The MacNeil/Lehrer NewsHour

MR. LEHRER: Good evening. Leading the news this Thursday, a British hostage was released in Lebanon and President Bush said the release of an American might soon follow. We'll have the details in our News Summary in a moment. Robin.

MR. MacNeil: After the News Summary our main focus is the hostage situation. We hear the statement by the freed British journalist, then look at what kind of deal the hostage captors are seeking to free the rest. Then a documentary report updating the politics of Kuwait a year after the invasion. NEWS SUMMARY

MR. MacNeil: British hostage John McCarthy was freed in Beirut today by his Islamic captors. The 34 year old McCarthy was turned over to the British ambassador in Damascus and then flown on a Royal Air Force plane to Britain. He arrived home tonight to the cheers of hundreds of journalists and spectators. McCarthy is a television producer for London-based Worldwide Television News. He was seized five years ago while on assignment in Beirut. Earlier today McCarthy expressed his thanks to those who'd helped secure his release. He said he had information about the other Western hostages in Beirut. He also said he wascarrying a message concerning their release. He spoke to reporters in Damascus.

JOHN McCARTHY: I spoke yesterday at great length with my captors. I was held by the group called Islamic Jihad. And they have given me a letter which they wish me to deliver personally to the United Nations Secretary General, Perez DeCuellar. I understand the letter seeks the Secretary General's help in arranging a release of all prisoners and hostages being held in Lebanon and for those being held in Israel. My captors did tell me that whilst their group, Islamic Jihad, does not hold all the hostages, they could assure me that for all 11 Western hostages being held in Lebanon health and living conditions are good.

MR. MacNeil: The fuller version of that news conference later. At the United Nations, Secretary General Perez DeCuellar said there had been no conditions attached to McCarthy's release. He also said he'd been in contact with all parties concerned with the hostage issue and he believed another release was imminent.

SEC. GEN. PEREZ DeCUELLAR: While I am still hopeful that we are going to have another one today or perhaps tomorrow, and then I hope it will be an American hostage, but I don't expect more than two.

MR. LEHRER: White House Spokesman Marlin Fitzwater said President Bush was pleased by the release of McCarthy but said he wanted all hostages released immediately, safely and unconditionally. Reuters News Agency quoted Lebanese sources saying Terry Anderson might be freed within the next 24 hours. Anderson, the Associated Press chief Middle East Correspondent, was taken hostage in Beirut more than six years ago. Mr. Bush on vacation in Kennebunkport spoke himself about the possibility an American might be released.

PRES. BUSH: Well, in the first place, we don't know anything official, other than that the British hostage was released. There are rumors, an increasing number of rumors, that an American will be freed. There was some Lebanese source -- we don't know how strong or good it is -- saying that Anderson will be released. And so it's -- the game goes on -- certain cruelty to it and a sense of tragic dance -- but on the other hand, there's some hope out there that didn't exist -- I say tragic because there's other Americans held. I'd be delighted to say one released, but I want to see 'em all released.

REPORTER: Why are you using the word "rumors?"

PRES. BUSH: Because when you see an unsubstantiated report, in my view it's a rumor and the evidence is not all that hard. We keep getting assurances and through third parties but that's not good enough for me. That's why I say rumors --

REPORTER: When you say third parties --

PRES. BUSH: -- because we've had it before. We've been down this road. The hopes of these families have been lifted only to be dashed before. And I, as President, I'm not going to be part of that game. It's too cruel, it's too ugly. Now --

REPORTER: But I mean, some of this is through diplomatic contacts.

PRES. BUSH: Oh yeah, diplomatic contacts and UN sources and that's why I think there's a chance now that -- better chance that an American will be released. There's all kinds of channels on these things as we know.

MR. LEHRER: In Israel, a spokesman for the defense minister said Israel will be ready to negotiate the release of Lebanese prisoners held in Israel, but the government expected any exchange to include the return of seven Israel soldiers missing in Southern Lebanon. In Beirut, a group calling itself the Organization for the Defense of Prisoners' Rights claimed it had kidnapped a French aid worker today. They identified him as Jerome LeRalle. They said he would be killed if any other Western hostages were released. There was no independent confirmation of that kidnapping. The group was unknown until yesterday when it claimed responsibility for a grenade attack on the United Nations Beirut office.

MR. MacNeil: The former prime minister of Iran was assassinated today in Paris. Shapour Bakhtiar was found stabbed to death at his home. Bakhtiar was the last prime minister under the Shah of Iran. He was a vehement critic of the late Ayatollah Khomeini's regime. He'd lived in exile since the 1979 Islamic revolution. He was the latest of a series of former Iranian officials assassinated in Europe since the late Shah was deposed. An unnamed aide was also killed in today's attack. Turkey today launched new raids against Kurdish rebels across the border in Iraq. Turkish troops moved into the rugged Iraqi border region after a two and a half hour attack by Turkish warplanes and helicopter gunships. A Turkish news agency said the Kurdish rebels suffered heavy losses. It gave no figures. Turkey began the raids on Monday. It has said the target of its attacks in Iraq is limited to hideouts used by rebel Turkish Kurds seeking an independent homeland.

