The NewsHour with Jim Lehrer

RAY SUAREZ: Good evening. I'm Ray Suarez. On the NewsHour tonight, a summary of the news, a federal board denies emergency loan guarantees for United Airlines, our series on executive pay and an interview with Jack Welch, the deadline rhetoric about Iraq's declaration on weapons stocks, and how the world sees America during this showdown with Iraq.

NEWS SUMMARY

RAY SUAREZ: United Airlines teetered on the edge of bankruptcy today. The company's stock lost two- thirds of its value after a federal airline panel rejected $1.8 billion in loan guarantees. That decision, late Wednesday, led to predictions the airline would now be forced to seek protection from creditors. It would be the largest bankruptcy in airline history. We'll have more on this story in just a moment. The news about United sent stocks falling on Wall Street. The Dow Jones Industrial Average lost more than 114 points, closing at 8623. The NASDAQ was down more than 19 points, closing under 1411. The State Department warned today of a possible terrorist threat to Americans in southeastern Turkey. The warning said the information was unconfirmed and fragmentary. It said Turkey had taken "prudent" measures to deal with the situation. The U.S. forces could use bases in Turkey in a possible war with Iraq. The U.S. Military made new moves today, building up forces near Iraq. The aircraft carrier "Harry S. Truman" and ten other ships in its battle group sailed from East Coast ports for the Persian Gulf region. They carried more than 8,000 sailors and marines on a six- month deployment. Iraqi President Saddam Hussein said today he's giving UN weapons inspectors a chance to do their work. He said the inspections could disprove claims that Iraq has chemical, biological or nuclear weapons. Last night, Iraq's deputy Prime Minster, Tariq Aziz, again denied his country has such weapons. But in Washington today, a White House spokesman said there's solid evidence of Iraqi violations.

ARI FLEISCHER: Iraq has lied before and they're lying now about whether they possess weapons of mass destruction. Tariq Aziz's statement is very much like statements that Iraq made throughout the '90s, denying that they had weapons of mass destruction when of course it was found that they indeed had weapons of mass destruction. And so I see little reason to believe Iraq now when they have such a history of lying in the past about this very topic.

RAY SUAREZ: We'll have more on this story later in the program tonight. Venezuelan President Hugo Chavez called out the military today to secure the country's oil industry. He ordered the navy to seize a gasoline tanker. The ship's crew had joined a four-day-old general strike aimed at ousting Chavez. The President said the strike was a plot to take over the country's oil industry in the world's fifth largest oil exporting nation. Chavez was deposed last April, but restored to power within days. Prosecutors in New York City asked a judge today to throw out all convictions in the Central Park jogger attack. The racially charged case drew national attention in 1989. Five black and Hispanic teenagers were convicted of beating and raping a white investment banker, and all served prison time. But last January, another man came forward and confessed to the crime, and DNA evidence backed up his claim. The judge is expected to rule in February. A druggist in Kansas City, Missouri, was sentenced to 30 years in prison today for diluting cancer medicine. Robert Courtney admitted watering down prescriptions for as many as 4,200 patients, and pocketing the money he saved. In court today, a federal judge told him, "Your crimes are a shock to the civilized conscience." A winter storm blasted much of the southern and eastern U.S. today. Snow and ice knocked out power to more than 1.7 million homes and businesses. Schools were closed in at least 13 states, and thousands of people were stranded at airports. The storm is blamed for at least 19 deaths. Senator Strom Thurmond celebrated his 100th birthday today in Washington at a party with hundreds of friends and family members. The South Carolina Republican has lived longer than any Senator in history. He's also served longer, 48 years. He formally retires next month. Roone Arledge, the former head of ABC News and Sports, died today in New York. He had been hospitalized at Memorial Sloan-Kettering Cancer Center. Arledge created ABC's "Wide World of Sports" in 1961, and "Monday Night Football" in 1970. He took over the news division of ABC in 1977, and created such programs as "20/20" and "Nightline." During his long career, Roone Arledge won 36 Emmys. He was 71 years old. That's it for the News Summary tonight. Now it's on to United Airlines on the edge of bankruptcy, more on executive compensation with Jack Welch, Iraq's approaching deadline, and how the world sees America.

UPDATE ON THE BRINK?

RAY SUAREZ: The United story is first. To walk us through the latest developments, we're joined by Paul Merrion, a senior reporter who covers aviation for "Crain's Chicago Business," a weekly newspaper.

