The MacNeil/Lehrer NewsHour

MR. MUDD: Good evening. I'm Roger Mudd in Washington.

MR. MacNeil: And I'm Robert MacNeil in New York. After the News Summary tonight, we have excerpts from President Clinton's news conference, next, a conversation about conditions in Bosnia with the United Nations refugee chief Jose Maria Mendiluce. Correspondent Tom Bearden updates the insurance picture for Florida hurricane victims. Then the risk of North Korea going nuclear. We talk with the U.S. official in charge of negotiations, Robert Gallucci. Finally essayist Roger Rosenblatt talks about gays in the military. NEWS SUMMARY

MR. MacNeil: President Clinton today vigorously defended himself against charges of indecisiveness. Politicians and political commentators have criticized the President in a range of issues. Last week, some House Democrats joined in after the President reportedly struck a deal with conservative Senators to eliminate a controversial energy tax from the budget, a tax which the House had approved. At a White House news conference this afternoon Mr. Clinton rejected charges of wavering, particularly on the budget.

PRESIDENT CLINTON: How can you say that? No President's budget has been taken seriously in this town for a dozen years. Three quarters of the Republicans in the House of Representatives voted against President Bush's last budget. I sent a budget up there that passed the budget resolution, passed on time for the first time in 17 years. And we're out here fighting forthese tough decisions. How could anybody say this is the most decisive presidency we've had in a very long time on all the big issues that matter? And I might say all the heat we're getting from people is because the decisions that have been made, not because of those that haven't.

MR. MUDD: President Clinton again spoke warmly about his Supreme Court nominee Judge Ruth Bader Ginsburg. He said he had called several members of the Senate Judiciary Committee on her behalf and that he was confident she'd be confirmed in time for the fall term of the court. Reporters asked Mr. Clinton about Judge Ginsburg's criticism of the Roe Vs. Wade decision that legalized abortion.

PRESIDENT CLINTON: She is clearly pro-choice in the sense that she believes the government should not make that decision for the women of America. She disagrees with the rationale of the decision. I'm not sure I agree with her, as a matter of fact, on that issue, but I thought it was a very provocative and impressive argument. And she, as a matter of fact, you know, I have always thought that Roe V. Wade was the most difficult case decided the last 25 years because it was such a difficult issue. And that the court would have -- did the best it could under the circumstances. She made a very interesting alternative suggestion, but there is no suggestion in any of her writings that she's not pro-choice. And that was to me the important thing.

MR. MUDD: Judge Ginsburg, herself, began making courtesy calls on members of the Senate today. Her first stop was the office of Judiciary Committee chairman Joseph Biden. She was escorted by Sen. Daniel Patrick Moynihan of New York which was her home state until she moved to Washington, D.C., in 1980. During the picture session, Sen. Biden said he was pleased by the Ginsburg nomination and optimistic that she will be approved by the Senate.

MR. MacNeil: In economic news, consumer prices were up .1 percent in May. The Labor Department said food prices were up sharply but largely offset by the biggest drop in energy costs in more than two years. In another report, the Commerce Department said that the overall U.S. trade deficit narrowed by 11.7 percent in the first quarter of this year to 20.9 billion dollars. The Food & Drug Administration has begun an investigation into the discovery of syringes in cans of diet Pepsi. Two syringes have been found in Washington, State, and two in Louisiana. FDA Chief David Kessler said tests have shown no contamination so far. He also said claims of syringes found in six other states may be copy cat reports spurred by publicity.

MR. MUDD: The Somali capital of Mogadishu was quiet today after three days of United Nations military strikes. U.S. officials today admitted that a missile fired from a helicopter yesterday missed its intended target and hit a civilian area, injuring 12 people. Protests against the U.N. action continued in Mogadishu. We have a report narrated by David Symonds of Worldwide Television News.

DAVID SYMONDS: Feelings are still running high over the deaths of up to 20 Somalis killed by U.N. troops at the weekend. And there's more anger over the air raids against warlord Mohamed Farah Aidid, whom the U.S. describes as thug. Aidid stands accused of breaking peace agreements an inciting his followers to kill 23 Pakistani U.N. peacekeepers. But the warlord remains defiant, confident of support in southern Mogadishu. He's accusing the U.N. of genocide and says he'll only negotiate if the offensive is halted. But the U.N. crackdown has the full backing of supporters of Aidid's arch rival, the self-declared Somali president, Ali Mahdi. His group says military action is the only way to stop Aidid. Mahdi, himself, believes the U.N. should go even further.

ALI MAHDI, Clan Leader: I'm sure if the U.N. will oppress Aidid and his groups, I'm sure immediately peace will come in this country. The symbol is that because it's only Aidid who want peace in this country.

MR. SYMONDS: The U.N. is strongly defending the actions of all its troops over the past few days. And the U.N. commander in Somalia, Jonathan Howe, denies they're taking sides. He says they're just trying to get the country back on its feet and return it to the people.

MR. MUDD: At his news conference today, President Clinton defended the U.S. air strikes against Aidid's forces, saying they were an appropriate response to the killing of U.N. peacekeepers.

MR. MacNeil: The commanders of Bosnia's three warring factions met face to face today for the first time and agreed to a cease- fire across the republic. They signed the truce in Sarajevo as fighting continued in that city and elsewhere in Bosnia. Dozens of previous cease-fires have been ignored or quickly broken. It was unclear whether this one would be different. It's to take effect on Friday. The Cuban news agency today announced cutbacks in that country's military forces, a move prompted by severe economic problems. Also, a top Cuban economic official said his government was willing to discuss reparations to U.S. companies whose property was confiscated after Fidel Castro's 1959 Communist Revolution.