MR. LEHRER: A cease-fire in the Yugoslav republic of Croatia was broken by scattered fighting today. At least one Croatian guardsman was killed. We'll have a report narrated by Tom Brown of Worldwide Television News.

MR. BROWN: The shaky federal truce is just about holding in strife torn Croatia but no one believes it'll last much longer. In the ethnic Serbia town of Benija, a familiar sound breaks the tense silence. It's a reminder that without further peace efforts, the cease-fire will be no more than a breathing space in the hostilities. After the failure of the European community to broker a permanent peace settlement, a larger group is giving it a try. In Prague, delegates from 35 nations at a conference on security and cooperation in Europe gathered in an attempt to reach a solution acceptable to all, but it's a tall order with positions polarized on all sides. The French for one want a European source in Croatia. But the Soviets oppose this. The peacemakers have two days to reach a compromise.

MR. LEHRER: More than 10,000 Albanian refugees forced their way into Italy today. They did it packed on a small freighter. The ship ran a police blockade off the Italian coast. The captain was ordered to turn back but he said he was under threat by the refugees. Some refugees leapt off the ship as it entered the port of Bari. The Albanians are fleeing impoverished conditions at home. A spokesman for the Italian government said they would be sent back to Albania.

MR. MacNeil: The former chief financial officer of the Bank of Credit & Commerce International testified before a congressional committee today. He said top executives at the bank built what he described as a lot of Chinese walls to keep their employees from finding out about the bank's illegal operations. Masi Shurama said he conducted an internal investigation in 1990 of the bank's activity. As a result of his findings, he resigned from the bank and threatened to go public. He said that led to a threat from one of his colleagues.

MASIHUR RAHMAN, Former BCCI Official: He said that let me tell you openly in front of Mr. Chadri that if you open your month or if you go to court, I personally kill people in my life in Mutan in Pakistan and I'll use the same gun on you. Now he was so junior to me I didn't even take it seriously. But after I left, several of my friends and ex-colleagues were bringing information that people from Abu Dabi, people from BCC, who were named in this report, have said that my life is not worth the paper it's written on.

MR. MacNeil: Rahman said he sent his family to the United States because his wife and children had also received threats. That's our News Summary. Now we focus on the hostage release and politics in Kuwait. FOCUS - FREE AT LAST

MR. LEHRER: The lead story of this day was the release of one British hostage in Lebanon and the hope it triggered about the other dozen Americans and Europeans still being held. John McCarthy, a producer for Worldwide Television News, was the man freed. He had been a prisoner of the Islamic Jihad movement for five years and three months. Soon after his release today, McCarthy talked on Syrian television about his captivity.

JOHN McCARTHY, Former Hostage: Well, first I want to say on behalf of the families of my friends with whom I was held hostage, the two Americans, Terry Anderson and Tim Sutherland, and my compatriot, Terry Waite from England, to tell their families that all three of them are well. I'm very hopeful that my release suggests that they too will soon be going home.

REPORTER: How is this a suggestion they're going to be home?

MR. McCARTHY: Well, before I was released, the day before I was released, yesterday, I spoke to some leaders of the group that were holding me which is the Islamic Jihad, Jihad Islamic, and they said that they believed the time was right now to end all the situation for all the Western hostages and they've given me a letter that they have asked me to take directly to the Secretary General of the United Nations, Perez DeCuellar, and in which --

REPORTER: Do you have any idea about this, what is in the letter?

MR. McCARTHY: Well, no. I believe that they lay out that they want to make a full exchange of the Western hostages and also probably the --

REPORTER: Trade for what?

MR. McCARTHY: Well, for all the prisoners civilian and military who are currently being held by Israel from Lebanon. That's to include the Lebanese soldiers, civilians, and Palestinians who have been taken from Lebanon, but that is what they want to do and they believe that releasing me indicates their good intent in this matter and that they hope to see from Israel now they hope through the United Nations some move on their part to show that the Lebanese prisoners are in good health and that they hope that soon they can make an exchange for everybody in Israel and everybody in Lebanon.

REPORTER: I know that you don't want to remember this experience, but what can you tell us just briefly about this experience, whatever you want to say.

MR. McCARTHY: Well, it's been a very, very long time, five years and three months. There were times when it seemed it would never end and I kept hearing news and thought maybe now, maybe now, and it would go away, and I think for all of us it was a constant, constant strain, a constant pressure on us, and we had to work very hard between us to, to keep our spirits up, keep ourselves happy and determined to carry on. And we've done that very well I think. The men I was with, Terry Waite, Terry Anderson, and Tom Sutherland, were very strong men and they supported me and I hope I supported them. In terms of the conditions of our captivity, the first two years I think for all of us were very difficult. We were living in poor conditions and there was really much pressure from the guards. But for the past three years, certainly I think, certainly for the last two years, conditions have improved a lot. This is small things from relations with the guards and the food and living conditions have improved greatly.

REPORTER: Why were you taken, do you think?