Well, Paul, what was United seeking from the Air Transportation Stabilization Board?

PAUL MERRION: They were trying to get a $1.8 billion federal loan guarantee that would back up a $2 billion loan from lenders in order to restructure their finances.

RAY SUAREZ: And the board turned them down. Where does this leave United?

PAUL MERRION: Well, they have one last chance. They can appeal. They're working on some kind of an appeal now. They're trying to get together with their unions and see if there's one last round of concessions that they can put together that will convince the board that they ought to get the loan guarantee.

RAY SUAREZ: The ATSB discussed publicly why it made the decision it did?

PAUL MERRION: They issued a statement after their decision. Itwas a closed meeting. But they said that the plan was not financially sound, the revenue projections were too optimistic. They had concerns that the... that they had not accounted for the low fare carriers and what kind of competition they'd create. Also they were concerned about the funding of the under funded pension plan going down the road.

RAY SUAREZ: Just recently United's Machinist Union turned down a concession package that included a 7% pay cut. Did this end up being key in the decision not to give them the loan?

PAUL MERRION: Not at all because the Machinists were going to vote again today. They assumed -- the ATSB assumed that the vote would have been positive this time, but they determined that that would still not have been enough. The mechanics canceled the vote last night because it became a moot point.

RAY SUAREZ: So United Airlines has to make some loan payments quite soon.

PAUL MERRION: Coming up next week. They have some payments due Monday and they've got a big payment on Thursday, December 12, $875 million. They cannot really make these payments. It would take up virtually all the cash they've got; without any kind of a loan guarantee and some kind of restructured financing, they'll have to declare bankruptcy.

RAY SUAREZ: Where does this leave the businesses that do business with United Airlines?

PAUL MERRION: If they declare bankruptcy? It actually puts them in a better situation because in bankruptcy your vendors are protected. You get almost as much priority as the debtor in possession lenders so in a way they'd be in a better position. Right now a lot of their venders are demanding cash up front. They're not extending credit like they normally would. And so that's added to United's problems.

RAY SUAREZ: So between now and the 16th, will United be able to buy, for instance, jet fuel, prepared meals, the things that a carrier has to buy really day after day after day?

PAUL MERRION: Oh, I would think so, yes. I think they're going to be able... they've got about a billion dollars in cash so they can pay for things like that on an ongoing basis. It's these debt payments that create the huge problem.

RAY SUAREZ: And what about people who hold tickets or reservations with United Airlines?

PAUL MERRION: Well, right now I don't think there's any reason to be immediately concerned. Even if they declared bankruptcy tomorrow, they would not be changing their schedule for the holidays immediately. In fact my own mother is flying United for Christmas when she comes to see me. Down the road, it remains to be seen what kind of flights will be cut, how they'll have to reduce costs by changing their whole route structure, but for the immediate future it will really be business as usual as we saw with US Airways when they filed in August. The traveling public saw little or no difference right away.

RAY SUAREZ: Well, when US Airways was approaching bankruptcy, they went to the same board, the same ATSB, and asked for some loan guarantees and they got them. What was the difference between the US Airways and United cases?

PAUL MERRION: Well, they got conditional loan guarantees based on the unions coming up with the actual cuts that they had promised and other cost savings from their vendors and so forth. In the case of United, their total savings in relation to US Airways were less. I think the board felt that they just needed to do more, given the outlook for revenues in the whole industry.

RAY SUAREZ: So they'll have to... in the view of the ATSB, they'll have to more drastically change the way they do business day to day.

PAUL MERRION: Yes; they can't change the ATSB's mind about the revenue projections. Unfortunately the ATSB doesn't reveal what its revenue projections are. In a way United is just trying to do the best job it can, not knowing exactly what the target is they have to hit. But they clearly have to come up with lower cost structure that will allow them to weather a prolonged slump in the airline industry, which a lot of people think will last for a few more years and particularly if there's a war with Iraq, it could be terrible for everybody.

RAY SUAREZ: So how long are we talking about for this transitional, this perilous period? Do we see a new United emerging early next year, further into 2003? How long does this kind of thing take?

PAUL MERRION: It's hard to say. US Airways' plan is to come out in January. So that's about five months. United hasn't said anything about what its plan actually is, given how much bigger of an airline it is and how much more complicated it is. It could take longer.

RAY SUAREZ: And be shedding lots of jobs in the meanwhile?

PAUL MERRION: They were already planning to downsize further next year in response to the bad economy and the downturn in travel. They're likely to have to shed more jobs.

