The MacNeil/Lehrer NewsHour

MR. MacNeil: Good evening. Leading the news this Tuesday, Iraq said it will crush the Kurdish rebellion within days. Tens of thousands of refugees are attempting to flee Iraq as the fighting intensifies. France called on the United Nations to stop Iraqi attacks on the Kurds and Shiites. We'll have details in our News Summary in a moment. Jim.

MR. LEHRER: After the News Summary we look at the dramatic price increase in the Soviet Union. Then comes a reporter's update of the war inside Iraq. Paul Solman looks at what the Japanese think about the Americans in Part 2 of our series on Japan, and we close with a reprise of an interview with choreographer Martha Graham.NEWS SUMMARY

MR. MacNeil: Iraq claimed today that the Kurdish rebellion in the North was all but finished. Rebels claim they recaptured the oil center of Kirkuk, but Pentagon officials said Iraqi forces controlled all major cities in the country. In Baghdad, Saddam Hussein met with his cabinet and reportedly told its members uprisings throughout Iraq were being rapidly defeated. Iraqi officials took journalists to the Northern Towns of Dahouk and Derbile today. Except for government soldiers, the heavily damaged towns appeared deserted. Turkey said more than 200,000 people were attempting to cross its borders to escape the unrest in Iraq. Turkish officials said the refugees were in danger of being killed by Saddam Hussein's forces. Thousands of refugees have already fled unrest in Southern Iraq. For many the conditions they found in refugee camps are little better than those they left behind. We have a report from John Alcock of Independent Television News.

MR. ALCOCK: The U.S. forces have simply lost count of the number of refugees and deserters streaming into American occupied Iraq. One checkpoint alone saw 35,000 arrive in the past week. They've no idea of when or if they'll get a proper home again. The living conditions in this abandoned cement works are a recipe for disease, but the people say they had to escape or die. What the refugees dread most is permanent peace, because they believe an American withdrawal would leave them at the mercy of Saddam Hussein's troops. That's why so many are rushing South towards the Kuwaiti border. It's a long, bumpy drive on roads the Iraqis once used as temporary runways. What awaits them is possibly worse than the sheds they've left behind. The border area is now overflowing with refugees. The arrival of a Saudi food truck usually provokes mayhem in the Town of Safwan. Unlike the Americans who've organized regular food cues here, the Saudis leave the people to fight for their rations. The deliveries are meant to be a good will gesture, but the weak are lucky to get anything. The refugee camp just across the bordering Kuwait may provide a safer haven, but as it expands, tension grows there too. On this occasion, a food cue disintegrated and the Saudis completely lost control.

MR. LEHRER: France asked the United Nations Security Council today to take action to end the fighting in Iraq. A spokesman for the French Foreign Ministry from Paris said, "It is urgent that the brutal repressions striking the Iraqi population be stopped." French diplomats at the UN discussed the issue with representatives of the four other permanent Security Council members. UN Sec. Gen. Javier Perez DeCuellar said this afternoon he was gravely concerned about the bloodshed. And in Washington, State Department Spokeswoman Margaret Tutwiler described the situation as tragic and heart wrenching, but she said the U.S. would not become militarily involved in an Iraqi civil war.

MARGARET TUTWILER, State Department: We have said 100,000 times it is up to the Iraqi people to decide their future leadership, not for outsiders. Why would you be putting American lives at risk to interject yourself in something that was never a stated goal or objective either militarily or politically, to somehow change the Iraqi leadership? And so I would say that we have been totally consistent for eight plus months now on what our policy is while we were there, what our mandate is. None of that has changed.

MR. LEHRER: Ms. Tutwiler said State Department officials would hold the first in a series of meetings with Iraqi opposition groups tomorrow. The UN Security Council began informal discussions on a cease-fire resolution today. The resolution calls for the destruction of Iraq's chemical and biological weapons, and for Iraq to pay war reparations among other things. If adopted, the resolution would establish a UN peacekeeping force along the Iraq- Kuwait border.

MR. MacNeil: A British businessman jailed by Iran for five years on spying charges returned home today. Roger Cooper arrived in London after being freed late last night. Cooper was arrested in 1985 for overstaying his visa while working as a consultant to an oil company. He said he probably just fit Iran's profile of a spy. He also said he was told one of the thirteen Western hostages in Lebanon might also be freed in the not too distant future.

MR. LEHRER: Three people were killed during an anti-Communist demonstration in Albania today. The violence was related to a victory by Communists in Sunday's elections in Albania, Europe's last Communist stronghold. Louise Bates of Worldwide Television News narrates this report.