MR. McCARTHY: I -- I have blond hair. I think for my passport only. Just I was British, I was a Westerner. I think it's something that we've all found, that the men who were keeping us, many of them were young men who were working in a group for what they believed in. They believed they were helping their community, their country in some way. Many of them I think regretted causing us hardship but they still did it. To that extent, I feel that the leadership is wrong to make -- to encourage them to do this. But they have done it. As you say, they have made my life very bad for five years. They separated me from my friends and my family. And for them, they feel that my case is no different from the case of the prisoners in Israel or before the prisoners that were held in Kuwait, which I believe have now been released.

REPORTER: Any plans for the future?

MR. McCARTHY: Yes, everything. I want to do everything. I want to go home and to be with my family a lot and to try and make up for the time I've lost in my career and in traveling the world and making friends.

REPORTER: When Frank Reed and Robert Polhill were released, I had a chance to see them, the first person possibly, they were not feeling well healthwise. You are feeling well -- it seems.

MR. McCARTHY: Yeah, I've been very fortunate. I've had no serious illness and we all suffer from latif -- but as I say, I have been lucky with my health. Terry Waite, for instance, had been very sick. He had a very bad problem with his lungs, asthma. They did take him to a doctor and gave him medicine for that and now I hope that he will be okay and until he is released.

REPORTER: Do you want to say anything to those people or to those countries who contributed to your release?

MR. McCARTHY: Yes, certainly. I would like to thank everybody who has worked to keep the pressure, to keep our names in front of the world, to those governments who have helped us, particularly today to members of the Syrian government and the armed forces who have kindly escorted me here to Syria. I'm very happy to be here and very grateful to them for their, for their kindness, their courtesy, and the hospitality they've shown me.

REPORTER: Well, again, welcome back and we hope that you have a better chance to make up for those years.

MR. McCARTHY: Thank you very much.

REPORTER: Thank you.

MR. LEHRER: At the United Nations, Secretary General Perez DeCuellar said he hoped a second hostage would be let go soon as the start of a process that led to release of all Western hostages in Lebanon. McCarthy's release leaves 12 Americans and Europeans still being held. For the record, the Americans are: Terry Anderson, 43, the chief Middle East correspondent for the Associated Press, he was captured in March 1985; Thomas Sutherland, 60, acting dean of agriculture at the American University of Beirut, he was kidnapped in June 1985; Joseph James Cicippio, 60, acting comptroller of the American University of Beirut, he was taken in September 1986; Edward Austin Tracy, 60, a writer, poet, living in West Beirut, he was abducted in October 1986; Alann Steen, 52, communications instructor at Beirut University College, captured in January 1987, along with Jesse Jonathan Turner, 44, professor of mathematics and computer science at that same school. The Europeans are: Terry Waite, 52, the special envoy, the Church of England, who disappeared in Beirut in January 1987 while on a mission to free the other hostages. They included Alec Collett, 69 year old British journalist who was kidnapped in March 1985. The other remaining British hostage is Jack Mann, 77, who's been missing since May 1989; an Italian, Alberto Molinari, 77, was kidnapped in September 1985; and Heinrich Struebig, 50, a German relief worker, was kidnapped in May 1989 along with a fellow relief worker, Thomas Kempner, 29. Many of the hostages' families have been active in keeping public and government attention focused on their hostage plights. Among the most active is Terry Anderson's sister, Peggy Say. She met with reporters at her home in Kentucky after she saw McCarthy's release on television.

PEGGY SAY, Terry Anderson's Sister: I just watched John McCarthy and he looks very, very well, and he saw Terry two days ago and Terry is well, as is Terry Waite and Tom Sutherland. Their living conditions have improved and hopefully, although we don't know the contents of the letter to the UN, hopefully it will be something that, umm, that we can respond to in a positive way and end the agony for everybody. Because John looks so well, I'm going to show him no mercy. I am going to get to him as soon as possible. As I understand it, they have not ruled out the possibility that another hostage might be released in the coming short-term. I'm not going to get caught up in that right now. The news for me is enough that, umm, after all my worry over the pictures and Terry's health, I should have known that Terry's not a quitter, that he was going to stay strong, and John attributes, as other hostages have attributed their survival, their emotional and physical health, to the men that they were held with, and once again, umm, I am just incredibly proud of Terry and he awes me with his faith and his dignity and his strength year after year. And when people ask me how I can continue, and I tell them that it's the example that Terry has set for me, I don't think a lot of people know what I'm talking about. I know from people like John just what an incredible person Terry has been in captivity under the worst conditions that anybody can endure and his -- I have heard him say on videotape and through other hostages, you know, why has my government forgotten me, why have my peers abandoned me, but never once to my knowledge has Terry ever said, my God, why hast thou forsaken me.

MR. LEHRER: Mrs. Say urged Israel to release a prominent Moslem cleric, Shigo Baid, and other Arabs. Since Israel is an American ally, she said, it should make the first move to end the cycle of hostage taking. Robin.

