two children on the ground and he killed the police officer. The policemen find these people killing them, then bring them a cup of tea and a piece of cake; in any police in the world, even in your country, in Europe anywhere, the police has to follow the law. They are not allowed to use force unless to defend themselves.

MS. WOODRUFF: But as you know, many of these fundamentalist groups, this Islamic group, is saying that your government is repressive, that it's denying due process, that it is not permitting democracy to flourish in this country.

PRESIDENT MUBARAK: That's good. That's good. We are not with democracy, and they want a democracy. Believe me, these people, whenever they take power, there will be no kind of democracy at all. They are against, they deny democracy, they deny parties; they deny government; they deny armed forces; they deny anything, so don't believe that. We know them very well. We have a very good idea about them and the police understand them very well.

MS. WOODRUFF: At the same time, as you know, the analysts, the experts on your part of the world say that because of the, the economic difficulties in the country, many people living in poverty, that people are going to be attracted to this political argument and they're not going to wait for someone like you and your government to fix things and make life more comfortable for them.

PRESIDENT MUBARAK: I agree with you. We are going through economic reform and economic reform has its side effects. Side effects, some burden of the people, and this I told the people before starting economic reform, and this is everywhere all over the world, whenever there's economic reform that people are affected. At the same time we are making reform to the economy with another two, three years. There will be stabilization. At the same time we are working hard to raise the standard of the people who have been affected, but we can't do it overnight. And those who are sitting here, accusing the government, they could go to Egypt, and accuse the government there we have criticism every day in the newspaper. It is not something new.

MS. WOODRUFF: Just one other thing I want to ask you about. You have criticized Iran as being one of the countries behind this fundamentalist unrest in Egypt and other places. People in the United States still perceive Iraq as the big enemy in your part of the world, where two years after the Gulf War people view Saddam Hussein as the big villain, and yet when we hear you make your, some of your points about what's happening in your country, it sounds as if you're saying Iran is the bigger threat. What do you believe?

PRESIDENT MUBARAK: I believe in Iran -- Iraq is in a mess now, very bad situation, the people are suffering, but Iran sees the opportunity that Iraq is in a mess and is trying to use the difficulties which, for example, our country is passing through to create her problems, for one simple reason. Iran want to have upper hand on the Gulf countries, on the oil fields there. The only problem in front of them is Egypt and President Mubarak. Since there was the Damascus Declaration, he doesn't want Egypt to be included in the defense of the Gulf countries. They are Arab countries, so we are trying harder, but we will never sit for the dance. So they want to de-stabilize Egypt so as to keep Egypt away. We will never be kept away.

MS. WOODRUFF: So when President Clinton mentions again today that the sanctions need to be kept against Iraq, is, is U.S. policy on the right track when we focus still so much against Iraq and not as much against --

PRESIDENT MUBARAK: I -- U.S. policy depends mainly on the U.N. resolution, and I said several times that Iraq should comply with the U.N. resolution. If this compliance could continue I think sanctions may be lifted by the U.N. also.

MS. WOODRUFF: And then what? And then Iraq rejoins the community of nations?

PRESIDENT MUBARAK: Maybe.

MS. WOODRUFF: We can co-exist with Saddam Hussein?

PRESIDENT MUBARAK: We shouldn't speak about Saddam Hussein. Let us speak about the Iraqi people who are suffering, and the sanctions, the people who are affected are the Iraqi people. Saddam Hussein may be not suffering from that sanction but the people, the majority, all people of Iraq, are suffering. That's why we are trying to find out solution how to help these people to live.

MS. WOODRUFF: And you've shared this with President Clinton?

PRESIDENT MUBARAK: Yes, I discussed it with President Clinton.

MS. WOODRUFF: President Mubarak, we thank you for being with us.

PRESIDENT MUBARAK: Thank you.

MR. MacNeil: Still ahead on the Newshour, President Clinton and the situation in Bosnia, the economic stimulus bill stalled in the Senate, and new strategies in cigarette marketing. UPDATE - STALEMATE

MR. MacNeil: Next tonight, an update on the situation in Bosnia. The civil war in the former Yugoslav state is a year old. Serb forces continue to hold the upper hand in the fight against Bosnian Muslims besieged in their capital, Sarajevo, and in the area around the town of Srebrenica. Now, as Jane Bennett- Powell of Independent Television News reports from the city of Tuzla, refugees are weapons in this war of attrition and survival.