RAY SUAREZ: Paul Merrion, thanks a lot.

PAUL MERRION: Thank you.

SERIES EXECUTIVE EXCESS?

RAY SUAREZ: Now, the last installment in our series on executive pay and performance. Tonight, our business correspondent Paul Solman of WGBH-Boston addresses many of the issues raised in the series with one of the key business leaders of the last decade, former General Electric CEO Jack Welch. Welch has been in the news lately when his retirement perks were made public during a divorce proceeding. Our interview is about the broader questions facing executives during this year of business scandal.

PAUL SOLMAN: Jack Welch, welcome.

JACK WELCH: Thank you; nice to be here, Paul.

PAUL SOLMAN: CEO pay. One thing we keep hearing about it: In 1970, 40 times that of the average worker; by 1990, 140 times; today, 500 times or so. Why did the divergence occur?

JACK WELCH: It occurred for a whole series of reasons, Paul, but primarily the desire in the '80s and '90s to more align CEO pay with equity.

PAUL SOLMAN: So the point is let's give the managers stock so that they're in the same position as the shareholders; that's what you mean by aligning interest?

JACK WELCH: That was the idea. Then what happened? The market took off. As the market took off, total compensation exploded, and the differences became very, very large, as worker compensation generally was related to inflation, plus some productivity gains. And so the disparity grew as the markets grew.

PAUL SOLMAN: You have written about the idea that the organization ought to be less hierarchical.

JACK WELCH: Right.

PAUL SOLMAN: That workers should have more responsibility.

JACK WELCH: Right.

PAUL SOLMAN: That, in fact, the bottom tier, the bottom 10% typically of workers should constantly be under pressure to either perform or leave.

JACK WELCH: Right.

PAUL SOLMAN: So that would suggest that, then, the gap ought to narrow between the guy at the top, or person at the top, and the people under.

JACK WELCH: Well, you have unionized employees, and unionized employees do not want to participate in a differentiated pay system. So they do not participate in the equity plans in most companies.

PAUL SOLMAN: What do you mean they don't want to participate? Why?

JACK WELCH: Because they want you to give the same number of shares to each employee. We've had many discussions about that with union leaders, and they don't want differentiation.

PAUL SOLMAN: Because then it pits worker against worker?

JACK WELCH: In their view. In our view, it rewards those who do better versus those who do less.

PAUL SOLMAN: So then you mean that if you had been able... American industry had been able to pay workers within broad categories for performance and discriminate among them, there would have been less of a gap, do you think, between the CEO...

JACK WELCH: No, I think there's an... there's an enormous increase in the number of workers-- workers now being the whole organization-- that the wealth gains in the '90s were enormous, Paul. I mean, General Electric had... I don't know the number, whether it was 7,000 or 10,000 millionaires. That happened because stock ownership was spread throughout the company, and a lot of people benefited. The CEO, yes, got excessive amounts or large amounts. Well, I can say...

PAUL SOLMAN: (Laughs) Is it excessive?

JACK WELCH: It was large. It was very much... you... I can't justify the absolute number. All I know is that tomorrow morning, if you want to cap it, you'd be the dumbest guy in town because...

PAUL SOLMAN: The dumbest guy in the whole town?

JACK WELCH: The whole town. Because what you would do is you would challenge the free enterprise system. And what you would say to people that own WorldCom shares tomorrow that are out trying to hire a CEO, "You can only pay that CEO so much." Or TYCO, who just had to replace their CEO, "You'd only pay them so much." How do you think they get people to go take those jobs, take those high risks?

PAUL SOLMAN: You don't think you could get somebody to take the job at TYCO or WorldCom or perhaps a place that's a little less besmirched?

JACK WELCH: No, I'm giving you troubled situations.

PAUL SOLMAN: Yes. The worst -- the worst of the worst; but you don't think you could get people to do that job for less money than...

JACK WELCH: You won't get the best people, because the best people are being paid very well where they are. That's what free markets are all about. I grew up in a union family. I didn't have two nickels to rub together. I went to a state school for $50 a semester-- got lucky; got a great team together and made a lot of money. I worked hard as hell. That's what America is about. We ought to be cheering that. We ought to be hoping there's lots of people that that's happening to.

PAUL SOLMAN: You used the word, perhaps inadvertently before, "excessive" pay. Do you think that during this period of the bubble, because of the bubble, you were paid excessively?

JACK WELCH: You... no. No. $600 billion was created.