MR. MUDD: Former Texas Governor John Connally died today in Houston. Connally was wounded in the gunfire that killed President Kennedy in 1963. Connally served as Kennedy's Navy Secretary and Secretary of the Treasury during the Nixon administration. He was 76. He died of pneumonia and of scarring of the lungs. That ends our summary of the day's top stories. Ahead on the NewsHour, President Clinton answers questions from White House reporters, a top U.N. official's view of the situation in Bosnia, the aftermath of Andrew, North Korea's nuclear plans, and essayist Roger Rosenblatt. FOCUS - Q&A

MR. MacNeil: Our first focus tonight is President Clinton's press conference today. Yesterday, after nominating Judge Ruth Bader Ginsburg to the Supreme Court, Mr. Clinton abruptly cut off questions when Brit Hume of ABC News asked about the decision making process behind the nomination. Today the President returned to Brit Hume with a joke about the reporter's recent honeymoon. Our excerpts begin with his opening comments on reports the economy is improving.

PRESIDENT CLINTON: I am confident that the continuation of this trend depends on our ability to pass a strong economic program through the Congress which reduces the deficit, increases investment in our future, and is fair in terms of requiring a fairer portion of the burden. The plan that the House passed, that the Senate Finance Committee is now dealing with, for every $10 that the deficit is reduced, $5 comes from the spending cuts, $3.75 from upper income people, $1.25 from the middle class, and families with incomes under $30,000 are held harmless. I hope that the principles I have outlined will be honored as this program moves through the Congress. Finally, let me say that the Senate is dealing with another very difficult and very important issue now, and that's campaign finance reform. Political and economic reform, in my judgment, over the long run must go hand in hand, and the time has long since passed when we should have campaign finance reform. Now, having said that, I think I ought to give Brit his follow up.

BRIT HUME, ABC News: I hope you don't mind if I follow up on another subject. In the House --

PRESIDENT CLINTON: You know what I'm really upset about? You got a honeymoon and I didn't. [laughter]

BRIT HUME: Yes, sir, but you got to end it.

PRESIDENT CLINTON: Well, let's extend it then. Go ahead.

BRIT HUME: The, the House liberals in particular, Black Caucus in particular, seem in a somewhat mutinous mood as they watch the deliberations in the Senate on your economic program, and I'm wondering, sir, what do you say to them to assure them that the tough vote they felt they cast for your program was not in vain and that you haven't really cut the rug out from under them?

PRESIDENT CLINTON: Well, I've not cut the rug out from under them at all. I have not agreed to any provision that the Senate Finance Committee is deliberating. There has been no agreement on any issue. And what I have assured the Black Caucus, and let me say I have talked to oh, probably 15 of the members in the last week or so just in that Caucus and many other members of the House, is that the principles that I outlined are still there and that we'll do our best to articulate those as the Senate deals with this bill. But the real test will be what happens in the conference and what the final bill looks like that the House and the Senate will vote on. And, again, I'm quite encouraged that we'll get a bill out that they'll feel good about.

HELEN THOMAS, UPI: Mr. President, do you perceive a loss of public confidence in your presidency because of wavering domestically and in foreign policy, and what do you plan to do about it, if there is such a case?

PRESIDENT CLINTON: Well, there is no wavering. You know, if somebody had told you at Christmas time, Helen, that by June the 1st we'd have unemployment under 7 percent for the first time in a year and a half, 755,000 new jobs, a 20 year low in interest rates, a seven year high in housing sales, that the United States would have led a global effort to support Boris Yeltsin, signed the Global Warming Treaty that actually happened on -- I mean, the Biodiversity Treaty that actually happened on June 4th -- passed family leave and passed the motor voter legislation, repealed the gag rule and the ban on fetal tissue research to allow more science and less politics in medical research, I'd say most people would think that was a pretty decisive record, that we would have moved this budget through the House of Representatives, sent it to the Senate, much tougher decisions than were required in the Reagan budget in 1981 on a faster track, on a faster track, I think people would have said at Christmas time that's a pretty good and decisive record. We haven't solved the problem in Bosnia that's plagued everybody. I concede that. The Europeans wouldn't go along with my proposed resolution. I still think they may be compelled to do that or something very near like it if they want to get anything done over there, and I think we're going forward. I like the Supreme Court judge that I picked. I don't think it shows any wavering at all on that --

HELEN THOMAS: Is the public feeling that you're indecisive --

PRESIDENT CLINTON: Well, all I'm telling you is --

HELEN THOMAS: -- on the highly touted issues of budget, Bosnia?

PRESIDENT CLINTON: Let me tell you something about Bosnia. On Bosnia, I made a decision. The United Nations controls what happens in Bosnia. I cannot unilaterally lift the arms embargo. I didn't change my mind. Our allies decided that they weren't prepared to go that far at this time. They asked me to wait, and they said they would not support it. I didn't change my mind.

ROBERT RANKIN, Knight Ridder Newspapers: Going to Judge Ginsburg, do you have any regrets about the process that led to her nomination?

PRESIDENT CLINTON: Yeah, I have one big regret.

ROBERT RANKIN: With Babbitt and Mr. Breyer's names as the front runners.