MS. BATES: The smoking shell of the Communist Party headquarters gutted by the angry crowd after the killings, the army sealed off the area to prevent more violence. Hundreds of riot police have opened fire on thousands of democracy supporters who've gathered outside the building accusing the government of rigging its election victory. Students who led the protest were anxious to show reporters the spent machine gun bullets that littered the scene. They say the first bullets were fired from inside the building, including the one that killed local Democracy Party Leader Aben Broshiev. They say it was then that hundreds of riot police moved in, firing live rounds, killing two others, injuring dozens more. A government statement said police had to open fire. The lives of those inside the headquarters were in danger. It called the situation "tense". Political freedom is at the root of that tension. And in the capital, government officials were delivering final election results that will only add to the explosive climate. The ruling Communists now under the Labor Party banner took the expected 2/3 of the assembly seats. As if on cue, no sooner were the results out then the streets of Tirana were filled with demonstrators and soldiers and gunfire. Albania's farewell to Stalinism will not be peaceful.

MR. LEHRER: In the Soviet Union, the cost of bread and many other basic consumer goods doubled or tripled today as state subsidies were removed. Extra supplies slated to ease the blow of the higher prices failed to arrive in state run stores. We'll have more on this story right after the News Summary.

MR. MacNeil: Back in this country, factory orders dropped 1/2 percent in February, the fourth straight monthly decline. Falling orders usually foreshadow cutbacks in manufacturing production and more layoffs. Wall Street apparently ignored the news. The Dow Jones Industrial Average closed with a gain of nearly 64 points. Analysts said bargain hunting and computer trading sparked the rally. In Dallas today, a former owner of a failed savings & loan was sentenced to five years in prison for using depositors' money to pay for a beach house and prostitutes. Donald Dixon was also ordered to repay losses totalling $577,000. His Vernon Savings & Loan failed in 1987, costing taxpayers $1.3 billion.

MR. LEHRER: The North Dakota State Legislature today failed to override a veto of what would have been the nation's strictest abortion law. The bill banned abortions except in the case of rape, incest, or if the mother's life was in danger. Gov. George Sinner signed the veto this morning, saying the government must not play God. He did sign a bill requiring women to wait 24 hours before getting an abortion. And that's it for the News Summary tonight. Now it's on to the Soviet price increases, a look behind Iraqi lines, how Japanese view Americans, and an appreciation of Martha Graham. FOCUS - LESS IS MORE

MR. LEHRER: Our lead story tonight is the price increase in the Soviet Union for basic goods such as milk, meat and bread. The first major government authorized government price increases in the Soviet Union in over 30 years. They are aimed at moving the country toward a market economy. We have a set up report from Moscow by Tim Ewert of Independent Television News.

MR. EWERT: The first phase of Mr. Gorbachev's long awaited economic reform program caused dismay in this Moscow super market today. The price of beef had gone up 850 percent. Butter was quadrupled. Sausages doubled. There were few takers and little sympathy for a government trying to end more than 70 years of rigid central control. I don't like these reforms at all said one man. They are robbing us. And this women snapped Gorbachev should resign it is all his fault. State subsidies have been slashed on a range of items as the first step towards Mr. Gorbachev's promise will be a full market economy. But with details of the final reform program still unclear his critics are worried that today's increases won't be coupled with other measures needed to tackle the economic crisis.

SPOKESMAN: If our central government would like only to solve its financial problems at the expense of the people it will only push forward the inflation process and it will worsen economic situation in the country.

MR. LEHRER: Now two other views of whether the price increase tactic is likely to work. Vlad Kontorovich is a Professor of Economics at Haliford College in Haliford, Pennsylvania. Yuri Maltsev served as an advisor on economic reform to the Kremlin before defecting to the UNited States in 1989. He is now a fellow at the U.S. Institute of Peace in Washington. Mr. Kontorovich first explain the theory behind the price increases. What were they designed to do?

MR. KONTOROVICH: The officially announced purposes of price increase is about everything. They should stabilize consumer markets, stimulate production of consumer goods, improve labor moral. Price increases will indeed do some of those things. They will help stabilize consumer markets. These price increases from the economic point of view were inevitable and actually long delayed only for political reasons.

MR. LEHRER: Is the basic idea. Let's say today they double the price of milk. Does that mean that the price of milk paid today approximate what it actually costs to produce a bottle of milk?

MR. KONTOROVICH: Yes production costs are a rough guide of how consumer prices are established. But not all consumer subsides are eliminated. Subsides are kept on many good only in reduced amounts and with government printing money at the current rate with all the horror stories of empty shelves in Soviet cities. They just couldn't continue the prices had to go up and finally I think that it is a good thing that one more self imposed taboo has been broken. This isn't the last time that the Soviet Government will have to resort to price increases with its other policies. So there isn't a silver lining. It was something that was long overdue and finally they did it.

MR. LEHRER: Mr. Maltsev what is your understanding on how the amounts on the increases were determined. Let's say bread is one thing, milk is another, meat is another. How did they do about making that determination?

MR. MALTSEV: Well the problem is here I think, here I will disagree with Vlad, in a sense that I don't see any kind of transition to a market economy by this so called reform because what the Soviets are really up they want to administratively in a bureaucratic way to raise the prices for them to cover the so called costs of production. But nobody knows in the Soviet Union what the costs really are because it is not a market economy, there is no competition. It is a unrealistic price I think and the prices are set by the State Committee of the Soviet Union on prices.

