The NewsHour with Jim Lehrer

MARGARET WARNER: Good evening, I'm Margaret Warner. Jim Lecher is off. On the News Hour tonight, lethal viruses attack computers around the world, a federal panel urges doctors to change their definition of high blood pressure, the challenger in Peru's Presidential race talks about the hotly contested election, and Mark Shields and Paul Gigot reflect on the week's political developments. It all follows our summary of the news this Friday.

NEWS SUMMARY

MARGARET WARNER: Copycat versions of the love bug computer virus spread worldwide today. One came labeled as a joke, another as confirmation for a Mother's Day gift order. They overwhelmed e-mail systems, forcing some to shut down. They also destroyed files containing photos and video. Some computer security experts put the cost of repairing the damage at $2 billion and climbing. We'll have more on the story right after the News Summary. Unemployment fell to 3.9% in April-- its lowest point in 30 years. Rates for blacks and Hispanics reached record lows. But average hourly earnings rose 0.4%-- double the expected rate-- and that raised new inflation fears. The numbers led analysts to predict the Federal Reserve will raise interest rates again this month. But President Clinton said other figures suggest inflation is under control.

PRESIDENT CLINTON: They show that the core inflation at something like 2.4%, and I think the overall inflation rate will come back toward that, now that the oil prices are moderating. So I think that should be quite encouraging, not just to the Fed but to all Americans and to American business.

MARGARET WARNER: On Wall Street, stocks were higher despite the interest rate concerns. The Dow Jones Industrial Average rose 165 points to close at 10,577. The NASDAQ Index added 96 points to finish at 3816. Overseas today, rebels in Sierra Leone seized more U.N. peacekeepers. U.N. officials said 200 Zambian soldiers were captured on their way to reinforce other peacekeepers. Six hostages were released today, but the rebels are now believed to be holding more than 300 U.N. personnel in all. Calm began to return to the Israeli-Lebanese border late today. Hours earlier, Ebola guerrillas and Israeli forces struck back and forth in some of the heaviest attacks in a year. We have this report from Louise Bates of Associated Press Television News.

LOUISE BATES, Associated Press Television News: Ebola launched a new series of rocket attacks on the northern Israeli town of Kiriyat Shimona in the morning, adding to the one soldier killed and 26 people injured on Thursday. According to the local authorities, four homes were destroyed in the latest salvo. The attacks sparked fears that the town could become a prime target, once Israeli troops leave the buffer zone in Southern Lebanon, something the government says won't happen. Israel's immediate response had been to retaliate. The military used both jet fighters and helicopter gunships to fly missions deep into Lebanon. The hit a Ebola stronghold in the East and cut off the Beirut to Damascus Highway. This Israeli air force video shows an attack on the power station. A number of power plants were hit, plunging Beirut and the surrounding area into darkness. The raids were aimed at punishing Lebanon for supposedly supporting Ebola, but they were also seen as a warning to Syria, the main power broker in the region.

MARGARET WARNER: Later, the Israeli cabinet decided against retaliating further. In Washington, a State Department spokesman urged restraint on both sides. The State Department confirmed today that two more of its laptop computers are missing. One had been signed out to a senior official. But a spokesman said neither contained classified information. Another laptop disappeared in February. It held sensitive data about arms issues and U.S. intelligence activities. The Transportation Department today announced new airbag safety standards. They require carmakers to use dummies of different sizes in crash tests. The goal is to make airbags safer for children and small women. The new rules take effect with the 2004 model year. That's it for the News Summary tonight. Now it's on to the new computer viruses, a blood pressure update, Peru's challenger, and Shields and Gigot.

FOCUS - BUG BYTES

MARGARET WARNER: Spencer Michels begins our look at the latest wave of computer viruses.

SPENCER MICHELS: Yesterday, millions of people were seduced by an offer of love online. Today, the cyber promise was a joke, with a new e-mail offering humor. But for those who responded, the joke was on them. The e-mails contained a destructive computer program, referred to as a worm, which is a type of virus. The so-called "love bug" was first detected in Asia and rapidly spread through electronic mail across the globe. Experts believe it may have started in the Philippines by a 23-year-old computer hacker nicknamed "Spyder." The worm has wreaked havoc in offices, causing companies to lose sales and time. 80% of the companies in Australia reportedly got hit. In the United States, where the cyber infection may have been just as widespread, employees at large and small businesses made contact the old-fashioned way after e-mail systems were shut down.

ADA GREEN, Perillo Lincoln Mercury: It's been a pain in the rear because I haven't been able to get in touch with my regional manager.