PRESIDENT CLINTON: First of all, I strongly dispute that I hung them out. I regret the leaks. But it's not fair to say I hung them out. Any Senator I talked to will tell you when I called to discuss Judge Breyer, I also said, I've got someone else I'm looking at. Anybody will tell you that. I told Bruce Babbitt the first day I called him, I want to know if you agree to be considered, I don't know if the country could afford to lose you as interior secretary. The truth is -- and I said this yesterday -- I will say it again, I have never seen such an outpouring of support for any public official in my adult lifetime as we got for Bruce Babbitt to continue as interior secretary while we worked through the issues in the Northwest and dealt with a lot of these other issues. I think -- I will say again -- I think Stephen Breyer is superbly qualified to be on the Supreme Court. I think both of them would have been confirmed by very large margins. I have no doubt in my mind of that. I really believe that she was the best candidate at this time. I was immensely impressed with the kind of inner strength and character that she demonstrated out there in the Rose Garden yesterday. And that's why I picked her. But do I regret the fact that there were leaks and that may have exposed them more than they would otherwise have been? I certainly do, and I'd be happy to -- you know, we ought to do better with that. And if somebody's got any suggestions about how I can, I'd like to have 'em, yes.

SANDY GILMOUR, NBC News: Mr. President, on Bosnia, can we take your earlier remarks to mean that you're now revisiting a tougher policy on Bosnia and that you might go back to the Europeans and sell them, or try to sell them once again on bombing the Serbs?

PRESIDENT CLINTON: Well, let me, let me -- I wouldn't characterize it quite that way, but let me, let me restate what I said before. I just want to make it clear that I don't think an unwillingness to move alone in Bosnia on arms embargo issues, and we supported bombing, if you will, if you remember, the position was that we would support the use of air power to back up a freeze of heavy artillery in place while the arms embargo was equalizing the opportunity that the sides had to work out their business. We thought that would lead, frankly, to a cease-fire and ultimately to a peace agreement. From the beginning, even after the British and French said we don't want to do this right now and we will not vote for it or support it in the United Nations, and the Russians said the same thing, they all agreed to leave the option on the table if their other efforts failed. What I want to reaffirm to you is that that is still my position. I still think that that may be the only way we can get them to have a real meaningful cease-fire and a real meaningful peace agreement, and that option was never taken off the table. The British and French and the Russians never said to me flat out they would never go along. They said they thought they could do better. It seems to me that the political situation has deteriorated since then and that, that my position has not changed. But I am willing to work with them todo what we can do.

MR. MUDD: The President today also talked about the importance of the space station and super collider programs. He stressed their technological and scientific value and said any possible budget cuts will be considered carefully. NEWSMAKER

MR. MacNeil: Next tonight, we look at the situation in Bosnia through the eyes of a man who has coordinated all U.N. relief there. Jose Maria Mendiluce has just ended a 19 month tour as special envoy of the U.N.'s High Commission for Refugees in the former Yugoslavia. A staff of more than 500 provides relief there to nearly 4 million refugees and displaced persons. During his tour, Mr. Mendiluce has criticized all warring sides at different times for obstructing relief operations and prolonging the war. He is now on a private visit to Washington. Mr. Mendiluce, thank you for joining us.

MR. MENDILUCE: Thank you very much.

MR. MacNeil: Another cease-fire in Bosnia was signed today, a nationwide cease-fire. Does the fact that all top military commanders signed it and met for the first time make you more hopeful about this cease-fire?

MR. MENDILUCE: Well, it's not the first time that we have been assisting to cease-fire agreements. I think there have been more than eighty or eighty-five cease-fire agreements since the war started in April '92. So we try every time to be optimistic and to think that this time is going to work. But we have to be a little bit skeptical and wait and see if in practical terms a cease-fire is going to work or not. The other question is that we are more concerned about what's going on behind the front lines, because one thing is to have a cease-fire. The other thing is to stop all the atrocities that are committed behind the front lines. And this is something that is far from being reached for the time being.

MR. MacNeil: I'll come back to that question in a moment. But I just want to ask you, all the political leaders of the Bosnian factions and the Serbs and Croats are meeting tomorrow in Geneva. All wars eventually enter a peace cycle. Is it possible that this war has now entered such a phase?

MR. MENDILUCE: Well, there are many elements that I'm not aware of, because I've been absent from the political site, from the political negotiations site, but let's hope that this is the case. The problem is that on the ground, at the ground level, what we are witnessing these days is an aggravation of the situation. More people are being displaced by force. There is fighting between Croats and Muslims provoking more displaced. There are still serious problems in eastern enclaves in Bosnia, like Gorazde that is being, has been under attack for the last 19 days. We are not allowed to go in Saravejo, it is still under shelling and under sniper fire. So we are still far from, from seeing on the ground that there is a change in the behavior of the parties to the conflict, and mainly the other concern is that there is real control of the top leadership towards the local commanders. The local militia is far from being in total control, complete control. So even if there is a certain will or some of the leaders could agree, it would take in the best of the cases some time to reach a peaceful solution on the ground.

MR. MacNeil: On Gorazde, I understand that the peace, the cease- fire signed today by the military commanders included an agreement by the Bosnian Serb military commander that some U.N. monitors could go into Gorazde. But I want to ask you about Gorazde. It is one of the so-called six safe havens established by the Security Council. It'sstill being attacked, as you said, by the Serbs and the civilian population killed and injured there. What does safe haven mean in reality?