PAUL SOLMAN: But somebody... one thing I read said even when the stock price of GE went down, you still got more compensation.

JACK WELCH: My personal wealth, if it matters to you at all, has been more than halved, as I haven't sold a share of GE stock in the last three years -- never sold a share of GE stock. So, I mean, I've... I've gone up with it and I've gone down with it.

PAUL SOLMAN: Do you think that the corporate governance system that we have that pays CEO's is a good one or ought to be fixed?

JACK WELCH: You know, I mean, it's a very good one. If you focus on pay for performance, and if you focus on results, and you focus on delivery to shareholders, you will get a system that works. And that's what we have. All of you critics come up with a better system than a free market system.

PAUL SOLMAN: I'm not a critic. I'm literally asking you the questions that...

JACK WELCH: And I'm giving you a response. We've got some ills with this system, but it's the best one we know how to do. And every time we try and organize it... right now we're in the process of putting a thousand rules in. Now you...

PAUL SOLMAN: Are you worried about that?

JACK WELCH: Very, very much so. I think you needed some. I'm worried about it. If you take the risk out of the system, what is it that will make America grow? It's what made America grow. Don't throw the '90s away. The '90s had its excesses, the '90s had its problems, but we became the most competitive nation on earth in the '90s.

PAUL SOLMAN: So how do you explain the scandals? Were you shocked when you found out what Enron had done, for example, Global Crossing?

JACK WELCH: Stunned.

PAUL SOLMAN: Yes?

JACK WELCH: Stunned. Stunned. Perhaps I shouldn't have been, because there have been abuses in every decade.

PAUL SOLMAN: Yes. Throughout the history of...

JACK WELCH: Of business.

PAUL SOLMAN: ...American business, yes.

JACK WELCH: So, I mean, perhaps I shouldn't have been, but I was.

PAUL SOLMAN: And so, what do you attribute it to?

JACK WELCH: Excesses; bubbles. I mean, you almost felt guilty if you weren't investing in dot-coms. You almost felt like a dope because your neighbors were saying they just made a doubling and tripling and quadrupling. Everyone got into the hype. The media played a role in the hype, the companies played a role in the hype.

PAUL SOLMAN: Yes, but it... but investing in a dot-com, no matter how stupid it may look in retrospect, is not the same thing as manipulating a, you know, transmission line-- as the guy from Enron recently admitted to doing, you know, so that he could pump up the price on the other end of the line.

JACK WELCH: But there's bad... that's bad behavior. There's 17,000 traded public companies, I think. I think so far there's something like 11-- is that what we're talking about?

PAUL SOLMAN: I haven't...

JACK WELCH: I think the numbers are something like that. Let's go 20, okay? It's awful. It's bad, but in general, there's millions of good people out there working day and night to do their jobs right.

PAUL SOLMAN: So you don't think there's lots and lots of people did this stuff, they just haven't gotten caught?

JACK WELCH: No! Not at all! Now we have a bad apple here and a bad apple there, but you have that in the town of the size of Tampa every day. That's why you have police departments, that's why you have law enforcement agencies. I mean, the business -- are a bunch of good people trying... the whole thing works because of business. Your network wouldn't operate without public funds, without donations, without gifts.

PAUL SOLMAN: I'm aware of that.

JACK WELCH: It comes from successful, winning enterprises. Why are the... why are these new governors coming into power in debt-ridden states, frightened to death as they take over budgets that... because the revenues are down, because business is down. Business is where it all starts. If you don't generate revenues from business, you don't end up with a society that works.

PAUL SOLMAN: Right. And the argument I think I'm safe in saying, the critics are making at this point about CEO compensation and about the corporate governance system is that it has broken faith with people so that they don't believe in the business system you're extolling as much as they used to.

JACK WELCH: And we have to do things to get them back because we brought into the market a vast population in the last ten years. I don't know the numbers exactly, but we were over 50% invested.

PAUL SOLMAN: Yes. So millions of people came in who were in before.

JACK WELCH: Never in before. And they deserve to know there's a fair shot out there. They...

PAUL SOLMAN: Right. And they now think that maybe there isn't, right?

JACK WELCH: Right. And we've got to be sure that we put in place things that give them that confidence. We're going through a cycle in American business where I've been out giving talks for the last months, talked to tens and tens of thousands of people, and they're down. Their 401(k)s are down, they're frightened for their jobs; they're not in that buoyant feeling of going forward. And so we need... we need to have an environment where CEO's are out taking risks, are out doing things positively, are out creating an atmosphere that we can win again. Right now it's a hunker down. It's a hunker down as there's trouble in the land, and we're too good a country and too strong a people to just hunker down.