SPENCER MICHELS: The love bug arrives as an e- mail with three little words, "I love you." The message reads, "Kindly check the attached love letter coming from me." When the computer user clicks on the e-mail's attachment, the virus replicates itself, automatically sending copies to everyone in the user's address book. The love bug was reportedly written using Microsoft's language, and targets users of the company's Outlook e-mail program. Besides replicating itself, the virus can damage other computer files, including popular MP3 music files.

ALED MILES, Symantec, Ltd.: This is officially, this love bug, is actually officially a worm, which means that you can't actually repair it, all you can do is delete it. And actually the love bug, if you have mpeg files, which of course are these music files so popular today, or jpeg files, which are pictures, then it can, this love bug file, infect those files.

SPENCER MICHELS: Governments have been affected, too. In London, the virus crippled the British parliament after a fashion.

MARGARET BECKETT, Member of Parliament, United Kingdom: I do not know whether to say I'm sorry or pleased, Madame Speaker. As far as I'm aware I haven't received a mail saying I love you. I believe what has happened is that the House authorities have in fact shut the House's e-mail down.

SPENCER MICHELS: In Washington, U.S. Government computers were infected at the Congress, the White House, and the Pentagon. This afternoon a spokesman at the Defense Department said at least two classified military systems were contaminated, but the problems were isolated, and no damage was done.

PRESIDENT CLINTON: We've been very fortunate. The government has fared well here. But it says that we've got a lot more work to do to protect all these systems in the private sector, and the government has to keep working too. It says that as we become more interconnected in an open way, that we become... as we reap the benefits of greater interconnectivity, we become more vulnerable to the disruptive forces that would seek to, either for bad design or just to provoke chaos, to take advantage of it.

SPENCER MICHELS: Copycat versions of the errant programs continue to cause distress. Computer experts believe the latest viruses have already caused billions of dollars of damage.

MARGARET WARNER: Elizabeth Farnsworth in San Francisco takes it from there.

ELIZABETH FARNSWORTH: For more, we are joined by Mark Rasch, vice president for cyber law at Global integrity Corporation, a computer security company. He is a former Justice Department computer crimes prosecutor; Jim Yost, chief information officer at the Ford Motor Company, one of the companies hit by the love bug virus; and Dan Schrader, chief security analyst for Trend Micro Inc., one of the country's largest manufacturers of anti-virus software.

Mr. Schrader, what's the latest on this virus, is it continuing to propagate?

DAN SCHRADER, Trend Micro, Inc.: Well, it's continuing to propagate, but the rate is definitely slowing down. Some of the estimates we've been hearing of 80% of companies being hit in Australia, perhaps the same percentage in the U.S., those are probably a bit high. Though anyone running certain Windows environments can get hit by the virus, it will only propagate within companies using Microsoft Exchange servers; they have maybe 40 or 50 percent of the marketplace. So the highest rate likely to get hit, about 40 or 50% of companies. That's still an awful lot of companies.

ELIZABETH FARNSWORTH: Just briefly, so we understand, why are those the ones likely to get hit?

DAN SCHRADER: Well, this virus requires you to have something installed called the Microsoft Visual Basic scripting host, or Windows scripting host, which many people have. It uses Microsoft Exchange, and Microsoft Outlook e-mail client to open up an address book and spread itself. Again, people using Lotus Notes or some other e-mail systems won't have that software in place, it won't spread through their computers.

ELIZABETH FARNSWORTH: Mark Rasch, is it the most lethal virus so far?

MARK RASCH, Global Integrity Corporation: It's the one that's caused the most damage because of the way it propagated and how broadly it propagated. There are viruses that are designed to be more lethal to individual machines that can delete the entire hard drive. This doesn't do that. The damage it caused was by propagating widely and clogging the e-mail systems.

ELIZABETH FARNSWORTH: Jim Yost, tell us what happened to Ford Mother Company, first start with today and then yesterday.

JIM YOST, Ford Motor Company: Today we got the bulk of our servers back up and running, our mail servers, which was really the major impact to us. Yesterday when we became a area of the virus very early in the morning, based on our situation in Europe, we made a decision before 8:00 Eastern Time to shut down our whole mail system worldwide to basically make sure that the virus was contained. We spent yesterday preparing for putting the antidote into our system. We disinfected our servers, made the decision last night on how to distribute that to our clients -- and then by noon this afternoon were bringing all of our mail servers back up and running.

ELIZABETH FARNSWORTH: Put all that together for us, Mr. Yost, how disruptive was that for the company's operations?