MR. MENDILUCE: Well, for the time being there is again one long distance between the agreements reached in Washington to declare these safe havens that were backed by the Security Council Resolution 836 around three weeks ago, and the capacity to implement this safe haven concept by deploying additional troops and by having access to these areas for the U.N. monitors, U.N. troops, and the humanitarian agencies. So what is happening in Gorazde is exactly what happened, happened before in Srebrenica with other enclaves, is that we are allowed to go in, and most of the job has been done, which means when all the surrounding villages, all the surrounding areas of Srebrenica or now Gorazde have already been taken by force by the Serbian side, and when -- the people are concentrated in human conditions in just a very, very small piece of land around the town of Gorazde or Srebrenica, so maybe we are allowed to go there is because a big part of the task of Kansas City area of taking control of the territory has already been implemented or achieved by the Serbian side. And the problem of these safe areas is the future. These areas are not, are not areas in which the people could live normally. They are like big refugee camps. All the houses and infrastructures are destroyed, and for the time being with Srebrenica we have enormous problems to bring in other assistance apart from food, and the people are living there, as I say, like in a very big refugee camp without any prospect for the future. So it is very delicate to remain the safe haven concept. It is a good decision. It is just and a step forward, and an emergency step forward to stop killings, but could not be the solution to the Bosnian problem.

MR. MacNeil: The -- you're saying that the Serbs have just so far ignored the agreement on the safe haven, the Security Council's call for safe havens, and have gone on with their ethnic cleansing, are going on with it?

MR. MENDILUCE: Sure. I mean, we have enough, enough data coming from Sarajevo, from Gorazde, and from other areas that proved that the Serbs are taking advantage of the delay in implementation of this resolution, of this agreement, and that they didn't stop the logic of the war, and the logic of the war for them is to gain territories by force and to expel the population outside these territories. That's one of the problems. The other problem is that there are areas that are not included in these six safe havens approved by the Security Council and the problem in these areas is that nobody is being protected like Magli or other areas where the Serbs are in offensive and we don't know exactly. We have to declare more safe areas, or we have to, to extend the size of the current enclaves in the eastern Bosnia are to increase the size and to make life more normal for the people, so there are a lot of questions, but the most urgent thing is to deploy the troops that are necessary with the adequate mandate to stop the killings of civilians, at least in the six areas that have been proposed.

MR. MacNeil: How many more troops would it take to do that?

MR. MENDILUCE: Well, I'm not an expert, but I've written about thirty thousand, thirty-five thousand troops. There are different opinions, but I think that this is the figure that is being used by the U.N. Secretariat.

MR. MacNeil: Some people have argued against the safe havens, that they're just, in effect, a fig leaf, a way for the United States and the Europeans to safe face but to avoid intervening more aggressively.

MR. MENDILUCE: I think that the problem is, as I said before, that if the safe areas concept is just an immediate action by the international community to stop the killings that are going on now in Bosnia it's a very good step forward. The problem is this step is a step and if this emergency action becomes the action, and I think that from a strictly humanitarian point of view to condemn hundreds of thousands of people to live in refugee camps or in ghettos, in its own country, is going to be really a very, very serious decision by the international community. So we hope from the humanitarian side that this is just going to be a step forward on the right direction, that this is not going to be planned by the international community. Unfortunately for some people on the ground, and in particular for the Serb leadership, this is the plan and they were very happy to learn that this resolution was approved, because they think that the international community is not going to, to go beyond this decision. And this is a very wrong message. And I think the international community should stress that we are not going to abandon the Bosnian people and we are not going to condemn them to live forever in refugee camps or safe areas.

MR. MacNeil: While you've been there for 19 months, the Bosnian Serbs have increased their hold or the territory they control to 70 percent of Bosnia. The Vance-Owen plan called for them to be pushed back to 43 percent of Bosnia. I know you're not on the political side, but with all the practical experience you and your colleagues have, do any of you think that it's remotely realistic the Serbs are going to be moved back from what they have occupied?

MR. MENDILUCE: I think that to reverse, to reverse the logic of the war that was a war of territorial gains and expulsion of population from the other ethnic group will require a lot of strength by the international community. I am afraid that to say that the only language that is understood in that area is the language of force. they have been using force for the political and military objectives, and it will be difficult to reverse this process without showing enough strength by the international community in the sense that we are going to go ahead implementing what we feel is just for the people of Bosnia-Herzegovina, and it will be very, very difficult to convince the hundreds of thousands of refugees and displaced to go back to their areas of origin. The hate that has been provoked by the atrocities committed, the fact that many, many villages, infrastructures, churches, mosques have been destroyed, completely destroyed by the Serbs and also to a certain extent by the Croat side make very difficult to think that you could reverse the process and the logic of this war and secondly that we are going to be able to return the people to their areas of origin. Now, it looks like it is almost an impossible task in the short-term to, to bring the people back and normalize the life according to the plan.

MR. MacNeil: Some people are beginning to argue that the only practicable thing is to abandon Vance-Owen or anything else and go to a partition of Bosnia where the Serbs would join Serbia, the Croatians would join Croatia, and the Bosnian Muslims would be left with a smaller Bosnia. What is your view of that?