PAUL SOLMAN: Is the economy in crisis, in a precarious position, about to suddenly turn around because productivity numbers, for example, are good and long-term-- that's what makes an economy grow?

JACK WELCH: As far as the fundamental numbers are concerned, in '80- '81, the prime rate was 21%.

PAUL SOLMAN: The prime rate of interest-- 21% if a company went to a bank to borrow money?

JACK WELCH: 21%. Today, it's 2%. Long-term rates are 4.5% to 5%. Short-term rates are 1.5%. Inflation was 13%. Today, it's 1.5% to two max -- maybe less. Unemployment was double digit, today it's under 6%. So you've got relatively good basic numbers. We are not in a total disaster here, but we do have new factors. We're more globalized. China is going to make the... the impact of China on this country in the next five years or ten years is going to make the Japanese of the late '70s and early '80s look like a water pistol.

PAUL SOLMAN: And that was a time, certainly by the mid-'80s, late '80s

JACK WELCH: Mid 80s

PAUL SOLMAN: -- where people were saying, "Japan --"

JACK WELCH: Won.

PAUL SOLMAN: -- has won ..."Buying has won. "Japan is buying up America."

JACK WELCH: So you have to get your company into a position of massive competitiveness. And it does you no good whatsoever to look at this situation as a pessimist. Nothing good occurs for people. If you look at this thing as... I see this...

PAUL SOLMAN: This thing meaning the...

JACK WELCH: This economy, this malaise, this scandal plagued environment, this congressional battle, the SEC issues, every one of these things is fundamentally an opportunity.

PAUL SOLMAN: But your point is that if people can be reinvigorated, reenergized, that that in and of itself will have a significant impact on America's competitiveness in the new global economy?

JACK WELCH: But you got to be... I mean, a cheerleading megaphone isn't going to do it. You've got to go out and make acquisitions, you've got to go out and spend some money on new products, you've got to be spending on R&D, you've got to be showing them where you're going.

PAUL SOLMAN: Well, your successor has just announced he's going to spend a billion dollars in R&D. And people say, hey, at this time, that kind of money?

JACK WELCH: He's doing something. He's getting people energized around new products. See, I happen to think that you cannot leave people in a malaise. Your job as a CEO is to give people the vision of where you're going.

PAUL SOLMAN: Jack Welch, thank you very much.

JACK WELCH: Thanks a lot, Paul. I enjoyed it.

RAY SUAREZ: Still to come on the NewsHour tonight, Iraq's weapons declaration deadline, and how the world sees America as the confrontation with Iraq continues.

FOCUS INSPECTING IRAQ

RAY SUAREZ: Iraq and the United States rev up the rhetoric as a major deadline approaches. Margaret W Warner has that story.

MARGARET WARNER: The approaching deadline for Iraq to declare its weapons of mass destruction has been accompanied by heated charges from both sides. The U.S. says Iraq is lying about its weapons program. Saddam Hussein said today the inspections would prove it's the U.S. that's lying. For perspective on all this, we turn to two commentators on international issues. Katrina Vanden Heuvel is editor of "Nation" Magazine. And Jim Hoagland is a columnist for the "Washington Post." Welcome to you both.

Jim, why are we hearing this rhetoric? Even before the Sunday declaration, why are we hearing this rhetoric from the White House saying Saddam has always been a liar, he's still a liar?

JIM HOAGLAND: Well, this is the point that the administration has been coming toward since it decided to go to the United Nations for new resolution spelling out tougher inspection terms. The administration put a lot of emphasis on getting this full statement and hopefully a truthful statement from the Iraqis, which will say, yes, we do have weapons of mass destruction, in which case the administration can play got-cha and demand that these weapons be destroyed or is more likely the Iraqis are left in a position of saying, no, we don't have any of these awful weapons of mass destruction. We've just spent the last four years keeping inspectors out. We've given up $130 billion at least in terms of the sanctions that are imposed so we could keep the facilities, the ability to produce these weapons, but we don't really have them; hardly credible. So the administration feels that either way they will be able to build a good case against Saddam once this declaration comes out.

MARGARET WARNER: But, Katrina Vanden Heuvel, why call him a liar now in advance? Why do you think the administration is doing that rather than wait until Sunday?