MS. BENNETT-POWELL: The large convoy of aid trucks making their way from Belgrade were stopped at Malesvornic apparently by the bridge commander claiming that today was a holiday and nothing could cross. But the convoy eventually moved on, half the trucks full of bedding, food, and medicine; half of them empty to help the evacuation of some 1500 women and children from Srebrenica. Twelve trucks arrived in the town just before mid-day and unloaded their supplies, well in time to bring the refugees out today. But the trucks returned empty, Muslim authorities there vetoing any evacuation which didn't comply with conditions established yesterday and which would have begun the process of de-populating Srebrenica, which they see as an invitation to the Serbs to attack.

WILLIAM TALL, United Nations High Commission for Refugees: The local government authority, it seems, didn't allow people to be evacuated. They said there was two conditions upon them leaving. One was Canadian troops being deployed in Srebrenica, and the second was air evacuation of all wounded.

MS. BENNETT-POWELL: After a journey lasting several hours, the refugees would have been brought here to the sports center in Tuzla, transferred just inside Bosnian-held territory into coaches for the remaining half hour of the route. It's been nearly a week since the last refugees left Srebrenica, packed into overcrowded trucks. These buses which the Muslim authorities demanded to support any subsequent contingent for the last three miles into Tuzla with a little dignity never left the bus station here in the town. The local mayor, who was marking one year of the war in Bosnia as commander in chief of the army in Tuzla, stressed the conditions put on the evacuation, especially its supervision by the Canadian U.N. battalion, but unlike the Muslim authorities in Srebrenica, he supported the evacuation in principle.

SALIM BESLAGIC, Mayor of Tuzla: [speaking through interpreter] Srebrenica will not run out of people. Srebrenica will also never fall despite of horrible aggression by the Serbian forces. The people there will defend their homes. We'll take children, wounded, and old people out of Srebrenica. The fighters of Bosnia and Herzegovina's army will defend the area and the rest of us will help as well.

MS. BENNETT-POWELL: The situation in Srebrenica is enough according to American Democrat Senator Joe Biden to prompt the U.N. to lift its embargo on arms to the Bosnian army. He was on a 15- minute visit to a Tuzla refugee camp on his way to Sarajevo, but the Security Council has postponed any consideration of the embargo for a week.

MS. BENNETT-POWELL: Do you think the Security Council was right to delay its consideration of lifting the arms embargo to Bosnia?

SENATOR JOE BIDEN: No. I, I argued seven months ago in the United States Senate that we should lift the embargo, that we should put as much pressure on and persuasion on the United Nations as we could. As a matter of fact, there's a thing called the Biden Amendment that if it were lifted, there's $50 million available for the President to supply military weaponry off-the-shelf, as they say, in the United States.

MS. BENNETT-POWELL: As Sen. Biden left to meet the three sides in Sarajevo, the UNHCR was ready to try its operation in Srebrenica again tomorrow, but with talks stalled, nothing is guaranteed, and the situation there is deteriorating.

MR. MacNeil: After that report was filed, a U.N. spokesman said the U.N. would postpone efforts to ship more food past Serb lines into Srebrenica tomorrow, and as we reported earlier, Serbian President Slobodan Milosevic praised the U.S. for its decision not to send troops to help the Bosnian Muslims. That praise was a main subject when President Clinton talked to reporters at the conclusion of Egyptian President Mubarak's White House Visit.

BRIT HUME, ABC News: I know that earlier today you dismissed the comments of President Milosevic about your policy there, a charm offensive, but I wonder, sir, if you don't think, nonetheless, that he wouldn't have said such things if he weren't finding the actions you've taken so far very bothersome and perhaps whether you think now that they would ever be completely discouraged.

PRESIDENT CLINTON: I don't know. I've done everything that I know to do consistent with the possibilities we have for further action in the United Nations with our European allies and the members of the Security Council. I think, as you know, I think the sanctions should be strengthened if the Bosnians don't sign the Vance-Owen agreement. I think we can, we obviously have made life more difficult for the people in Serbia, and I think there are other things that we can do. I wouldn't rule out or in anything, but it's plain that what Milosevic was trying to do was to essentially head off further efforts to toughen the sanctions or to take further actions that will not be successful.