MR. MacNeil: Now five views on why McCarthy was released and what next we can expect in the hostage drama. Richard Murphy is a senior fellow for the Middle East at the Council on Foreign Relations, is a former assistant secretary of state for Near Eastern and South Asian Affairs. Mordechai Abir is an Israeli political scientist at Hebrew University in Jerusalem. Andrew Whitley is director of Middle East Watch, a human rights organization based in New York. He was formerly a journalist based in the Middle East. Asad Abu Khalil is a Lebanese political scientist now teaching at Colorado College. He joins us from Denver. And Sepehr Zabih is an Iranian political scientist who teaches at St. Mary's College in California. He's writing a book on hostage diplomacy and he joins us from San Francisco. Andrew Whitley, do you see this as a lone gambit, or the beginning of a general deal?

MR. WHITLEY: I'd like to believe it's the beginning of a general deal. I think that all the signs were that the package had been confected, it was in place. We were waiting on one or two developments in particular, some news about Rana Rad, who's the Israeli navigator who was shot down in Lebanon in '86, and that's been a condition that the Israelis have been holding out for for some time. Until that was, that piece was put in place, I think that nearly everything else was ready.

MR. MacNeil: A really comprehensive deal for all the Western hostages in exchange for all the Israelis that the others hold, that Lebanon holds?

MR. WHITLEY: The package composes three main elements. It composes all the Western hostages with a small proviso that two of the Western hostages, the two Germans, should really be considered as part of a bilateral deal with the German government for the Hamadi brothers. These are previous people who have been involved in kidnapping events who have been sentenced to jail in Germany. They're being held there. And I think that might be dealt with separately. But the other hostages who are being held primarily by Islamic Jihad together with the Israelis who are still alive, we know for sure, we believe for sure that one is alive, possibly more, and the Israelis want the remains of the others, and then the third group would be the prisoners who have been held in Southern Lebanon in the Kiem Prison, which is effectively under the control of Israel, or else those like Sheikh Abaid, a smaller number being held in Israel.

MR. MacNeil: Richard Murphy, do you read McCarthy's release the same way, as a possibility for the general deal that everybody's been hoping for for a long time?

MR. MURPHY: Well, that does seem to be very much in the air now, a general deal, and I -- I hope like Mr. Whitley that's the case. I was not familiar with all of the details as currently as he is.

MR. MacNeil: Mr. Abir, Israeli statements today have not been discouraging or -- or a flat refusal to deal here. Do you think Israel can now accept a general exchange?

MR. ABIR: Israel was always ready for a general exchange, general meaning all the Israelis who are being held whatever Lebanese factions there are, and not just Mr. Arad. We have six missing soldiers. We hope that most of them are alive. We are afraid that some are dead however. Then we want their remains. There was no access to them up to now, no sign of life. So we were always willing to go into a deal that would include the Israelis as well, not just to pay for the others.

MR. MacNeil: So what do you think of the prospects of such a deal now?

MR. ABIR: I think that they have improved because of developments in Iran on the one hand, and I would say the developments in the relationship between the United States and Syria, which holds practically Lebanon today and the Hezbollah, the Islamic Jihad, all these shadowy organizations which come under the same super structure would not have been able to operate in the area without Syrian permission or accessibility to the area. So I think that these two developments are extremely important for what has happened now.

MR. MacNeil: Mr. Zabih, as somebody who has been following the - - both the Syrian and the Iranian moves in this -- do you now expect a comprehensive deal?

MR. ZABIH: I don't. The reason is really the experience of the past. I do know that the Iranian government is very eager to bring this whole matter to a close by the end of this year. But the past experience indicates that hostages would not be released en masse, itwould be two at a time, one at a time. And the reason is that by holding to them, hostage takers and government who supports them like Iran, of course, has something to gain. As far as Iran is concerned, obviously it wants a normalization of relations with the United States on its own terms and therefore, is unlikely to, very hard to bring a sufficient pressure. It is true that Syria has physical control of nearly 90 percent of Lebanon, but I want to emphasize that for ideological, radical Islamic reason the hostage takers are as yet closer to Iran than to any other country in the region.

MR. MacNeil: So you don't expect one day soon to see a general release and a general deal. You expect them to come out in ones or twos for tactical reasons?

MR. ZABIH: I believe the experience in the past indicates that would be the case, but I do know that from my sources in Tehran that an American would be released. Who that would be is, of course, subject to speculation. But from Tehran Times, which is an English language newspaper in Tehran very close to the government of Rafsanjani, we have heard in the past news that have proven to be quite accurate and I suggest that this time also they would be quite accurate.

MR. MacNeil: So that one American -- do you have any better idea of which American might --

MR. ZABIH: I heard just up to yesterday speculation was that it would be Alann Steen, but today we are hearing more about Mr. Anderson. My own hunch is that unfortunately it may not be Mr. Anderson because he is a big fish in the net of the kidnappers and I think they are going to hang onto him to the very end.

MR. MacNeil: I see. Mr. Khalil, what do you expect to happen, a general release now following Mr. McCarthy, or as we've just heard a few at a time to hold out to the end for the highest price?