MR. LEHRER: So the costs are also arbitrarily set. In other words they don't have an accurate measurement of what it takes to produce a bottle of milk or a carton of milk?

MR. MALTSEV: Yes the imputes have prices which are again bureaucratically set by the State Committee of the Soviet Union on prices and I don't think that the prices which existed before today in the Soviet Union have been very low. Because the Soviets for example for milk they have to work seven times longer than American. Some thing like 12 times longer for beef and pork.

MR. LEHRER: How are those figures determined. Just in rough terms where does that come from?

MR. MALTSEV: How much working time you should spend.

MR. LEHRER: To earn enough money whether it is rubles in the Soviet Union or dollars here to go buy a turkey or something.

MR. MALTSEV: That is right. So that is why I don't see any kind of reform in that. I think more over this mainly in today's political situation it can lead to mass unrest and we've had this strike of minors already from march which is continuing up to now and one of the main slogans of the minors is for Mr. Gorbachev to resign. And I think that the time is very improper to introduce as drastic measures as he did.

MR. LEHRER: Mr. Kontorovich your position is that this is inevitable that prices had to go up. Is that correct?

MR. KONTOROVICH: Three years ago it was clear the longer the price increase is delayed the larger the shock will be. Now they are up for a huge shock only because the inevitable was delayed. If you print so much more money than the economy needs and this is what the Soviet Government is doing. There are two choices either you can fix prices and the shelves are empty and people spend an inordinate amount of time searching for goods or you let prices rise to equate supply and demand. That is not quite what happened. Instead of letting all the prices find their equilibrium levels the Soviet Government freed some prices, imposed ceilings on others and just administratively increased some other prices and there may be debate how this should have been done. How many prices should have been increased administratively and how many prices should have been left to the market to determine. But again honesty as unpopular and distabilizing politically as this measure is there was no other way but to do that.

MR. LEHRER: Mr. Maltsev do you believe that the result of this, at least there is a possibility that the result of this could be more goods on the shelves, that this will generate more money and thus more production of meat and all the other basic things?

MR. MALTSEV: Well I think that may be it will stabilize the consumer market for may be a month or two but these price hikes they would not increase the production of the stuff. They would just cut off the less fortunate in the Soviet Union. Right now according to the Soviet statistical date 55 million of the Soviet Union already are living below the poverty live and the poverty line in the Soviet Union is not a poverty line here. It is really actual starving.

MR. LEHRER: What is the idea for instance. Let's say the price of meat tippled today. We must make it clear that it was no uniform all over the Soviet Union on all these price increases weren't exactly the same. It varied from place to place, city to city. But let's say in an area where the cost of meat tippled. A pound of hamburger went up three times over night. Where does that extra money go?

MR. MALTSEV: See in the Soviet Union a lot of things they look the same as here but they are not the same. Here for example if the price were tippled will help production of every thing because people would use the money to expand and produce more. While in the Soviet Union this money again will go to the State budget and will be misused on construction of new Egyptian Pyramids or scud missiles.

MR. LEHRER: It is like revenue for the Government?

MR. MALTSEV: It will be revenue of the State and the workers and the peasants who produce the stuff they would not have any benefit of the price hikes.

MR. LEHRER: Mr. Kontorovich that sounds terrible.

MR. KONTOROVICH: Well actually according to official data 85 percent of the extra money generated from price increases will go to compensate consumers. I think 85 percent is a little bit to high but may be as much as 60 percent of the money will be rechanneled to consumers. Wages and salaries in state enterprises are going up. retirement incomes are going up. It is much more than a safety net. It is actually very extensive compensation which will limit the stabilizing effect of price increases.

MR. LEHRER: But the idea there being that the people will pay more money for their hamburger but the money will be funneled back to them to buy the hamburger. Is that the idea?

MR. KONTOROVICH: Not all of the money.

MR. LEHRER: But 60 percent?

MR. KONTOROVICH: 60 to 80 percent. At least 20 percent will be taken out of circulation and probably will help stabilize the consumer market. Will help fill the shelves.

MR. LEHRER: But you don't think that is going to work do you Mr. Maltsev?

MR. MALTSEV: No I think in this case if 85 percent of the money earned by the price hikes would be returned back to the people then this whole concept of reform is completely insane. I mean the people already have this money. So to my mind this wired kind of redistribution will not work at all. So to my mind what Mr. Gorbachev is trying to do right now is he is trying to prolong the existence of the system which actually doesn't work.

MR. LEHRER: Mr. Kontorovich do you agree that is what is at work here?

MR. KONTOROVICH: I agree with Yuri in what ever relief will come from price increases will be only short term because this government can not deal with the root cause of inflation. So in three, four, six months it will have to resort to price increases again. If it keeps working the pressed at the rate that it does now.