MR. MENDILUCE: Well, this is a very political question, and I think that the politicians know better what they can, they can realistically obtain through the negotiation process.It will depend on the -- as I mentioned before -- the level of decision and the strength that the international community will show, and it will depend also on the cost that the international community is ready to pay to keep Bosnia-Herzegovina as a member state of the United Nations with the current, or with the theoretical borders they had before the war. But it is up to them to judge the consequences, but as a citizen, not as a UNHCR staff member, I think it will be very negative for the international community to, to accept that by force you can change the borders an independent country in Europe at the end of the 20th century.

MR. MacNeil: As a citizen of Spain, which you are, in addition to being a United Nations official, after 19 months running the U.N. relief effort there, what do you feel about the adequacy of the western response to the situation?

MR. MENDILUCE: Well, I think that we made an enormous effort at the humanitarian level that paid results. We have been able to save together with the peacekeepers hundreds of thousands of lives during the winter. But the limits of this operation, the limits of the international operation in Bosnia-Herzegovina have been linked with the lack of success in stopping the war and reversing the logic of the war and imposing a peace plan that could be acceptable for all. So I have mixed feelings on that. I think that this is a very positive attempt by the international community to try to stop for the first time the logic of the war. I'm trying to impose some principles and rules, some decisions taken by the international community. For the time being, we have not been successful in stopping the war, in finding the way to reverse this horrible ethnic cleansing policy in Bosnia. But, on the other hand, the humanitarian operation has been able to save lives and we hope that these lives that we save are going to find a future of hope and a future of hope is linked with the end of the war and is linked with the political settlement that will respect the rights of the people. So we have not yet -- we have not yet finished the task, but I think that we are on the right direction despite the frustration for many of us when we see that every day and day after day we have more people killed, more people displaced, more people destitute, and very little help in the short-term. I hope that the international community will continue paying attention to the problem, and people will not start being tired about the killings and all the miseries of the war in Bosnia, and that the international community will continue their efforts to stop the war and to find a peaceful and an acceptable solution for al the communities in Bosnia-Herzegovina.

MR. MacNeil: Well, Mr. Mendiluce, thank you very much for joining us.

MR. MENDILUCE: Thank you.

MR. MacNeil: Roger.

MR. MUDD: Ahead on the NewsHour, the insurance industry after Hurricane Andrew, North Korea's nuclear plans, and essayist Roger Rosenblatt. UPDATE - ANOTHER CASUALTY?

MR. MacNeil: Hurricane Andrew reeked havoc not only on homeowners but also on the insurance companies. And as Correspondent Tom Bearden reports, neither has fully recovered.

MR. BEARDEN: Ten months after Hurricane Andrew, repair work still goes on. Andrew was a storm without precedent in American history. Square miles of homes were smashed. Paying to repair and replace those homes produced unprecedented losses for the insurance industry. In May, Allstate Insurance Company Vice President Robert Pike told a congressional committee that Andrew wiped out every dime of profit from every premium ever collected in Florida.

ROBERT PIKE, Vice President, Allstate: During all of those years, in all of the lines of business we wrote, not just homeowners but auto, commercial, condo, boat owners, all the lines of insurance, all the profits we made in those 53 years, including investment income on those profits, totalled $1.4 billion. Our after tax, after reinsurance loss as a result of that two hours of savagery that was occasioned by Hurricane Andrew was 1.9 billion. So in two hours, 53 years of profit and investment income was wiped out.

MR. BEARDEN: Donald Southwell told a Florida insurance commission hearing it was even worse for his company, Prudential Property & Casualty or PruPak.

DONALD SOUTHWELL, Vice President, Prudential: We had 37,000 claims from this storm, and we paid almost $1.3 billion, $1.3 billion in claims, $600 million in capital. PruPak was bankrupt twice over.

MR. BEARDEN: Almost a dozen insurance companies did go bankrupt after Andrew. Southwell said the only reason PruPak was still in business is because its parent company, Prudential Insurance, stepped in with a $900 million infusion of capital to cover the claims, something it had no legal obligation to do. What worries the insurance companies is the risk from the next hurricane. Allstate, Prudential, and others said they would go bankrupt if another Andrew sized hurricane were to hit south Florida, unless they reduce their exposure. So many companies asked the state insurance commission for permission to reduce the number of policies in effect and to raise rates. Allstate wanted to drop 300,000 policies when they expire. Prudential wanted to eliminate 25,000 policies and raise rates an average of 21 percent. But a lot of angry homeowners attended public hearings on the requests, and they weren't buying the company's arguments. Some pointed out that Allstate had reported record profits last year despite the storm claims. Dade County resident Lloyd Hough told Prudential's representatives he felt abandoned.

LLOYD HOUGH, Dade County Resident: And after 20 years and some people longer than that, one time, we're being cut off. They're walking away from us, where in years past we could have gone and gotten insurance probably somewhat cheaper with another company but we stuck with your company because the name meant something. And it don't mean a whole lot today to most of us in Dade County.

MR. BEARDEN: Responding to a flood of complaints, Florida Insurance Commissioner Tom Gallagher imposed a 90-day moratorium on non-renewals. A few days later, the state legislature extended it to six months. That leaves homeowners covered through November and covered through the current hurricane season. Gallagher wants the time to study the risk analysis. He's not convinced by insurance company statements about lost profits.

TOM GALLAGHER, Florida Insurance Commissioner: Well, of course, maybe they have lost all the money they made in Florida, but, you know, this isn't the only state they write in. They write in all states. And they made money in some states. For many years, they made money in Florida. They could lose money in another state, and it's supposed to be balanced throughout all the states. It's sort of a like a company telling you that one your neighbors had an automobile accident and, therefore, they're going to drop your insurance because they had a big cost in your block, and they can't afford to insure your block anymore. It's the same with the states. I mean, how big should it be? I believe they should spread those losses and spread those profits throughout the country, not just do it state by state.