KATRINA VANDEN HEUVEL: Well, I think that there is a fight within this administration. We get war rhetoric from some and then we get rhetoric from Colin Powell which is more in sync with general secretary Kofi Annan saying inspections will take time. It's not a one-week wonder. I think there is a yearning across this country and across the world for the inspections process to be pursued, to be pursued to the extent possible to avoid war and to be legitimized. That's what this resolution was about. Those who signed on to it in the Security Council had a double mission. One could call it double containment. They want to prevent the United States from going to war and contain Iraq. There is great concern about destabilization in the region, a strong view that war is not necessary, that it will destabilize, perhaps make al-Qaida's political project even more powerful, and there is great suspicion even among close allies of the United States about the United States imperial ambitions in the region. If Iraq is first, is it then Iran and Syria? Let us pursue inspections to their utmost possibility. And if the United States on December 8 says, "We know you have nuclear... we know you have weapons of mass destruction," if they can come forward on North Korea as they have with their intelligence, let them come down to the security council and inspectors and not play a game in pursuit of regime change or a reckless, unnecessary war.

MARGARET WARNER: Jim Hoagland let's go back to an earlier point that Katrina Vanden Heuvel touched on about the inspections themselves. Would you interpret the rhetoric coming from the administration this week as essentially saying they don't have a lot of confidence in the inspections? I noticed yesterday, for instance, that the White House spokesman not only made sure that the press new... knew that the administration has let Hans Blix know, the head of the weapons team, that they want more aggressive inspections. What do you think is going on there? Why would they be talking about that now?

JIM HOAGLAND: Well, I think they're talking about two things that we have heard in the press briefings where officials at the White House have pointed to the historical record of the Iraqis having consistently, pervasively, almost non-stop lied about the weapons of mass destruction. This is a matter of historical record. This is not a matter of propaganda. The second point is that there is skepticism about the ability of the inspectors operating in a country the size of California with a regime that practices great secrecy even on mundane things, that these inspectors will actually be able to produce a smoking poison gun canister in Saddam Hussein's hands. The results are likely to be ambiguous at best, and the administration is beginning to build its case for why Saddam Hussein has not changed. There has not been a strategic shift in his outlook about poison gas, about the other weapons of mass destruction that we know he's developed and lied about, and then that's how the administration is framing the inspections. They are not there to prove that Saddam has disarmed. Saddam has to prove that he has disarmed. It was interesting in his statements today that Saddam Hussein has tried to shift the focus, and he's described the job of the inspectors as disproving American allegations. There's certainly nothing in the resolution about that. And the United States is engaged as Saddam Hussein is in trying to focus, trying to shape the debate.

MARGARET WARNER: And so, Katrina Vanden Heuvel, explain what you make of the Iraqi rhetoric. Yesterday you have a senior Iraqi saying these inspectors are spies for the U.S. and Israel. Today Saddam Hussein says we're going to let the inspectors do their work because they're going to prove the U.S. is lying.

KATRINA VANDEN HEUVEL: Well, much of this is for domestic consumption in Iraq. But let us not forget that the inspectors who worked in Iraq for about eight years had great success in dismantling Iraq's weapons of mass destruction program. What is important I think is that we now... we see Iraq within the context of this administration's policy of pre-emptive war, which is really an overthrow of a defensive international tradition, American tradition in favor of a destabilizing tradition counter to American norms and international law norms. I think as I said earlier that if America has evidence, intelligence evidence, it goes to the UN and the Security Council, I might refer back to North Korea, which is a more hermetic, sealed society. Today Ari Fleischer said that North Korea didn't... Iraq, unlike North Korea, had a history of invading its neighbors. Mr. Fleischer might want to take a history lesson in terms of North Korea's invasion of South Korea in 1950, but more important is to legitimize inspections, to legitimize multilaterals in treaty and diplomacy in dealing with proliferation and chemical weapons and biological weapons and not resort to war as a first or second resort as this administration seems to want to, itching, as so many within it want to do and not putting, for example, the Middle East crisis on the front burner as many in the Security Council privately have told the U.S. is the thing to do.

MARGARET WARNER: Jim Hoagland, do you think that when Sunday rolls around and Ari Fleischer was pushed on this point today that if the U.S. comes out and says this declaration is a falsehood that it should come forward publicly with evidence to back up the charge?