REPORTER: That he may not feel that -- not ruling out anything, he may, indeed, feel that the use for example of American military force has, in effect, been ruled out.

PRESIDENT CLINTON: Well, it's never been ruled in. The United States is not capable of solving that problem alone. I don't think anyone expects us to do that. We have been in many cases more aggressive than what we were willing to do than the European neighbors of the former Yugoslavia. I still believe there is some chance that we can make this peace process work, and I still think there are lots of other things we can do to make life more uncomfortable for, for the Serbs, and I wouldn't rule those out.

MIKE McMEE, Conus Communications: I couldn't help but notice that in your answer to the first question you sounded frustrated about the situation in Bosnia and that if there is no change in the position of European governments that if they can withstand sanctions, the Serbians will essentially be able to get what they want.

PRESIDENT CLINTON: That is what I'm concerned about. You got it. That's about as, that's about as good a statement as I could have made myself.

MIKE McMEE: Are you putting then the onus on the European governments to take this a further step, or is there some other step the U.S. --

PRESIDENTCLINTON: No. The United States -- if you believe that we should engage these problems in a multilateral way, if you believe, for example, in what happened in a good way in Operation Desert Storm, then the reverse has to be true too. The United States has got to work through the United Nations, and all of our views may not always prevail. Look at how long it took us to just secure the approval of enforcement of the no-fly zone. Also, it is frankly a very difficult situation. The Europeans remember how many German troops were once in what became Yugoslavia and then came apart. It is a difficult situation. It is the most difficult and most frustrating problem in the world today. The only point I was trying to make is I have proceeded all along on the assumption that whatever we did and whatever we could do we would and should act through the United Nations in a multilateral way. I have done my best to continue to stiffen the sanctions, to continue to push for more action, to push for enforcement of the no-fly zone, to push all the countries involved to do what we could to try to bring this to a successful conclusion so that the principle of ethnic cleansing is not rewarded in Bosnia and therefore encouraged in other countries. I have not thought that the United States should or could successfully take a unilateral action. And I know that a lot of things that we could do to inflict some pain might also impale a great deal of cost and might not pursue any of the -- change the ultimate outcome of how the Bosnian people have to live, so it is a very frustrating and difficult circumstance.

MR. MacNeil: Another side to the intense diplomatic effort over the war on Bosnia is unfolding in Moscow. The leader of the Bosnian Serbs is in the Russian capital to gain support from hard-line nationalists. He wants them to limit the Yeltsin government support for sanctions against Serbia. FOCUS - TIMEOUT

MS. WOODRUFF: Next, the fate of President Clinton's $16 billion economic stimulus package. Late last night the Senate shelved further action on the bill until after a two-week recess. That decision came after hours of closed-door negotiations and a third attempt to end a Republican filibuster failed. Kwame Holman has our report.

SEN. ROBERT BYRD, [D] West Virginia: This is the President's package, the pending substitute for the substitute for the substitute is the President's package.

MR. HOLMAN: While Democrats and Republicans in the Senate battle over spending taxes and the deficit, there is unanimous agreement on one thing, Robert Byrd of West Virginia is the Senate's foremost authority on parliamentary rules and procedures.

SEN. ROBERT BYRD: This Senator plays by the rules. Most Senators have, based on my observations through the years, don't pay much attention to the rules. That's, that's dry stuff. They don't get headlines. Who wants to bother with reading an old rule book? Who wants to bother with reading that book on Senate procedure?

MR. HOLMAN: However, Robert Byrd's use of his superior knowledge of the rules has angered Republicans, so much so that they've come together to bring work on President Clinton's so-called "stimulus package" to a screeching halt. Right now the Senate is so divided members won't even try to reconcile their differences for at least two weeks.

SPOKESMAN: The Senator from West Virginia is recognized.

MR. HOLMAN: When debate on President Clinton's spending package began 12 days ago, Byrd, chairman of the Senate Appropriations Committee, immediately maneuvered to protect the President. He did so byskillfully proposing a series of amendments that once adopted would wipe out any other amendments previously passed. Byrd moved so fast that Republicans who had hoped to cut into the President's spending plan weren't quite sure what had happened.