MR. BEARDEN: But Prudential's Southwell says insurance commissioners in other states would never allow a company to raise rates to cover losses somewhere else.

DONALD SOUTHWELL: People in Florida may feel that this risk should be spread across the country but people in Iowa do not. It's also clear that people in Florida would not want to pay for the potential for earthquake catastrophe in California. In addition, it's just flat out not legal to pay for risks of Florida on policy holders of other states.

MR. BEARDEN: So even if you wanted to and the other policy holders were willing to accept the additional price, you couldn't do it anyway?

DONALD SOUTHWELL: That's correct.

MR. BEARDEN: In fact, Florida homeowners had been getting bargain rates for years. The insurance market was extremely competitive, and premiums were well below what would have been justified by the risk.

TOM GALLAGHER: The market drove the rates. Companies charged a lot less and asked us for a lot less rates than they were able to justify actuarialy. In fact, if you look at other hurricane prone areas in the Caribbean, they're paying six to ten times what our people in Florida pay for homeowner's insurance, and in many cases, their homes are built better.

MR. BEARDEN: Prudential's Southwell says the moratorium compels PruPak to keep rates artificially low and to risk bankruptcy in the process.

DONALD SOUTHWELL: We are definitely not out of the woods here. Prudential bailed out PruPak when the last hurricane hit. They've given us another chance, but we've got to get our exposures down. And during this moratorium, we are exposed to a risk that could bankrupt PruPak again.

MR. BEARDEN: And there's no guarantee that Prudential would step in and rescue you again?

DONALD SOUTHWELL: That's correct.

MR. BEARDEN: So your company risks its entire future in this hurricane season?

DONALD SOUTHWELL: Yes.

MR. BEARDEN: Prudential has asked the state for an exemption from the moratorium so they won't have to renew policies in high risk areas.

ANN KINSTLER: Our house is starting to look good again. Will it ever get back to normal though?

MR. BEARDEN: Ann and Stewart Kinstler live in one of those areas. Their house was moderately damaged during the storm. The Kinstlers say Prudential handled their claim promptly and fairly, but when they were told their policy wouldn't be renewed, they worried about being able to find any insurance at a price they can afford.

STEWART KINSTLER: What's happening is the honest person who doesn't make a claim for five or six or seven years if they have any claim is now winding up scrambling, looking for insurance.

ANN KINSTLER: My husband got stuck last week, and we have a $35 towing bill which is supposed to be covered under our automobile insurance, and we're afraid to put in a claim for it. You pay insurance premiums all these years and then when you do have a claim, you're afraid to do it for fear of being cancelled.

MR. BEARDEN: The state set up a joint underwriting association, or a JUA, to provide insurance for people like the Kinstlers who might not be able to get new insurance on the commercial market. A JUA policy is supposed to cost only slightly more than a standard policy, albeit with less coverage. But for some it isn't working out that way. Dennis Gruf's insurance company withdrew entirely from Florida after the hurricane. When he couldn't find another company willing to write a policy on his house, he contacted the JUA.

DENNISGRUF: Their rates were advertised to be no more than 25 percent on your present insurer, and when I got those figures it really was a shock. It was up like 425 percent.

MR. BEARDEN: Gruf had been paying $388 a year. The state fund wanted nearly $1800 to insure his home. He later found a more reasonable rate from a private company. State officials say Gruf's experience is atypical, but others complain of being quoted rates double or triple that of their previous premiums. Back in Washington, Florida Congressman Clay Shaw argued that all of these stop gap measures don't address the real problem. He says no single state can afford to bear the financial burden of a catastrophe like Andrew by itself and that federal action is required.

REP. CLAY SHAW, [R] Florida: The risk has to be, has to be taken over the entire country. There is no single state or single territory that can possibly foot this bill without the, without the federal government's deep involvement and the federal government's lead.

MR. BEARDEN: Shaw joined with the insurance industry to urge that a tax free, federal emergency fund be established. It would be funded by insurance company contributions and could be tapped in future disasters. That might help Florida's homeowners after a future storm, but all they can count on now is sharply higher premiums in anticipation of the next possibly even more deadly storm that scientists believe will cross their coast within the next decade. FOCUS - NUCLEAR THREAT?

MR. MUDD: Next tonight we take up the story of North Korea's on and off pursuit of nuclear weapons. If North Korea gets the bomb, does that mean South Korea and Japan would soon follow? In a moment we'll talk with a U.S. official who's been negotiating with North Korea, but first some background. Communist North Korea, a nation of 23 million, has grown increasingly isolated since the collapse of communism in the Soviet Union and elsewhere. China is now its only important friend. It is communism's first family dynasty ruled by Kim Il Sung who has made plans to be succeeded by his son, Kim Yong Il. They celebrate their rule with large public festivals. A highly fortified de-militarized zone has separated from North Korea from the Republic of South Korea, a key American ally in Asia since the end of the Korean War in 1953. More than 40,000 American troops are still posted in South Korea. In March, North Korea announced it intended to pull out of the international treaty that calls on countries not to develop nuclear weapons, setting in motion a June 12th deadline for formal withdrawal. The CIA and other experts say North Korea is close to or already may have enough plutonium to build nuclear weapons. The North Korean regime runs a nuclear complex about 60 miles north of Pyongyang, the capital, which it says is to generate electricity. But most experts insist this site is aimed at nuclear weapons production. Since last year, North Korea has refused to allow international Atomic Energy Agency inspections of two nuclear waste dumps. If North Korea follows up on its threat to withdraw from the treaty, the U.S. has said it might ask the U.N. Security Council to impose economic sanctions, but China has raised the counter threat of a veto, and even western officials question how well economic pressure would work against one of the world's poorest countries already isolated from the global economy. For the past two weeks, North Korean diplomats have been negotiating with U.S. officials at the U.N., and over the weekend, North Korea announced it would adhere to the non-proliferation treaty, at least for a while. But it objected to so-called "intrusive inspections." With us now is the American official who's been doing the negotiating, Robert Gallucci, the assistant secretary of state for political military affairs. Mr. Secretary, what's at stake in North Korea's threat to withdraw from the treaty?