MR. KHALIL: It pains me to say that I do not see the possible final resolution of the hostage saga likely at this point and I see the focus on the Iranian and the Syrian dimensions of the hostage story to be misguided. I think the captors now enjoy more political independence than they ever did. And what should be emphasized is there have always been limitations to the extent of Iranian pressure and influence among the captors, themselves. In various interviews I've conducted with leaders and members of the Party of God, for example, it was made clear to me that they harbor no longer admiration for Rafsanjani's government, so there is no indication that the captors are interested in pleasing the Iranians or the Syrians. Of course, the Syrians as well as the Iranians will take advantage of the situation to take whatever credit they wish to take in order to appease the West for economic or political reasons. What is also important to emphasize is that there are already complications within the domestic Lebanese scene that will make the final resolution more difficult and the domestic Lebanese situation is the crucial one in the understanding of the hostage situation. For example, we have various gangs who control various hostages. We're talking about the Islamic Jihad, which is one of the very factions. What is now making things more difficult is that we are seeing a tug of war between one of the captor groups, which is Islamic Jihad, and another one, which have operated under various names from the Organization of the Oppressed on Earth to the Organization of the Defense of Rights of Prisoners to the Organization of the Strugglers of -- for Freedom. Yesterday and also today the latter group made statements to the effect that they will view any moderation of the Islamic Jihad as an indication of a sellout to the West and the Islamic Jihad is very concerned about its image too. The Islamic Jihad is believed to be tied to somebody who had a relative in prison in Kuwait. Now the prisoners in Kuwait were released so the Islamic Jihad might be willing to compromise on some of the hostages in order to achieve financial and political rewards and they also would like to tie it to your larger political cause, that of the Shiite and Palestinian prisoners held by Israel against international law in order to achieve legitimacy in Lebanese political lives. So for that reason, and also because the Americans achieve for the captors a certain publicity that they want to maintain, I do not want to see a possible release of the American hostages and I also agree that Terry Anderson -- and it's painful to say that -- because of the high profile effort by his sister will probably be one of the last hostages to be released. And I don't say that critically of the courageous efforts of Peggy Say which I support.

MR. MacNeil: Andrew Whitley, what do you make of those three rather pessimistic views of the situation?

MR. WHITLEY: I don't think that they're incompatible with a suggestion that a solution can be found in the near future. What gives me grounds for pessimism is today's latest development, the reported seizure of another French aide worker.

MR. MacNeil: By one of the groups that was just mentioned by Mr. Khalil.

MR. WHITLEY: Possibly by a breakaway from one of those groups, somebody else masquerading under a new name representing people who claim to be holding out for the stronger terms and who are perhaps resistant to the idea that there should be a grand solution at this stage. I think when we talk about a grand solution, we should remember that all the parties concerned, the major parties, are in agreement in principle that it should be ended now at this time. I think that the hostage takers are realizing that it's a wasting asset and that they are now trying to strike as good a bargain as they can. I certainly don't think it's a matter of everybody all coming out at once. They will come out in dribs and drabs, but it will be as part of a synchronized package.

MR. MacNeil: But strike the best bargain, what do you mean by a bargain? Do you mean just release our brothers who Israel is holding, or do you mean money, a bargain for money or for something else?

MR. WHITLEY: For sure the hostage takers, themselves, are going to be looking to what their life is going to be like after they release their trump cards. And there is no doubt that the element of money and sanctuary for them has come into the picture.

MR. MacNeil: Do you -- do you understand that to be part of the negotiations, Mr. Zabih?

MR. ZABIH: Well, yes, to be sure the question of ransom in what form it should be, and the question of what would happen to them, that is the reason why we are now appealing to the United Nations. I want to emphasize that the impact of the Gulf War all over the Middle East has been really very great and to a large extent that impact could be interpreted as the recognition that the United States will use force, massive force, to achieve its objective. So my answer to that question is yes, the question of sanctuary, the question of ransom, the question of to which country they would go, and here is where again the Iranian situation, the Iranian position would become very important. Furthermore, one more thing, let us remember that Syria is now gradually approaching toward a pro- American posture and you could imagine how unpopular that posture is it's some radical groups. For example, I would not be surprised that the attempt by a group today in taking a new hostage, if that is accurate, really stems from those groups, maybe radical Lebanese, who are against the Syrian occupation or other radical groups who do not wish to see Syria do what Egypt did under President Sadat responsible for such an act.

MR. MacNeil: Richard Murphy, is everybody, including the United States, just freelancing in all this time? Is everybody running around independently trying to do their best, or is there some sort of massive coordinated diplomacy going on with the United States, Lebanon, Syria, Israel, Iran? What is your understanding of what's actually happening?

MR. MURPHY: Well, there's been a constant threat to every conversation of Sec. Shultz in the Reagan administration, I'm sure of Sec. Baker, of our concern to get the hostages out in each meeting that they would have had in the region. The war has had its effect. The war has brought, has accelerated the trends in the area that has brought Syria into a more, a closer relationship with the United States. Iran does not see it in its advantage any longer to be so totally hostile to the United States. It wants a better relationship, but its leadership is still divided and it has its critics. Lebanon is the everlasting example of what happens when - - and warning to us all -- when a country disintegrates to the point that Lebanon has, that you can have a faction attacking the UN yesterday, taking a captive today, there are still many, many subfactions there which can inhibit the grand deal. Do I think there's a piece of paper or a single arrangement? No.