JIM YOST: In the end it turned out to be not very disruptive. We have our mail system totally separated from our applications and our e-mail systems from our customer bases. So in reality, we isolated the issue to our exchange servers, shut those down, prevented the spread. And the inconvenience was the inability for people to send e-mails. But we obviously maintained our other communications, voice, telephone, fax. So there was really no substantive disruption to our operations. We lost no production, we lost no sales. We really had no disruption to our production operations.

ELIZABETH FARNSWORTH: Dan Schrader, you have something to say about that?

DAN SCHRADER: I'd mention Ford was lucky in that case. Many companies rely entirely on e-mail. People call it their mission critical application. If I can't get e-mail, I might as well go home, and I think a lot of white collar workers feel the same way.

ELIZABETH FARNSWORTH: Tell us about the virus; what do you know about it and how do you know it?

DAN SCHRADER: I've seen the virus code, as have many other people now. It's been widely spread, the source code of it has been published, which is unfortunate; I wish people wouldn't do that. The virus is not a very sophisticated virus. The person who wrote this was not an educated or experienced programmer; it looks like it's bits and pieces from other viruses like the Melissa Virus and kind of cobbled them together. It has misspellings; it has grammatical problems; it has bugs in the virus. There's text in it that indicates it came from the Philippines, and that may be true, but I think the jury is still out. That's what the virus writer wants us to believe. Now, the virus again deletes multimedia files in your computer, which is unusual. Many viruses try to either wipe out your computer or they try to target usually more valuable documents like word processing documents, spread sheet files and databases. We're fortunate it wasn't the case this time.

ELIZABETH FARNSWORTH: Mark Rasch, add anything you want to, to that, and tell us what we know about people who develop these programs.

MARK RASCH: We use somebody called a profiler, that's a former intelligence analyst, hotels us things that we can find out about these type of virus writers. Typically for this kind of a virus that spreads broadly, the goal of the virus writer is simply to obtain credit. Look at the newspapers and either say to the public or their friends, hey, I did that, which is by the way one of the ways you catch them is when they take credit for it. But other types of viruses are designed to hide programs, so - logic bombs or Trojan horses -- so that they can go back in later on, get your password and log in and steal the information that they're looking for. So the motives for writing them and the kinds of people who do it differ widely.

DAN SCHRADER: I agree with the motives in this case, however, this virus writer did try to steal passwords. Fortunately, the code didn't work, but one of the things the virus did was it tried to change what website your computer would go to, and when it went there, it would automatically download a file that would take passwords off your computer and e-mail it back to some location. That code didn't work very much; the website wasn't working; it didn't get widespread, but that was a problem with this virus as well.

ELIZABETH FARNSWORTH: Jim Yost, let's talk about what can be done to avoid this. You told us how you solved the problem with minimal disruption, according to what you have told us. Is that because you were really prepared, because your computers were programmed in a certain way? Or explain what you had done to prevent disruption.

JIM YOST: Well, we have a very active security effort within the company. We have layered security, we have firewalls at different levels. We physically separate our different types of servers, so to the extent there is infection we can isolate it and keep it separate. So there's a physical and logical control that we have on the spread. Unfortunately this was a virus for which there was no protection, it did get in. We've trained our people to search out and understand when they get unknown very odd e-mail to alert us immediately, so we can go into action. Our team did go into action, determined very quickly that this was a potentially very dangerous virus. And that was the reason why we shut down the systems very quickly. So it was basically being very well prepared, having good security in place. But I think also, as always, it relies on very quick identification by people that it's a problem.

ELIZABETH FARNSWORTH: And Mr. Yost, how worried are you about this? Do you get the feeling that the viruses are getting more dangerous, more sophisticated with each attack?

JIM YOST: Well, clearly there is always someone out there who is going to try and take advantage of some weakness in the system. As we become more wired together and more reliant on the system, it requires us to become much, much more careful in security. I worry about it on a daily basis. We've got very good experts that work with our vendors to make sure we're well prepared. But we're always to some extent going to be vulnerable to some very creative individual who will find a unique way to get into an application.

ELIZABETH FARNSWORTH: Mark Rasch, comment on that, this vulnerability of our networked world.

MARK RASCH: What's happened as we become more networked, we become more vulnerable because we rely on these e-mails systems and these other systems all the time. The other problem is that just like what was just explained, you can only prevent the viruses that you know about. If somebody comes out with a brand new variant that you've never seen before, you have to be prepared to react, and really there's very little prevention that can be done.

ELIZABETH FARNSWORTH: Mr. Rasch, if it attacked the Microsoft e-mail system, will some computers in a company have to be on a different system? It's like mono culture and crops, if you have one crop, it's more vulnerable to a pest.