MR. LEHRER: Well gentlemen on that gloomy note we will leave it. Thank you both for being with us. FOCUS - BEHIND THE LINES

MR. MacNeil: Next an update on the bloody struggle for power in Iraq. This afternoon Charlayne Hunter-Gault talked with two of the Journalists who have escaped from Northern Iraq along with thousands of refugees. Scott Petersen of the London Daily Telegraph reached the Turkish Capital of Ankorah a few hours ago. He had been covering the fighting between Iraqi Government forces and Kurdish guerrillas know as the Presmerga.

MR. PETERSEN: On Saturday when I arrived I was able to get half way between the town of Kirkuk which had just fallen to the Iraqis and Erbil which was on the verge of falling to the Iraqis and on that front line that day it was quite quiet for a few hours and then shelling began from the Iraqi side, artillery, tank fire and that sort of thing. After about two hours the Pesmergas decided to move back about three kilometers to be safer. After the artillery found them again two helicopter gun ships came over the horizon and began to harass their positions, firing their rockets. machine guns and that sort of thing.

MS. HUNTER-GAULT: What were they using to fight back with?

MR. PETERSEN: Well the only thing that the Pesmarga had, they did have some anti craft, low caliber anti air craft guns but they didn't seem to be too effective. They shoot at the helicopters with rocket propelled grenades which went wide of the mark and probably not as high as the helicopters themselves but that was all there was to it. The tanks we were not actually able to see the tanks moving forward or any thing else but it was very definitely these helicopters and that was the first of four similar attacks that day that pushed the Persmerga back.

MS. HUNTER-GAULT: And what finally happened at Erbil?

MR. PETERSEN: Well on Sunday morning at 8.o'clock the Iraqis finally did make their invasion or I guess their preliminary attack with the helicopters again and this is what sparked off the refugee exodus from Erbil. It turned out in fact to come sooner than any one thought. There were very few refugees fleeing Erbil earlier and in fact refugees who we were walking with told us that while they had told their families that would not yet be leaving Erbil that the Kurdish rebels would be able to take care of the defense of the town and that sort of thing which turned out to be quite a fallacy primarily because of these fears that comes in to populated cities by these helicopters. If the helicopters were not involved in the fighting it is unlikely that the Iraqis would be able to make such significant gains.

MS. HUNTER-GAULT: Did you talk to these rebels at any point along the way, I mean, what was their attitude about what was happening? I understand that they expected help from the outside.

MR. PETERSEN: Every single refugee that spoke English and there were many that came up to us the first thing they said to us was that George Bush did not go far enough. He is the reason why we are suffering and why is it that the United States is not helping us when they already began the war. They very much feel that the Americans and the Allies have lead the Kurds down the path of toppling Saddam Hussein but have not finished the job.

MS. HUNTER-GAULT: Well Scot Petersen you get some rest. Thank you for joining us. Later I spoke with ITN Correspondent Brent Sadler who also witnessed the final battle. He escaped a day earlier than Petersen did and is now in London. Brent Sadler how exactly did you get out of Iraq?

MR. SADLER: Well the escape route necessitated a perilous drive through some very remote mountain ranges and the extreme end of the Kurdish are close to the border with Iran. That meant traveling through rivers. A lot of the time walking and eventually picking up a four wheel drive truck that got me to the crossing between the North of Iraq and Syria. The final leg of the journey was a sort swim across a flood plane of the river Tigress under shelling, I might add, from the Iraqi guns and eventually reaching the safety of Syria.

MS. HUNTER-GAULT: What was your impression of the state of the Kurdish forces when you left?

MR. SADLER: Well I was with the Kurdish forces from very early on in their campaign of liberation in those Kurdish towns in the North of the country. And one saw great excitement, great joy, at this period of short lived freedom. Freedom of movement, freedom of thought, freedom of expression. And of course after the last battle that failed to retake Kirkuk one could see a rapid change in the situation on the ground and you had a very dejected,a very fearful people wondering how much punishment was going to exacted against their people for the challenge that they made against Baghdad.

MS. HUNTER-GAULT: Were they afraid and from what you know was their fear that reprisals would be taken against civilians and did you see any evidence of that?

MR. SADLER: Yes Indeed, I mean, those people are very concerned that as a result of their exposing some of the excesses and brutalities to myself and other journalists such as execution chambers in secret police headquarters, such as weapons of beating. I saw some blood stained pieces of piping in one police headquarters that was used for beating political prisoners. They were able to show what few journalists got in to Northern Iraq the kind of things that happen to people there. And now Saddam Hussein I have no doubt what so ever will make those people pay a high price for doing that. And that is why you are finding such large numbers of refugees moving from their areas of where they live to safer ground higher ground. And all those people that supported the rebellion are running away.

MS. HUNTER-GAULT: Well were many of them getting out the way you did through Syria or are they mostly going to Turkey?

MR. SADLER: Well most of the families that I was talking to in Erbil which is about 60 miles north of Kirkuk was thinking about heading to the border with Iran. I mean quite frankly there were people who helped Western journalists in there were asking us where they thought the safest place might be. They had no idea. We are talking about people who have never been in this situation before. People who have never controlled such huge areas of Northern Iraq and they were wondering where best they might go. I mean, just let me tell you about a situation which is close to the Iranian Border. That was a town that was gassed in 1988 two years ago to this month where 5000 people were killed as a result of the action by the Iraqi President who ordered that those people should be punished for their support of Iran in the Iran, Iraq War. Two thousand families were living in this village under this new so called period of liberation. Those families will also now doubtlessly flee for their lives. Where they go that is the problem. It is a human tragedy evolving right now.