MR. MacNeil: What is your view of this Mr. Abir? Is there -- is anybody coordinating all this? Is there -- or are these just mushrooms springing up independently in this very complicated forest of diplomacy?

MR. ABIR: Well, it depends on whose side we are talking about. First of all, I would say that what is happening now is a reflection of all the fears that Israel has concerning the peace process because of such groups that will continue to operate beyond the signature of a peace accord if there will be one, God willing. But I would say that --

MR. MacNeil: I don't follow you. How is what's happening a reflection of those Israeli anxieties?

MR. ABIR: Well, the majority of Israelis do not believe to the extreme right, the Messianic right, or do not believe to the very hopeful extreme Dovish left, but who are the mainstream of Israel with about 80 percent of the population are working towards a peaceful security and peaceful security we know is going to be quite endangered by breakaway groups that will take upon themselves, and we have a very substantial element in the territory that is not under the PLO at all. It is the Islamic fundamentalist. They are now accounting for about 35 percent or 40 percent of the support of the Palestinians.

MR. MacNeil: But how does that Israeli anxiety come into play in this situation where suddenly there looks to be some hope of - -

MR. ABIR: It has nothing to do with that. I would say that Israel was all the time willing to trade. I would say that here the United States was far more adamant concerning not being blackmailed than Israel. And I'm not very proud about that because we have let go about 11,000 what we consider first rate terrorists --

MR. MacNeil: "We" being Israel?

MR. ABIR: Israel. I am an Israeli and some of them, most, many of them with blood on their hands in exchange for soldiers, so we gave in, we cave in. We do not cave in, however, on an exchange which will not include the seven Israelis that we have mentioned before, six of them soldiers, one of them a navigator who at least we know about him that he is alive, so concerning your question about a grand plot and machinations, I would say definitely yes. There is something moving behind. I'm not that pessimistic about the ability of Iran as my colleagues were - - not you -- I mean our colleague from -- was it Mr. Abu Khalil I think?

MR. MacNeil: Yes, in Denver.

MR. ABIR: Yes, in Denver. I think that Iran has a lot of pull with these groups. At least this is what we hear from our own sources in Israel.

MR. MacNeil: And the British prime minister, John Major, singled out Iran for thanks today in addition to Syria.

MR. ABIR: I would say that they are much more responsible for the release of Mr. McCarthy and possibly the American that will come out than the Syrians. The Syrians are facilitating the moves and get Israel glory afterwards because they insist that the release will come through Damascus.

MR. MacNeil: Let me ask Mr. Whitley this. I know that through Middle East Watch you have been very closely in touch with the sort of negotiations going on and that you can't talk totally freely about all of them because you know some of them in confidence. Is everybody freelancing, or is there a really coordinated diplomacy behind all this?

MR. WHITLEY: I think it's a mixture of the two. There is a degree of coordination. Obviously the --

MR. MacNeil: Led by whom?

MR. WHITLEY: The United Nations has been playing a prominent role for some years in trying to coordinate the efforts of various parties. The Israelis and the Iranians have been having direct contacts and some of them almost face to face, some of them indirect contacts.

MR. ABIR: We refute that officially.

MR. WHITLEY: But we have information that Israel and Iran has at least been in contact on some of these matters, as would be natural that they would do so.

MR. MacNeil: And the United States --

MR. WHITLEY: Are taking more of a passive posture. The Iranians have been the most active driving force recently in trying to push this matter to a conclusion as far as we can tell from the indications and signals that we've had. They certainly have demonstrated an anxiety to bring to a close quickly. There has been something of a stalemate or a block in some of the negotiations that have taken place. And they have, indeed, been very discreet, but there were grounds for hope that things were coming together. I would say there's an element of freelancing. Some governments have taken it upon themselves to work privately trying to bring about releases and some of them are governments who played a traditional role in this way in the past.

MR. MacNeil: Let me ask Mr. Khalil, do you agree that there is a more than just the release of prisoners held by Israel in the demands of the hostage holders and that they will actually be seeking ransom or money or some other tangible thing?

MR. KHALIL: Okay. May I first respond to what Mr. Abir said before. I think it would be unfair to tie the hostage story to the peace process in general because those captors, the handful of the scoundrels who are responsible for those deeds, have no ties to mainstream Arab, Palestinian, or Lebanese political organizations, so a view that tends to link them together to be purely propagandistic. The second thing that was suggested which is also inaccurate is the assumption that all of the Lebanese andPalestinian men and women that Israel holds against international law without any charges in most cases are hard core terrorists. That's not true too. I happen to know some of the youths who were taken in South Lebanon. Some of them are, you know, non-violent people. Some of them were taken simply because they reject the continuation of Israeli occupation in South Lebanon. Now what I want to emphasize is, that is first, the petty personal cause of the captors, which is the release of the prisoners of Kuwait which already took place before, and there is also a very important demand which some of the groups are pressing, which is the release of the two Hamadi brothers in West Germany, which is going to be something in the news I think in the next coming weeks, and that's why I think it's going to make it more difficult for Islamic Jihad to release more of the prisoners because the latter groups are the ones that are --

MR. MacNeil: Those are the two who were convicted by the West Germans for complicity in the bombing of the American nightclub.