SEC. GALLUCCI: Well, I think in the first instance what's at stake is peace and stability on the Korean Peninsula. The intrinsic importance of discouraging the North Koreans from stepping out of the treaty, from moving out of safeguards, and ultimately proceeding with a nuclear program that could be directed at nuclear weapons acquisition is our first objective preventing that. Beyond that, what's at stake of course is the treaty regime, the non- proliferation treaty regime, which has over 158 hearings, and the international safeguards regime administered by the IAEA in Vienna. All this I think is at stake as well as the broader question that you opened with, and that's namely regional stability beyond the Korean Peninsula.

MR. MUDD: Is an Asian arms race too broad a phrase to use as, as encompassing the danger?

SEC. GALLUCCI: I think that it would be prudent to be concerned about this over the long run. I think our interest right now is to get on with the discussions to engage the North Koreans and see if we can't find a negotiated way to settle the issue on the terms that we initially outlined, namely the North Korean return to the non-proliferation treaty, acceptance off full scope safeguards and proceeding with the South to implement an agreement they reached sometime ago called the North-South De-Nuclearization Declaration which would provide for a nuclear free Korean Peninsula.

MR. MUDD: When North Korea last weekend said that they would suspend their withdrawal from the treaty, what does the word "suspend" mean? I mean, how long does the suspension last?

SEC. GALLUCCI: The word "suspend" will mean in the first instance what the North Koreans wish it to mean. They have set no time limit on this. They indicated they would stop the clock on the 90 days that the treaty provides from the initial announcement of their intent to withdrew. They stopped it the day before their withdrawal would have gone into effect. So right now we are in a situation in which they are still parties to the treaty. They are still bound by their safeguards obligations. From our perspective, this interim period that we together created last week will last just so long as we are making progress towards resolving the issue on the terms that I described a few moments ago.

MR. MUDD: Is your effective political deadline then President Clinton's trip to South Korea? Is that the wall you don't want to hit?

SEC. GALLUCCI: No, actually I wouldn't make any connections whatever.

MR. MUDD: You would not?

SEC. GALLUCCI: Would not, no. I think we will be by the terms of our discussion last week meeting again with the North Koreans within some few weeks, the venue to yet be determined, and then we'll continue I hope somewhat in the same spirit in which we ended last week.

MR. MUDD: When the North Koreans agreed to suspend their withdrawal, what did it take for, what agreement brought that suspension about? What did you say and what did they say?

SEC. GALLUCCI: I'm going to answer that question as best as I can, but you'll understand if I really don't go too deeply into what it is that actually motivates the Koreans.

MR. MUDD: Because you don't know, you mean?

SEC. GALLUCCI: That's exactly right.

MR. MUDD: Oh, really, really?

SEC. GALLUCCI: This is not a secret. It's something -- the motivation is not known to me. I do know that the things which we discussed over essentially four days of meetings spread out over two weeks involved their concerns on their side about their security and the extent to which it was put at risk by American military presence in the South, by assurances that the South Koreans had made that there were no nuclear weapons in South Korea, our statement that we would abide by that South Korean position. They are concerned about the International Atomic Energy Agency's impartiality as they call it. From our side, we of course focused on their nuclear program, their intentions, and their obligations to abide by safeguards. I think we reached agreement because they have an interest in staying in the treaty, staying in safeguards for what that means over the longer term. And what that means over the longer-term means entering the family of nations, the international community, on terms that they right now do not yet participate.

MR. MUDD: Did the United States agree to cancel its, its traditional annual military maneuvers in South Korea as a step of good intentions?

SEC. GALLUCCI: There was no detailed discussion of maneuvers or exercises. The discussions we did have focused as I said on the nuclear issue essentially. There is no change in our plans with respect to next year, and those plans were made in conjunction with the South Korean government as they always have.

MR. MUDD: So what's the hang up, Mr. Secretary? Is it the North Korean intransigence about allowing the International Atomic Energy inspectors to come in and look carefully, is that it?

SEC. GALLUCCI: The hang up that brought us this situation and this crisis was the North Korean refusal to accept International Atomic Energy Agency's special inspection at two sites. They were accepting what you might call regular inspections, and we understand still are. The IAEA following an inspection concluded from analysis that the results of that inspection that the North Korean declaration as to the amount of reprocessing and plutonium that was separated did not square with their analysis. And so they wished to do additional inspections to clarify this situation and at two sites, which they identified and believed they could, they could visit, they could inspect, they could take samples of radioactive waste, and perhaps come to a conclusion, a technical conclusion about what a proper figure would be. It is the North Korean refusal to accept those special inspections that bring us this situation we now have.