MS. HUNTER-GAULT: And what about the guerrillas, I mean, can they just fade back with the civilians or can they go back in to the hills or what?

MR. SADLER: Well you could see what was happening on the streets as I was leaving. On one night people Pesmergas were on the streets with their automatic rifles and grenades stacked on their bodies. The next day they had simply started melting away. They had put their weapons in secret places as they had done over the years and they were hoping they may be able to brave out the returning forces of Saddam Hussein.

MS. HUNTER-GAULT: Finally Brent, Scott Petersen talked about the changing attitude towards the Bush Administration. Did you detect a change in attitude among the Kurds toward the Bush Administration for its present position now?

MR. SADLER: Yes indeed. That was a negative position as far as the Kurds were concerned. They were delighted to see Western journalists. Any body who could push their cause through media on the global circuit and they very quickly became disenchanted and and angry in the days that I was there that the international community at large led by America had really left them as scape goats to pay the price in blood for challenging the regime which they said the world wants. Saddam Hussein they said should be removed. The World has said that Saddam Hussein should be removed. They could not do it on their own they said how could they do it against a force like Saddam Hussein's that was still left still intact as far as controlling its own civilian population was concerned after the Gulf War.

MS. HUNTER-GAULT: Well Brent Sadler thank you for joining us. SERIES - CULTURE CLASH

MR. LEHRER: Now Part 2 of our series on Japanese-U.S. relations. Last night Business Correspondent Paul Solman looked at the ways Americans have often stereotyped the Japanese. Well, tonight the reverse, how the Japanese have done the same to us.

MR. SOLMAN: A Japanese TV ad mocking militaristic Japanese managers and their American workers, many of whom just can't keep up.The stereotype of the lazy American is becoming commonplace among the hard driving Japanese. More and more Americans are simply down and out. But there's another side to the Japanese image of Americans. The Japanese are making fun of us all right, yet, some 3 million of them will travel half way around the world this year to see how we live, shop at our fanciest stores like Tiffany's. Increasingly, Japanese feel superior to Americans, and yet at the same time, they're as drawn as ever to American culture. In a word, they're ambivalent about us, just as we are about them. Where does the ambivalence come from? In large part from the competition between two very successful cultures with extreme differences, differences which absent deep understanding and sympathy, have often led to caricature. Nashville, Tennessee's Grand Old Opry, a typical stop for Japanese tourists in America, only these Japanese are not simply tourists. They're corporate executives here to size up the state of American society and report their impressions back home. During a break between acts, Tatsuo Itoh on the right and Jiro Aiko are given a backstage tour. Immediately they're confronted by conspicuous contrast with culture back home. For example, public displays of affection are very rare in Japan, so is back stage informality.

JAPANESE TOURIST: I thought this place must be closed for general public. It seems this is open. Everybody can come in.

SPOKESMAN: Is this gentleman from Sony?

SPOKESMAN; Yes, he is.

SPOKESMAN: I want to thank you. You bought CBS and three publications. I make the awards for CBS.

MR. SOLMAN: CBS Records is a major label in the country music business, which makes Jiro Aiko a sort of Nashville mogul.

SPOKESMAN: Four of your artists, if you don't keep up with 'em -- four of them have gone gold, Charlie Daniels, Vern Gazdon, Ricky Van Shelton and --

MR. SOLMAN: Aiko is a former government official, now a top executive at Sony. Back home, he'd probably never find himself this cozy with a total stranger, but here his Japanese politeness has him trapped. Aiko may be a little embarrassed by this encounter, but he's not surprised. Having spent years in the states, he understands the cultural divide.

JIRO AIKO, Sony Corporation: I think always that the American society is verbally explicit society.

MR. SOLMAN: Explicit?

JIRO AIKO: Yes, explicit society verbally, but Japanese society is very implicit. One of the main characteristics of the Japanese culture are literature, anything. The role of vacuum is very important.

MR. SOLMAN: Role of the vacuum, space, silence?

JIRO AIKO: Yes, yes.

MR. SOLMAN: Well, there's nothing implicit about the Grand Old Opry, and in other ways too, American society seems to declare itself all too publicly to the Japanese.

TATSUO ITOH, Fuji Xerox Corporation: When I arrived at Kennedy Airport, first, I was a little bit shocked at the shabby status of airport, and again while we were on the way to the hotel, I saw again the roads were terrible and there are so many rubbish thrown away on the floor, and I thought the American economy or American culture, itself, might be at least on the verge of decaying in certain areas.

MR. SOLMAN: And even the Gulf victory may not be enough to counter an image of a U.S. that's falling apart. Yoshi Tsurumi came here from Japan in the '60s and now teaches at the City University of New York. He returns often to Tokyo and reports that many Japanese there fear an America in decay.