SEN. MARK HATFIELD, [R] Oregon: Mr. President, if this amendment that is, that is, this question that is pending, will it be amendable if it is adopted?

SPOKESMAN: The adoption of the substitute amendment renders the underlying amendment question no longer amendable, the underlying question no longer amendable.

SEN. MARK HATFIELD: No longer amendable.

SPOKESMAN: That is correct.

SEN. MARK HATFIELD: Adopting the current question would wipe out all of those previous amendments that had been acted upon and perhaps adopted?

SPOKESMAN: It would have that effect, the Senator is correct.

SEN. MARK HATFIELD: I thank the chair.

MR. HOLMAN: Byrd, hardly disguising the pleasure gained from his parliamentary slight of hand, baited his Republican colleagues.

SEN. ROBERT BYRD: If you want to call up an amendment, call it up. Call it up to the underlying substitute. Let's see if you got the votes to win. Then you may have some reason to shed tears. We may watch you as you shed tears, we may be sympathetic or we may not. But that's the way the rules play around here.

MR. HOLMAN: Minority Leader Bob Dole acknowledged Byrd's temporary victory.

SEN. ROBERT DOLE, Minority Leader: You are, as you properly suggest, using the rules, as you do better than anybody that I have ever known in the United States Senate, and I compliment you for that. But I guess the frustration is even though we understand it, we're still frustrated.

MR. HOLMAN: However, Democrat Paul Sarbanes of Maryland offered little sympathy for Dole and the minority.

SEN. ROBERT SARBANES, [D] Maryland: Now it's an approach that's been used, was used consistently by Sen. Dole when he was the Republican leader, so it comes with little grace to hear these kind of complaints when, in fact, Sen. Dole once did seven straight amendments to line up the tree, as they say, in parliamentary terms.

MR. HOLMAN: As debate continued through last week, Byrd eventually withdrew his so-called "tree of amendments," but then succeeded in thwarting Republicans once again. An amendment offered by Hank Brown of Colorado would have prohibited spending of $100 million on 54 specific projects.

SEN. HANK BROWN, [R] Colorado: It only includes some of the projects that at least this member feels upon reading the list are the least deserving of federal money and least match the purposes of this legislation.

MR. HOLMAN: When Byrd saw that not enough Democrats were on hand to defeat Brown's amendment, he maneuvered to force a second vote, so the next day with all Democrats on hand, the Brown amendment was defeated. John Chafee of Rhode Island is one of the moderate Republicans the President might have counted on to support his stimulus package but not now.

SEN. JOHN CHAFEE, [R] Rhode Island: I feel that the Democrats have acted in an arrogant manner. They have tried to ram through things that are not good for the country in the long run. I feel certainly before ice skating warming pots and running tracks and water canoe courses that we ought to either not have them or pay for them, be prepared to pay for them.

MR. HOLMAN: By the end of last week, Republicans united and decided to use the only tool still available to them. They would not allow a final vote on the President's stimulus package until changes were made.

SEN. PETE DOMENICI, [R] New Mexico: Frankly, I think we have a responsibility to prevent the passage of a bill that is just a spending spree early on in a fiscal policy that's supposed to get the deficit under control.

MR. HOLMAN: What Republicans have succeeded in doing is to prevent an end to the debate known as cloture. Sixty votes are needed to do that. Democrats have only 57. And even one of their own, Richard Shelby of Alabama, is voting against them. One cloture vote failed on Friday and another Saturday. Senators apparently tiring of debate turned instead to poetry.

SEN. JOHN KERRY, [D] Massachusetts: So what of Senate is this that's sinking toward the abyss? Do we not understand that all over this land that people don't want us to fight, they want us to move legislation approve, they want us to do what is right.

MR. HOLMAN: Yesterday was to be the beginning of the Senate's Easter recess but Majority Leader George Mitchell called Senators back to the Capitol for one more cloture vote. So dismal are the prospects that only 78 of the 100 members bothered to show and once again, the vote failed.

SEN. PAUL SARBANES: You know, it's very frustrating that the Republican Senators, a minority of the Senate, has tied the institution into gridlock and is keeping us from even voting on the program. I mean, they can vote against the program if they don't think it's the right thing to do, but they ought to give us a chance to vote on it, and they're simply blocking us from doing that.