MR. MUDD: But they couldn't be members of the treaty in good standing if they didn't allow those inspectors in, could they?

SEC. GALLUCCI: They're --

MR. MUDD: You're not going to, you're not going to give on that issue, are you, inspection?

SEC. GALLUCCI: We are committed to supporting the treaty and to the International Atomic Energy Agency inspection regime. We have made that clear in discussions with them. It is clear in the statement that we issued. It is clear in the press coverage that followed. What is at stake here is, as I said initially, the validity of these inspections and the standing of the inspection regime, and we will support that regime. The North Korean position is right now as defined by the IAEA inconsistent with their safeguards obligations. So you have stated it fairly accurately.

MR. MUDD: How much plutonium do you and does the intelligence community think North Korea now has, enough to make a bomb?

SEC. GALLUCCI: I don't think I want to comment on what an intelligence community assessment is of North Korean plutonium accumulation. I will say that the issue really that confronts us is the question of how much they may have separated and whether the declaration they made to the IAEA is, indeed, accurate.

MR. MUDD: Why did it take the International Atomic Energy inspection team so long to blow the whistle on North Korea's continued processing of plutonium? Couldn't, couldn't they have gotten in there earlier and warned everybody what was going on?

SEC. GALLUCCI: I don't think it took them long at all. I think that a fairly deliberate and reasonable process of visiting the correct sites, doing an analysis, and then based on information available to it from the inspection and from other states led them to ask for special inspections, and once they were refused, those special inspections, they moved promptly to the Board of Governors where on schedule the board voted them in non-compliance and the issue was reported to the Security Council. I think the IAEA did just fine.

MR. MUDD: And my final question: Is there the possibility that big China, its only influential friend, might help the United States to bring North Korea into compliance?

SEC. GALLUCCI: It is our hope that China and other states that may have influence with the North will convince the North that the best route is, indeed, to comply with Atomic Energy Agency safeguards.

MR. MUDD: Good. Thank you very much, Sec. Gallucci. ESSAY - SPECIAL INTERESTS

MR. MacNeil: Finally tonight, essayist Roger Rosenblatt, contributing editor of Vanity Fair Magazine, has some thoughts on what makes the gays in the military issue so divisive.

ROGER ROSENBLATT: The ban against homosexuals in the military began in the burgeoning age of psychiatry in the 1940s, was encouraged in the McCarthyite age of political oppression in the 1950s, and is now being argued in the height of the age of special interests today.

SPOKESMAN: When it became known in the unit that someone was openly homosexual, polarization occurred, violence sometimes followed, morale broke down, and unit effectiveness suffered.

ROGER ROSENBLATT: The age of special interests works against homosexuals serving in the military in two ways: The first is that homosexuals are seen as homosexuals exclusively, i.e., men and women who are musicians, teachers, secretaries, construction workers, physicians, and soldiers are viewed through a single prism that focuses on them one dimensionally as gay. And, in fact, some homosexuals appear to strive to be seen that way. The second way is that people who oppose them, those who do not abhor homosexuality on moral grounds alone, claim that once the ban against gays is removed, through that newly open door will come the physically handicapped, the mentally handicapped, and other sexual minorities such as transsexuals. In short, the military, like the rest of America, would become the prisoner of more special interests. The odd thing about this idea of special interests is that it was supposed to be good for America, to help the country be both more profitable and more fair minded. On the fair minded motive was built the entire movement toward affirmative action behind which stood the proposition that the special interests of minorities were so special they deserved special breaks. Ironically, a generation after the Supreme Court decided that schools should be integrated, many of those who had fought for an end to segregation decided everybody should now be educated in the culture of his or her origin, the melting pot broken up into individual bowls of soup. And while all that was happening, the country, itself, divided among special interests. You're from the sun belt or from the Northeast corridor. You're poor or you're rich. You're black, you're white. You're disabled, you're a teacher, a worker, a farmer, a liberal, a conservative, you're a homosexual. We are joined these days in a national battle in which homosexuals are identified solely by their sexual orientation and are discriminated against solely because of that one thing. For their part, homosexuals are insisting on being seen in at least two roles, as full citizens of their country, as well as homosexuals. The inherent rights and obligations of citizenship are discounted by those who seek to keep homosexuals out of the military or to keep homosexuality something which is tolerated only as long as it occurs behind closed doors. Citizenship is evidently not enough of a special interest to warrant full participation in the society. The age of special interests, however well meant at the start, has twisted a lot of ideas into knots that in turn have fastened nooses. All the intracity racial wars are the products of special interests, of Haitians, Koreans, Jews, blacks, whites, and neighborhoods. In Bosnia, the so-called "ethnic cleansing," a sick, comic euphemism, is driven by special interests. To see people in one dimension is to narrow and make smaller everything by that process, their humanity, the viewer's vision, and the viewer's humanity as well. Suddenly, the earth of a single human species becomes a free for all of tribes and clans, and the results are always the same. A museum in Washington has just been erected as witness to those results. I'm Roger Rosenblatt. RECAP

MR. MUDD: Again, the major stories of this Tuesday, during a White House news conference, President Clinton vigorously defended himself against charges of indecisiveness. And the Commerce Department reported the overall U.S. trade deficit narrowed by 11.7 percent in the first quarter of the year. Good night, Robin.

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