YOSHI TSURUMI, City University of New York: Problems are here visible. It doesn'thave to be Japanese to recognize them, but the lack of will on the part of American leadership, in political leaders to really deal with them -- you recognize them as problems -- that scares many Japanese, and the younger generation simply picks up on that theme and say American support is now crumbling, American days are over.

MR. SOLMAN: Then years ago when U.S. auto workers trashed this Toyota, Japanese TV ran the footage again and again -- to the Japanese, a sign that the U.S. was scapegoating them for America's decline. The image lives on. In a recent Japanese economics primer called Japan Inc. the U.S. auto industry is represented by thinly disguised Chrysky Motors, management by Chrysky's CEO, Lee Ironcoat. Both are treated with contempt. Harvard Business School Professor Mike Yoshino is a native Japanese in whom his countrymen confide. He hears the contempt firsthand.

MIKE YOSHINO, Harvard Business School: It's not the words, the expressions they use, but it's a disdain, almost a despise, a contempt. Americans don't work hard. Americans really have serious drug problems and Americans are poorly educated. Americans are not disciplined.

MR. SOLMAN: Business Consultant Sheridan Tatsuno is a third generation American with extensive Japanese contacts.

SHERIDAN TATSUNO, Business Consultant: The Japanese are so puzzled and in somewhat they feel sorry for us. They keep asking what's the matter with America, why can't you get your act together?

MR. SOLMAN: According to writer James Fallows, recently returned from a long stint in Japan, these new negative feelings are tinged with an old fear.

MR. FALLOWS: I think we can understand in the way as children might look on the schoolyard building, as somebody who internally was worse than us but also was bigger than us, and we were vulnerable to him in a certain way. He could wallop us in the side of the head at any given time. I think there's something of that combination of attitudes. The Japanese feel with some reason they just outperformed and out tried and out worked and out sacrificed the U.S. At the same time, the U.S. is big and they've gotten in trouble by challenging the U.S. before, so I think there is that ambiguity, as you would have towards the big bully.

MR. SOLMAN: Whatever misgivings the Japanese have about our latest show of force, however, they keep coming to sell products here, to buy businesses, to invest, as in this Nissan automobile plant in Smerna, Tennessee. In 1981, this factory opened under protest as local Teamsters opposed the use of non-union labor. Officials tried to carry on, but they were constantly met with chants of "go home, Jap," "Remember Pearl Harbor", and "Go Home Rat!" Representing his government, there's Jiro Aiko right in the thick of it. How did it make you feel?

JIRO AIKO: I felt -- typical part of society.

MR. SOLMAN: What do you mean?

JIRO AIKO: Very competitive.

MR. SOLMAN: And very angry. Were you scared at all?

JIRO AIKO: No. I enjoyed it.

MR. SOLMAN: You enjoyed it. Aiko enjoyed the energy, the freedom, the Americanness of what he saw, because it harkened back to a vision of America that many Japanese still admire. This Japanese Jack Daniels ad is trading on the positive stereotype of Tennessee, home to traditional American values like individuality and openness. Thus, Japan's double image of us, America the beautiful, America the pitiful, freedom from one point of view, chaos from the other. This split view of Americans in particular and outsiders in general has a long history in the land of the rising sun. As Japanese have compared themselves to the rest of the world, a sense of supremacy have alternated with what at times seems like a national inferiority complex because historically, the Japanese, like other relatively isolated peoples, have seen themselves as a race apart. In the mid 1800s, when Commodore Perry's gunboats pried open Japan, the double image was striking; to some, the agent of a more advanced culture, to others, a big-nosed barbarian. The positive image won out and for the next half century, Japan imitated and studied the West, acting as if Western ways were superior to their own. Eventually, however, pride and fear led to renewed nationalism, the return of the negative stereotype, the banning of Western habits, and ultimately to war. As Prof. John Dower has shown in the book "War Without Mercy", Westerners were now foreign devils. Winston Churchill had horns. The man behind the mask, FDR, was a demon. As the war was ending and Japan braced for invasion, Yoshi Tsurumi's teacher talked to the kids about what to do when the American cannibals came ashore.

YOSHI TSURUMI, City University of New York: Not only we talked about, we practiced, hoping that we wouldn't have to do that, but the choice was either you were eaten alive by the Americans or committed suicide -- suicide and die honorably.

MR. SOLMAN: You practiced it?

YOSHI TSURUMI: Of course, we practiced it.

MR. SOLMAN: How did you practice it?

YOSHI TSURUMI: We didn't have weapons or anything. We were just taught a couple of things. Hanging yourself is the easiest thing or jumping off the cliffs, a kind of low tech kind of suicidal methods which were readily available to any human being.

MR. SOLMAN: When the Japanese finally met Americans in the flesh, however, they found themselves looking up to the friendly and generous outsiders.