MR. KHALIL: That's right. It is believed that some of the relatives are tied to some of the names we heard like Organization for the Defense of the Prisoners who are insisting on the release of the prisoners in West Germany as part of any deal that is to be stricken. But what I also want to emphasize too is that the issue of the Palestinian Lebanese prisoners held by Israel is an issue that goes beyond the demands of the captors. It is an issue that unifies all Lebanese, across political sect, and it's also the demand of the newly established Lebanese government.

MR. MacNeil: Well, let me just -- suppose our two friends, Mr. Khalil and Mr. Zabih, are right and that the, the captors string this out and take Terry Anderson as the most dramatic example, hold onto him the longest and are actually seeking some kind of ransom, the United States has always said it will never negotiate with terrorists, what happens in this case?

MR. KHALIL: Well, ransom has been paid in the past. I mean, one thing we know from the appendix of the Tower Commission, for example, is that -- and here while I tend to underestimate the influence among Iran the captors for so many reasons -- we know from the appendix of the Tower Commission, for example, that even when Khomeini was alive, when the efficacy and the legitimacy of the Iranian mogul was at its height among the Shiite fundamentalists in Lebanon, Iran did not have an easy time in achieving the release of the three hostages. They had to first wait, pressure, and in some cases to pay money. And in cases in the past -- I mean from my own knowledge about the subject that the captors are insisting that there is a price on each hostage to be released which approximate a million or a million and a half dollars.

MR. MacNeil: I've even seen --

MR. KHALIL: The price tends to fluctuate.

MR. MacNeil: Yes.

MR. KHALIL: It is intended by the captors in their own opinion, of course, to compensate for all the efforts and expenses that they incurred.

MR. MacNeil: Well, in the time remaining, let me come back to Mr. Murphy here. What does the United States do about this if that is the case, it's not just the release of prisoners in Israel, but it's actual cash?

MR. MURPHY: I can't see the United States being in agreement with payment of money for --

MR. MacNeil: Even through some complicated third, fourth party route?

MR. MURPHY: Well, I think it'd be very hard for the United States to do that because it has taken a policy decision many, many years ago that to do so only encourages the taking of further hostages. If there can be a grand bargain such as you suggest where Israelis are involved returning where Americans and other Western hostages come back, then there can be a major transfer of Lebanese and presumably Palestinians as well out of Israeli prisons. But in that case, we would sit back and our hands would be clean of any question of paying ransom. There need be no ransom.

MR. MacNeil: So would you agree, Mr. Whitley, to conclude this that the situation tonight does not look like even though a deal appeared to be in the works, that it doesn't look like a simple deal happening all at once, very quickly?

MR. WHITLEY: Certainly not a simple deal. I don't think it ever was and the latest developments suggest that it could be unfortunately a strung out process, which is what we'd all hoped to avoid.

MR. MacNeil: Well, Mr. Whitley, Richard Murphy, Mordechai Abir, Mr. Khalil, and Mr. Zabih, thank you for joining us. UPDATE - KUWAIT: ONE YEAR LATER

MR. LEHRER: Now the political situation in Kuwait. There was much talk of democracy and reform when the allies restored the Emir to his throne, but that has not happened, not yet. Correspondent Ian Williams of Independent Television News reports.

MR. WILLIAMS: The debate looks animated enough. The passions are real. But Kuwait's national council, part appointed, part elected by just a few thousand people, is a far cry from democracy. It was established five years ago when the ruling Emir scrapped the more broadly elected parliament whose former chairman mocks the council.

AHMED AL-SADOUN, Former President, National Assembly: The so- called national council is absolutely of no power. It has no -- at least that comes from our side of the constitution. I think it's only a puppet of the government. I think the government has got it only in order to bar, to bar the parliament from taking the key spot.

MR. WILLIAMS: The old parliament building, the National Assembly, was gutted by the Iraqis. But the ruling Al-Sabah family has promised it will be re-established after elections in October next year. The delay is deplored by the five opposition parties grouped under the Democratic Front who meet regularly at members' houses. They'd like to see a wider electorate, including women. And they regard the delayed elections as a betrayal of promises made by the Emir before liberation. They see democracy as essential now.

JASEM AL-QATAMI, Democratic Front: Why all this time without any people participation, without parliament, without observation by the people representative. Now nobody can discuss with them all this money spent. Millions, billions are spent unwisely without a participation of the people. This is the money of the people.

MR. WILLIAMS: The government says an election doesn't make sense while many are still abroad.

ABDULLA AL-JARALLAH, Cabinet Minister: Now we are not ready to prepare the papers for elections and we don't know the people and they change their places -- many change, and even the printed to bring to the paper now, you face many problems, so we need time to prepare for the election.

MR. WILLIAMS: In the meantime, the ruling family is reluctant to allow any public debate. The principal resistance newspaper was closed after liberation and the press is still carefully controlled. 'Al Qabas,' the only non-government newspaper now being published, opened again last month, but its editor is forced to work under tight restrictions.