JIM HOAGLAND: Well, I think what the U.S. fears is that on Sunday or perhaps on Saturday, we're likely to get several thousand poorly copied photocopies of documents, some of them in Arabic, some of them in German, some of them in unknown languages, that will take a long time to absorb and to digest and to base analytical judgments on. That would be partial compliance of a very devious sort. That may well be what happens. I think the administration though will not immediately come out with a statement. I think it will want to be seen to be studying these documents, and I think we've touched on an important point earlier in describing the work of the previous arms inspectors under the UNSCOM, Special Commission of the UN, who did have success primarily because they were able to use information provided by defectors -- Saddam Hussein's brother-in-law, for example, son-in-law, who was then subsequently executed. Once they had that information from defectors, the inspectors were indeed able to do their job. I would not be at all surprised if there are not some recent defectors we don't know about yet who you will be hearing from once the Iraqis have made their declaration.

MARGARET WARNER: All right, Jim, Katrina, don't go away because we want to hear from you further because we're going to turn now for a moment to how U.S. policy is seen elsewhere. Terence Smith looks at a new survey on that subject.

TERENCE SMITH: The new poll is entitled "What the World Thinks in 2002, How Global Publics View Their Lives, Their Countries, the World, America." It was conducted by the Pew Research Center for the People and the Press. Its director, Andrew Kohut, joins me now.

Andy, welcome.

This is a simply huge survey compared to what is normally done, let's say, in this country. Tell me about the genesis of it and how you did it.

ANDREW KOHUT: Well, we did it in 44 countries. We did it with 38,000 interviews. In each country we can say something about public opinion. The broadest objective of it is to understand global points of agreement and disagreement at a time when the world is getting smaller and at a time when the world is extremely tumultuous. This is the first series of reports to come out of this survey. We will report later in the spring about other topics.

TERENCE SMITH: Looking at it altogether, what's the biggest trend, the most interesting and surprising thing that came out for you?

ANDREW KOHUT: The two headlines: One, the amount of global gloom about the international situation, the position of the planet at the end of the year; and also slipping... the slipping American image all around the world, not just in Muslim nations where the notion is they hate us. But attitudes toward America have declined all around the globe.

TERENCE SMITH: All right. Well, let's look at some of the findings that you have here. I mean the first in a chart here shows the European views of the U.S. particularly compared to an earlier survey done in 1999-2002.

ANDREW KOHUT: The earlier survey by USAIA, I might add and it shows clearly in Germany, Britain, Italy, opinions of the United States are still favorable but not nearly as favorable as they were prior to 9/11 attacks. There was a great outpouring of sympathy from us, from our friends and from all kinds of countries, but what this survey shows is the extent to which our old traditional... our old friends, our traditional allies are begin to go have a different point of view about us on a lot of different issues.

TERENCE SMITH: Why down so sharply in Germany?

ANDREW KOHUT: That certainly was taken just before the German election. And opinion about America was very contentions; the issue of whether we're going to go to war with Iraq and whether the Germans would support us or not and the Germans are very wary about potential war in Iraq and getting involved in it.

TERENCE SMITH: And yet right next door in France essentially flat or even up a point.

ANDREW KOHUT: Yeah, but the French have... give us the lowest ratings in Europe. It's just that they haven't gone any lower. The French have been traditionally at least favorable to us -- of the big nations of Europe.

TERENCE SMITH: All right, then, secondly is a survey you did of the opinion of the U.S. in the Muslim world. Tell us about that.

ANDREW KOHUT: Well in the Muslim world we find that if there's a place where there's true dislike of America, it's in the Muslim world. As this surveys shows, our two partners in the war on terrorism, Egypt, 6% have a favorable view, 69% an unfavorable view. In Pakistan, only 10% favorable view; in Turkey, 30%. Both of these numbers

represent lower ratings than was the case prior to the 9/11 attacks.

TERENCE SMITH: What explains them so low? For example, in Egypt, a country to which we give billions in foreign aid, Pakistan, a country where we for gave debt and provided a lot of assistance and still do, how do you explain it?

ANDREW KOHUT: Well, Terry, unquestionably our policy, U.S. policies toward Israel are a large part of this, but there's another element of this. In every one of these countries, there's disapproval of the war on terrorism, even in the Muslim countries where we're liked in Indonesia, not shown on this chart or Mali or Senegal. There's backlash in Muslim countries against the war on terrorism. The U.S. is thought to be picking on Muslim countries. Not so in the rest of the word. The war on terrorism gets broad support around the world but not in Muslim countries.