SEN. JOHN CHAFEE: This is a situation where the Republicans have laid down a marker and said that, look, we're not going to be treated this way because there's a long session ahead. There's the balance of this Congress, which is a year and a half, plus there's two more years after that of the Clinton administration. And there are 43 Republicans who have been elected by their constituents to do a good job for the nation, and they're not just going to be run over.

MR. HOLMAN: It was after the last cloture vote that Senate leaders got together and decided to try no more for now.

SEN. GEORGE MITCHELL: I now ask unanimous consent that the Senate stand in recess as previously ordered.

SPOKESMAN: There being no objection under the order previously entered --

MR. HOLMAN: Held up by all of this is $4 billion to pay for extended unemployment benefits. If the Senate cannot complete action on the President's spending plan by April 22nd, the day unemployment money is projected to run out, the benefits will be stripped away and passed separately. Gridlock may continue on Capitol Hill, but it appears neither Democrats nor Republicans want to play politics with someone's unemployment check. FOCUS - UP IN SMOKE

MR. MacNeil: Finally tonight, the strategy and the implications of price cuts in the cigarette industry. Last Friday, Philip Morris reduced the price of its highly advertised Marlboro brand by 40 cents a pack. The move opens a new front in the $45 billion a year U.S. industry.

SPOKESMAN: [TV Commercial] This is a man who smokes Marlboro cigarettes. What kind of a man is he?

MR. HOLMAN: Marlboro men in this country are harder and harder to find. Back in the 1960s, a full 50 percent of the men in this country saw smoking as a regular, relaxing and presumably healthy habit. But the undoing of that image started around the same time. The U.S. Surgeon General began stamping his threatening imprint on cigarette packs, and the anti-smoking sentiment has grown ever since.

SPOKESMAN: You know, if people smoked like this, they'd only be hurting themselves and wewouldn't have to worry about being around people who smoke in homes, restaurants or at work, but people smoke like this, and it can hurt those around them.

MR. MacNeil: The first wave of no smoking regulations hit the country in the mid '80s. Today all of the 50 states have local or statewide rules about where you can and cannot smoke. And every year the no smoking section is more popular. The number of smokers is now down to one in four and cigarette companies feel the pinch. As the population of smokers goes down, the price is going up. The big name brands like Marlboro and Camel sell for about $2.20 a pack. But there's a new popular kid on the block, no frills, discount, generic cigarettes. They sell for about a dollar a pack. So customer response is no surprise. Even without advertising, cut rate brands account for one out of every three cigarettes sold. Last year, generic sales cut industry profits by a billion dollars. On Friday, Philip Morris took a page from the discount book and cut the price of Marlboros by 40 cents a pack, sending its stock plummeting. And finally the prospect of a Washington sin tax has cigarette makers worried. That's one of the things Hillary Rodham Clinton is considering to finance health care reform. Some say it could be as high as a dollar or even two dollars a pack. To discuss what's behind these developments, we're joined by two people who follow the cigarette industry closely. Ron Burry -- Roy Burry is a senior vice president and tobacco analyst at Kidder Peabody, a New York investment firm. John Banzhaf is the executive director of Action on Smoking & Health, also known as ASH, a national, legal action anti-smoking organization. He also teaches law at George Washington University. Mr. Burry, why do you think Philip Morris cut the cost of Marlboro cigarettes?

MR. BURRY: Robin, they had no choice. This is an action to meet the competition. As your lead-in said, low price brands were undercutting the major brands such as Marlboro. They had to meet the competition. They have to move their prices down, or pure and simply, the new consumer on the block here who is not willing to pay for brand image is going to desert that brand and brands like it and move to less expensive brands. They were forced by the competition to make this move.

MR. MacNeil: It's resulted in a very considerable drop in Philip Morris's stock and in the stock of some other companies that make particularly Philip Morris, and brought the Blue Chips down, it went down again today, did it not, somewhat?

MR. BURRY: Yes, it did.

MR. BANZHAF: So altogether they've lost, what, about a quarter of the value of the Philip Morris shares?

MR. BURRY: Yes, it has. And that's a total of about 15 to 20 billion dollars so far.

MR. MacNeil: Does that mean it was a smart decision, or does that indicate maybe they might be having second thoughts about it?