TATSUO ITOH, Fuji Xerox Corporation: And they are so tall and they looked so rich and we know that we were defeated by United States, so we looked at them with a kind of awe.

YOSHI TSURUMI: Any Japanese elders of my age, that means mid 50s and above, do remember the tremendous changeover that took place in each individual's mind from just the Americans as ogre to Americans as benign and very understanding, just the leader, and that feeling and that impression's very very strongly surviving even today, however, the younger generation, younger than say 40, who grew up after World War II, don't remember those what happened during World War II. It wasn't taught, et cetera, and suddenly just as they grew into the prosperity of Japanese post war economy, then they begin to develop certain negative perception about United States. Now more importantly, those younger generations are now coming into the position of leadership in industry, academe, and government. A tremendous generational changeover is taking place in Japan.

MR. SOLMAN: It's the new generation that watches TV shows like this, How Much For Things All Over the World, a sort of Price is Right, in which panelists try to guess the cost to Japanese consumers in yen of items produced all over the world, here, crystal in Lisbon, Portugal. As they try to figure out the price of this Portugese stemware, its rim cut especially to accommodate the famous Western nose, the richer, younger Japanese are making new racial comparisons. In recent years, the Japanese were self- conscious about their relatively diminutive size. These days they're making fun of the generous proportions of the competition. But while the younger Japanese may have begun to make fun of Americans on TV, the oldergeneration is still trying to buy our good will. We're back on tour with our Japanese executives, last stop is New York's Japan Society, where they're listening to appeals for funding.

GLEGG WATSON, Xerox Corporation: In many respects, blacks in America have tremendous pride in your success even though they're Americans, 30 million black people might become much more productive once you realize that we're not stupid.

MR. SOLMAN: But according to a recent poll, nearly half the Japanese people rank minorities as America's No. 1 economic problem. And Japan racial prejudice is so deep seated it extends beyond African-Americans.

JAMES FALLOWS, Writer: I think the only way a white American can have a sense of what it's like to be a black is to live in Japan for a while, because it's the only place on earth I think where your racial identity is so important in a thousand summary judgments each day and is on the whole negative that -- I've lived in Africa and they are obviously different from everybody else, but it was somehow on a different plane in Japan, where I could never ever escape the way I looked.

MR. SOLMAN: Just picture blond, six foot Jim Fallows in this typical Tokyo crowd. It's no surprise that such a homogeneous society treats the rest of us as outsiders, but in the United States, a nation of immigrants, there's nothing more important to us than being accepted and liked by everyone. I want you to react to me as a person. I want you to try harder to like me. Would you try harder, or is it an unfair demand?

JIRO AIKO, Sony Corporation: Well, this is not my personal answer, but I'm going to tell you what the, you know, normal reaction of Japanese to your question -- I know that I cannot comply with your request, but still I want to be very polite to you and I don't want to disappoint you.

MR. SOLMAN: So you're saying that Americans want something from the relationship that Japanese just can't give?

JIRO AIKO: If we remain as we are.

MR. SOLMAN: If they remain as they are. Well, in a sense, they can't in a multinational, multilateral world, but change in the Japanese character has tended to be a rather slow and uncertain thing. As long as Japanese see themselves as deeply different, they'll probably see Americans as somewhat curious creatures for whom stereotypes are the easiest categories to apply, and if U.S. society remains as it has been in recent years, then the Japanese stereotype of us is likely to become even worse than it already is.

MR. LEHRER: Tomorrow night in Part 3 of this series, Paul Solman will look at what happens when the Japanese and the Americans collide in the workplace. FINALLY - GRANDE DAME OF DANCE

MR. MacNeil: We close tonight with a remembrance of Martha Graham, the choreographer who was a revolutionary force in modern dance. She died of a heart attack yesterday at the age of 96 at her home in New York. For most of this century, Martha Graham provoked the critics, some to extremes of adulation, some to scorn. She started at the Denishon Dance School in Los Angeles, the cradle of modern dance. She went on to create an entirely new style from a belief that movement reveals inner emotions. She created scores of dances, often much closer to acting than dancing, and many of them are classics of the modern dance movement around the world. In 1930, she gave a legendary performance in the Rite of Spring to Stravinsky's music choreographed by Leonid Marcine. Fifty-four years later she choreographed her own Rite of Spring unlike any other. [RITE OF SPRING DANCE]

MR. MacNeil: In a rareinterview then on the occasion of her 90th birthday, I asked Martha Graham why she wanted to re- choreograph the piece she had performed so many years earlier.

MS. GRAHAM: I was always fascinated with the music, it drew me into it partly, partly that, and partly the fact that I was badgered into it by people around me who thought it was the thing for me to do, and I fought it for years, because I was very afraid of it.

MR. MacNeil: I was wondering, is it intimidating to take a score that is one of the great 20th century pieces of music and so often attempted?

MS. GRAHAM: Well, it's very arrogant. I was afraid of it, very afraid of it. And when I was working, I could not listen to the music too much because it unpowered me in a way. I would choreograph around the idea and I knew the music so well that the phrasing was in me and we did it without music a great deal in a movement sense, then we adapted it to the music after that, but I did not interpret the music.