MOHAMMED AL-SAGER, Editor, 'Al Qabas': Whatever we feel like publishing there is a censorship, there is a censor here. He read all the newspaper before printing and he will okay things and he refuse things and he postpone things so we are not really free to publish anything. We have lots of problems. Maybe before the invasion we had quite few problems, but now we have problems in every department, in every ministry, in the social life, in the economy, in the political life, everything, we have to debate it.

MR. WILLIAMS: One key debate, what to do about the country's non- Kuwaitis who made up a majority of Kuwait's population before the occupation and whose treatment since liberation has provoked an international outcry. Abdali is a sand swept camp in No Man's Land on the Kuwait-Iraq border. The Red Cross provides food, water, and sanitation to 2,000 Bedoons, stateless Arabs. But these people want to live in Kuwait. Many were born there. Bedoons form the backbone of Kuwait's police and army and undertook other manual jobs the Kuwaitis preferred not to do. Many thousands left Kuwait or were taken hostage by Iraq during the occupation. Now Kuwait doesn't want them back. In this blistering heat many families have given up hope and left for Iraq, where they face an uncertain and possibly hostile future. Those who remain are gripped by despair. The Kuwaiti authorities show no sign of relenting and letting them back to the country these people regard as home.

ALI MOHAMMED: I'm born in Kuwait, Southern Kuwait, graduated from Kuwait University. Also I am, I was a policeman in Kuwait. I went to Iraq with my uncle. He was a hostage. After liberation by one or two days, I come back to my country but Kuwait do not allow me to enter and with me in this camp -- I am in this camp from five months have been in this camp.

KAREEMA YOUSIF: We hope every day that we maybe an official person, Kuwaiti person, I mean, come and ask us about what we want. Nobody came. Nobody came. And we, still we have the hope maybe one day they come back and tell us, and tell us.

MR. WILLIAMS: In Kuwait City, officials have been more occupied with their Palestinian population. Huali used to be the bustling home of 400,000 Palestinians. Now barely 1/4 remain and many of them are preparing to leave. They say life's being made impossible for them. The authorities have stopped collecting the rubbish and have removed the right of Palestinian children to free education. Only at Friday prayers do people gather in numbers, people who before the Iraqi occupation were Kuwait's professional class, the doctors, civil servants, and engineers. They're now being sacked in the hundreds. They accuse the government of victimizing the entire community though only a small number collaborated with Iraq.

MAN ON THE STREET: All of the Palestinians here in Kuwait who lived in this country, who were born in this country, they didn't hurt the country, I am talking seriously. The Palestinian people who hurt this country actually they are the Palestinians who get in the country during the occupation.

MAN ON THE STREET: We are astonished why people who are helping the Kuwaiti during the Iraqi occupation to Kuwait why they are -- they are suffering from Kuwaiti people.

MAN ON THE STREET: All of my friends, most of these here in Holonegra, most of them no work, no money, no anything.

MR. WILLIAMS: Most admit the initial violence against Palestinians has diminished. Now it's economic pressure that's driving them out of Kuwait. At the fortified embassy of the PLO, the Palestine Liberation Organization, their top official in a rare interview accuses the government of more subtle intimidation.

MOHAMMED AL-JABAR, Charge d'Affaires, Palestine Embassy: [Speaking through Interpreter] If you cannot get a job, you must leave the country anyway, you can't support yourself, so you will choose to leave and find a place where you can have a job and where you can educate your children.

MR. WILLIAMS: The government replies Kuwait has shown too much good will and it's time to put their own people first.

ABDULLA AL-JARALLAH, Cabinet Minister: The Kuwaitans are very good -- okay, you can work, this is your place, this is your country, and through the crisis we discover our really friends, so now we are strict how to planning for the future for our own people.

MR. WILLIAMS: Trials of Palestinian and other alleged collaborators have already drawn international criticism for the way they were conducted and for alleged torture of defendants. Later this month 40 more people will face the court. The government insists the trials have been and will be fair.

MOHAMMED AL-BANNAY, Prosecutor-General: [Speaking through Interpreter] If the courts find these cases are sound, we will proceed with the prosecution just like any other country in the world. But if we find that confessions were taken by force, then the case will be thrown out, however, this hasn't happened in any case so far.

MR. WILLIAMS: Inside the courts, soldiers prepare the defendant's cage for the trials. Now they are some two weeks away. With the growing alarm over the treatment of non-Kuwaitis, the proceedings here will be important for the country's image throughout the world. In the eyes of many who helped liberate Kuwait, it's not just the defendants going on trial, it's the system, itself. RECAP

MR. LEHRER: Again the major story this Thursday was the release of a British hostage in Lebanon. President Bush told reporters there were reasons to expect an American to also be freed soon. And before we go, a clarification. Earlier I included British journalist Alec Collett on a list of Western hostages. He was reported killed in 1986 by a radical Muslim organization, but his body has never been found. Good night, Robin.

MR. MacNeil: Good night, Jim. That's the NewsHour tonight and we will see you tomorrow night. I'm Robert MacNeil. Good night.