MR. BURRY: Well, I'm certain that the management of Philip Morris did not want to do this. Keep in mind that this is a free enterprise system, and managements are forced to compete whether they want to or not, and the existence of these brands which were gaining large amounts of market share forced the company to make this move, cut their price, or just simply lose the brand franchise because nobody would buy the product.

MR. MacNeil: Mr. Banzhaf, what is your explanation? Do you have any different view of this?

MR. BANZHAF: Well, I think it is an act of desperation. It's signalling a major change in the tobacco industry. I think gone forever may be the days where they could make exorbitant profits riding upon images of cowboys and sexy and sophisticated people. On the other hand, it's a despicable decision because they know, as we know, that the major people who are going to be lured in by the lower prices are kids, teen-agers, nine to twelve in many cases, because they are the ones who are most sensitive to price increases and most concerned about images, the Marlboro Man. On the other hand, it does vindicate the major thesis of the proposal to increase the cigarette tax by $2.00. That is showing that the consumption of cigarettes are very sensitive to price increases, again particularly with the kids, and also showing how over priced they are. The tobacco industry keeps crying crocodile tears every time we ask for a three or four or six cent increase in the price of cigarettes. Here they can drop the price 40 cents and still make a healthy profit. So we know who it is who is looking out and not looking out for the poor smoker.

MR. MacNeil: Do you think it's deliberate, a deliberate attempt to go for younger smokers that is part of this price reduction?

MR. BANZHAF: Of course, it's deliberate. They're not doing it on their brands which are geared to older people, Benson & Hedges, Merritt, Parliament, Virginia Slims. We know they're not above targeting kids. I brought this along. If your camera can pick it up, it's a little change purse that says right on it, "Lunch Money for Student, Name, Grade," right on the back Philip Morris. Here's another Philip Morris gimmick. You can figure out how old the people are that that's aimed at, and if you want Virginia Slims, which is another one of their brands, here's one of their shirts. It's not too clear because it's designed to glow in the dark, but you can see the size of person this is aimed for. These people are out to get kids, plain and simple.

MR. MacNeil: Mr. Burry, do you think that's a deliberate part of the Philip Morris strategy on this occasion?

MR. BURRY: Robin, that's totally preposterous. These brands existed or brands existed at these price points for many years. It's merely an action on the part of the company of business decision as such. It's against the industry's policy to advertise or aim anything at smokers or any possible smoker that would be under the age of 21. So I don't know where John got those things but certainly they're not in the policy of the industry and certainly they're not used to advertise at kids at all.

MR. BANZHAF: Well, Roy, they do have the Philip Morris image on them, so you know darned well where I got 'em. We know that Philip Morris hasn't the guts to appear on this show or other television shows to debate it. So that's the answer. They are looking for kids. They are positioning their brand for kids. Marlboro is the most popular brand, as you know, among kids. Why aren't they cutting it across the board with their other products if they're not interested in kids?

MR. MacNeil: Let me just say that we invited Philip Morris to be on this program, and they didn't agree until it was too late today to be on this program, although they were on a program with us last week talking about the cigarette tax. Do you expect other brands to do the same, other big name brands to do the same as Philip Morris is doing with Marlboro?

MR. BURRY: I think this will happen. The other brands must bring their prices down as such. They will wipe out the lower price brands as they now exist. No brand can keep its price - -

MR. MacNeil: You say "wipe out." You think the lower, all these lower price brands we were showing earlier willgo away because the, the well-known brands are coming down in price?

MR. BURRY: Absolutely true. Absolutely true. The reason for that is the higher price brands are better quality, and the cigarette smoker can most assuredly tell the difference between quality and lack of quality. Also, the image is there and the superior packaging is there. So as all of these brands come down in price, I think you'll see that these, these cigarettes that are built on foreign tobacco, that's lower quality than American tobacco, will be wiped aside, and the full price brands will take over this market.

MR. MacNeil: Mr. Banzhaf, do you think -- I gather from something you said earlier, you don't think it's just a coincidence, this price drop, when there's a lot of talk about a sin tax and a tax, much greater tax, federal tax on cigarettes to pay for health care reform. You don't think that's a coincidence, the timing of this?

MR. BANZHAF: Of course, it's not a coincidence.