MR. MacNeil: What do you think you brought fresh or added to the legend of the sacrifice during the Rite of Spring?

MS. GRAHAM: I don't know that. I simply know that of -- I've known about sacrifice so long that every moment of our lives is a sacrifice of a kind. Any moment of choice is a sacrifice. Tragedy is so close to us in such tiny things. It's just a matter of the instant of choice. [DANCE SCENE]

MS. GRAHAM: I think each one of us has all of life in us and it is our choice to decide what we will reveal. Some of us are not so fortunate as to be unable to reveal that which is not pretty. And I knew one woman who came back in Brooklyn to me one time and she'd evidently been crying and she said, "You'll never know what you've done for me tonight, thank you," and walked out. She had seen her only child, a nine year old boy, killed by a truck in front of her and she had not been able to cry. They took her everyplace. They gave her everything. They did everything. And the doctors were afraid for her. They took her to a performance of mine. She saw Lamentation and she cried. She said for the first time she realized that grief was universal and honorable and she could indulge herself in it. That was for me a great gift and a great lesson. [DANCE SCENE]

MR. MacNeil: Most of your great works were choreographed on your own body by you, for yourself. How does it make you feel now to have to work on other dancers' bodies and to watch them performing your works?

MS. GRAHAM: If you really want the truth, it makes me a little jealous. I sit in the wings -- but sometimes -- every night -- but sometimes it is very difficult because the change is there. They're not feeling what I feel. I feel a little possessive and a little jealous, envious.

MR. MacNeil: Is that because the dances are so personal to you, such an expression of your own life?

MS. GRAHAM: I try to know the woman I'm dancing about or that I am dancing. Like Clytonestra, I have to know what she had for breakfast practically so that I know what made her do the things she did. In all of us -- of course, maybe this is my father doctor speaking -- how many drops of blood have gone into the making of you? How much memory is in that drop of blood? What is there and remembered and not even remembered, sensed in some way? And it's that perhaps that I am jealous about. I'd like to feel that again. I'd like to participate in that possession again, because it is a possession. You know exactly what you're doing when you go on the stage, or you should, or you shouldn't go on a stage.

MR. MacNeil: Coming to interview you today, someone said, you're going to meet a woman who's 90 years old but who feels like a girl of 18. Is that how you feel?

MS. GRAHAM: Yes. I forget that age. I've never made any -- I don't like the idea. It's a nuisance. It's a nuisance in the sense that you can't do what you used to do, but as far as being a threat, no, I don't think so, not if you have the necessity to go on. If you want to sit in a rocking chair, you might -- I've known people of 16 who were absolutely suited to the rocking chair right then and I've known people of 60 who will never sit in a rocking chair. So I make no point about saying it's amusing to be old. I think it's an extreme bore in many ways and I fend it off as long as I can, but I don't -- that's not the core of my life. The core of my life is activity and the wonderful, wonderful things that are to be seen and discovered all over again every day.

MR. MacNeil: If you stopped coming in here every day and goading and inspiring and driving your students and your company, would the work continue?

MS. GRAHAM: I'd like to think so, in as far as it is valuable for its time.

MR. MacNeil: Martha Graham worked with her company up until the last months of her life, completing a 55 day tour of the Far East with her troop last December.

MS. GRAHAM: I have always said I don't know what will endure. I hope it will endure. I have tried to make the technique behind each dance, each interpretation of a character, as authentic as I know.

MS. GRAHAM: [Teaching] That, it should be like a heartbreak as the whole lift comes. It isn't just going through it. Do it once more, just once. Ready and -- [music playing]

MS. GRAHAM: When you teach a person, you are embarking on a very holy time. You're taking a life into your hands. You can make that person feel what you will, if you have hypnotic power enough to make them do the proper exercises with the proper timing and feeling. That's a great responsibility.

MS. GRAHAM: [Teaching] That's it, so that the whole throat is open. The throat is such an endearing part when you use it to the side and comes from the spine and it isn't looking, it's being -- all right, ready, please. [music playing]

MS. GRAHAM: I think the teacher delays or denies the importance of the soul or the mind, but those are the people who are afraid of walking the razor's edge. [music playing]

MS. GRAHAM: [Teaching] And rest --- all right. Shall we go on?

MR. MacNeil: Martha Graham, who died yesterday at 96. At her request, there will be no funeral. RECAP

MR. LEHRER: Again, the major stories of this Tuesday, Iraq said the Kurdish rebellion in the Northern part of the country would be crushed within a few days. France called on the United Nations to stop Iraq's assaults on the Kurds and Shiites. Finally, late today, the Associated Press reported that Los Angeles Mayor Tom Bradley is expected to call for the resignation of Police Chief Daryl Gates later tonight. Good night, Robin.

MR. MacNeil: Good night, Jim. That's the NewsHour tonight. We'll see you tomorrow night with the next in our series on U.S.-Japanese relations. I'm Robert MacNeil. Good night.