TERENCE SMITH: And in Jordan, again, a very close ally of the United States and yet only 25% have a favorable view of what the U.S. is doing these days.

ANDREW KOHUT: Very unfavorable attitudes. There's the real problem for the United States, addressing not only dislike -- out and out hatred in some of these countries. 42% have strongly unfavorable views of us in Turkey -- our NATO ally.

TERENCE SMITH: Then you go on to this next, you take a look at the question of whether suicide bombing is justifiable in defense of Islam in different countries.

ANDREW KOHUT: There's a very troublesome attitude. We show very strong, high percentages in some country, majority saying suicide bombing is justifiable in defense of Islam. Even in countries where it's not a majority or even a plurality, there's large percentages of the... of these populations which are sympathetic to this tactic -- a worrisome set of attitudes.

TERENCE SMITH: And finally, you analyze the question of using force to oust Saddam Hussein from Iraq, and attitudes towards that and what did you find?

ANDREW KOHUT: Interestingly, while the Europeans agree with us that Saddam is a threat to regional stability, a threat to world peace, there is very little appetite for joining the conflict among our allies even in Britain we have 47% in favor, 47% opposed. The Turkish situation is really the most problematic for the Americans. Only 13% say the Americans should be alloyed... allowed to use their bases to attack Iraq if it comes to that. The Turks not only don't want to do this -- they think it might be bad for Turkey if Saddam goes. Many of them see a war against an unfriendly Muslim state, not an objective... having the objective of making this a more peaceful region.

TERENCE SMITH: And yet finally through all of this, you find a reservoir of good will towards the United States.

ANDREW KOHUT: In most countries, in 35 of the 44 countries, a majority of people still have a favorable attitude toward the United States. That favorable... those favorable ratings are lower than they once were, but the United States still is looked to particularly in the developing nations of Asia and Africa, as models for democracy, models for free market practice.

TERENCE SMITH: Andy Kohut, thanks so much.

ANDREW KOHUT: You're welcome.

MARGARET WARNER: And rejoining us now are Katrina Vanden Heuvel editor of the "Nation" Magazine and Jim Hoagland, a columnist for the "Washington Post."

Katrina, what do you make of this poll? Do you think that this slipping opinion of the U.S. is justified, and does it matter?

KATRINA VANDEN HEUVEL: I think it shows the desperate need for an alternative national security, human security agenda. Think of the goodwill in the immediate aftermath of September 11 that has been squandered. The U.S. could have used its leadership and could still with an alternative to be a source of hope not resentment in the world. Instead we have used our resources, energy, and militarism toward a reckless war with Iraq or heading that way instead of think of promoting a development and democracy agenda in the Arab world, trying to bring peace to the Middle East, using the UN as a real instrument for war prevention and disarmament. There are a whole series... and addressing the vast inequalities in the world. So I think Turkey is a very interesting example. If we're going to go there and $10 billion for their air space for military purposes, why not use that money for nation building, economic security, so I think it's a very telling sign, not surprising, in light of the way this administration has treated even its closest allies on everything from the international criminal court, global warming and shredding treaties right and left.

MARGARET WARNER: Telling and not surprising, Jim?

JIM HOAGLAND: Well, not surprising on two scores. One is that the United States, after all, is the biggest, richest, strongest kid on the block. It's going to stir resentment. We're also very intrusive. We are symbols of globalization. People frequently mix up changes in their societies that come from globalization and attribute it to Americanization. So that's a problem that comes with the territory. There's a problem created by this administration in terms particularly of an early days of its style, of unilateralist behavior and really of sticking a finger in the eye of some of the Europeans. There's a price to be paid for that. The administration I think has come to realize that and is working hard on overcoming it but the third thing in this that is a little bit more surprising for me is the fact that the countries that were surveyed are gloomy about themselves. The disapproval ratings of the governments of those countries are higher than the disapproval ratings of the United States. The executive summary of the report says we live in a gloomy time, and the United States becomes a symbol and pays the price for some of that.

MARGARET WARNER: Jim Hoagland, Katrina Vanden Heuvel, thanks, both.

KATRINA VANDEN HEUVEL: Thank you.

RECAP

RAY SUAREZ: Again, the other major developments of this day: United Airlines teetered on the edge of bankruptcy today after a federal panel rejected loan guarantees for the company. And prosecutors in New York City asked a judge to throw out all convictions in the Central Park jogger attack. We'll see you online, and again here tomorrow evening with Shields and Brooks, among others. I'm Ray Suarez. Thanks and good night.