MR. MacNeil: Explain your reasoning for it not being a coincidence.

MR. BANZHAF: I think the tobacco companies see that for the first time an administration is serious about bringing American tax rates up somewhere near where they are at world levels, that is, somewhere around 60 to 70 percent of the retail price. What are they doing at this point, as the industry analyst so delicately put it, is positioning themselves for this increase. What they really mean is that they will be able to lure in thousands of kids each and every day until that increase goes in. We know that the great majority of kids who try cigarettes now as a result of this price increase [decrease] will be addicted to some extent, and because they have lowered the price it will be easier in a sense to weather the increase. On the other hand, it seems to me they undercut their two major arguments, one of which is they say increasing the price won't discourage competition. It won't discourage consumption. We know it does. Secondly, as I said before, every time we ask for a price increase, even of a few cents on the tax, they come in and have these big crocodile tears about penalizing the smoker. We now know they've been raising their prices 8 to 10 percent each and every year, and as a result, they're able to cut 40 cents off the price and still make a huge profit. What other product can do that today?

MR. MacNeil: Mr. Burry, do you think that they are positioning themselves deliberately in anticipation of a much bigger cigarette tax?

MR. BURRY: No, I do not. And the cigarette prices are at this level to begin with. I would stress that. There were already cigarettes selling at these prices and below, and as a result, there's no new price point established. There's no cut in the level of cost of cigarettes. It's just that the big brands with the high qualities are now available at lower, lower prices. Let me also respond --

MR. MacNeil: May I just go on -- do you think it's going to result in a war between Camels and Marlboros and big contenders like that, like airline fares and things, we're going to see increasing price competition downwards?

MR. BURRY: I think we're seeing that right now.

MR. MacNeil: We're seeing the first step in it, but --

MR. BURRY: Well, it's been a price war for a long time, and the people that have been winning the war have been the low price brands that have cut the price. Now they're dropping the bomb, and this is the end of the war, because the big quality brands are going to take the market, and that will be the end of it. It's the climax, the last battle in the war, and the war will end because Clinton big brands will take over the whole market.

MR. MacNeil: Do you think that by dropping a package of Marlboros from roughly 2.20 in many states to if you pay the tax and don't buy them illegally to about $1.80 that is really going to make the cigarettes competitive with cigarettes that cost $1.00?

MR. BURRY: Now with cigarettes that cost a dollar. That's too far down. But these are a very small, small segment of the market. This tobacco is brought in from outside the United States. It's low quality, and believe me, the cigarette smoker can tell the difference. Most of the value cigarettes are sold between $1.25 and $1.75.

MR. MacNeil: Value cigarette is the industry term for the fully priced cigarette?

MR. BURRY: No. That's the term for the higher end of the discount market.

MR. MacNeil: I beg your pardon.

MR. BURRY: Yes. And that's the portion that will be wiped out. There's always been a small segment that's called private label, and that will continue to exist. And when the, when the full price brands come down to $1.80 or below, you will see a great cutback in the market share of the lower price brands.

MR. BANZHAF: Robin --

MR. MacNeil: Do you agree with that?

MR. BANZHAF: Robin, I was going to say at this point the so- called lower price or discount brands occupy about a third of the market, up from almost nowhere a year or two ago, and most of the major tobacco companies are finding that they were very much out of tune in underestimating how well they would do. I'm not a smoker, but many of the people are saying that the really big difference between the premium prices --

MR. MacNeil: Can you just quickly? We have to end it there.

MR. BANZHAF: The big difference between the two is advertising; it's not in taste. This is going to provoke a price war. It's even a possibility of bankrupting one of the companies.

MR. MacNeil: All right. Mr. Banzhaf, Mr. Burry, thank you for joining us. RECAP

MS. WOODRUFF: Again, the main stories of this Tuesday, President Clinton and Egyptian President Mubarak met in Washington and said they were optimistic about prospects for Middle East peace. Mr. Clinton warned Serbia that it will face tougher sanctions if it doesn't agree to stop the fighting in Bosnia. He also said he would compromise on his economic stimulus plan which is stalled by a Republican filibuster in the Senate. Good night, Robin.

MR. MacNeil: Good night, Judy. That's the Newshour for tonight, and we'll see you again tomorrow night. I'm Robert MacNeil. Good night.