MARK RASCH: Certainly if you have diversity in operating systems and e-mail systems, you'll be less affected by a virus that attacks only one variant. The problem is there's some functional reasons to want to have similar systems within a company. So it's a tradeoff again between functionality and security.

ELIZABETH FARNSWORTH: Mr. Schrader, on the vulnerability.

DAN SCHRADER: Well, one of the problems of the Internet is collectively we're all relying on individual security. In other words, even if -- a sophisticated company like Ford, they're relying on end users knowing what to do and knowing not to open up the e-mail attachment, running programs that are sent to them. Unfortunately most companies, most people are not as sophisticated as Ford. What we need to be doing is moving some of these security functions off the desktop, stop relying on the end user, and make it part of the infrastructure at the Internet. We need to be scanning malicious code as part of the backbone of the Internet, and until we get there, we're not going to have an infrastructure in place for preventing or containing the spread of these viruses.

ELIZABETH FARNSWORTH: Is any of that happening?

DAN SCHRADER: Well, it's starting to. A few companies like Sprint and U.S. West that offer managed e-mail services or Internet service, some providers are offering as a value added service to scan their data for viruses. If you're a U.S. West customer, for I think $15 a month you get Internet access, for another $1.50 a month they'll scan everything for viruses. That's very good model, because that means the end user doesn't have to worry about running anti-virus software, updating anti-virus software, getting the update. It means vendors like ourselves don't have to worry about trying to update 300 million desktops in time to stop the next Melissa Virus. So U.S. West customers, they were protected. People who were getting their e-mail primarily through U.S. West and had signed up for that service, within an hour of our identifying it they were protected without doing a thing. That's the kind of model we need to move to over the future.

ELIZABETH FARNSWORTH: Mr. Yost, do you agree with that from the point of view of a big corporation like Ford Motor Company?

JIM YOST: Yes. We scan incoming e-mail. In this case there was no protection for that virus. So it got in. And obviously with our layered protection we scan at different levels, but as long as you don't have the anti-viral protection, it's going to get in and can wreak havoc. So there's a dual responsibility: one is to scan for known things and try and stay as far ahead as possible, detect where these viruses might be going and prevent them, the future ones; but there's also a requirement on the case of the user when there is a problem to identify it and notify people that can take the corrective action.

ELIZABETH FARNSWORTH: And, Mr. Rasch, the privacy issues start to come up when talking about the need for more security?

MARK RASCH: Well, what ends up happening now is you're scanning every single file that's coming in. Not only does that slow things down, but it raises the possibility that the contents of the file can be read. Who's going to decide something is a virus or isn't a virus -- should be able to be read or should not be able to read. We have lists of viruses that Symantec and other companies put out, and those kind of lists if you're just comparing it against a list, that's one thing. But what you've done is you've enabled the ISP's now to really go through all these files.

ELIZABETH FARNSWORTH: Mr. Schrader.

DAN SCHRADER: It's a very legitimate problem. In fact, we have a constant tradeoff between security and privacy, and it's a debate we need to have on a national level. Every security expert has an opinion on this. If you're going to stalk every e-mail and scan for virus, the next step is scanning junk mail or scanning for unsolicited mail. At what point do you want to give control to some foreign user or to some organization and where do you want to make the decisions yourself?

ELIZABETH FARNSWORTH: Okay. Briefly, what should our viewers who are computer users be watching all for?

DAN SCHRADER: Very simply, you should not open any file sent to you unless you know why somebody sent it to you. You should use your automatic update function within Microsoft Windows Explorer to update with the latest security patches. You just go up to the tools menu, and you click on Windows Update, and Microsoft will automatically download all these security updates. Finally, run anti-virus software, update it I would say at least weekly.

ELIZABETH FARNSWORTH: Mr. Rasch, do you have anything to add to that?

MARK RASCH: The only thing is from a corporate standpoint also, you need to have an emergency response plan and try to figure out who's going to be able to pull the plug on the e-mail.

ELIZABETH FARNSWORTH: And Jim Yost, anything to add?

JIM YOST: I think that pretty well covers it.

ELIZABETH FARNSWORTH: Okay. Thank you all three very much.

MARGARET WARNER: Still to come on the News Hour tonight, an update on high blood pressure, Peru's challenger, and Shields and Gigot.

UPDATE - SILENT KILLER

MARGARET WARNER: Now, the highs and lows of tracking blood pressure. Susan Dentzer of our health unit begins. The unit is a partnership with the Henry J. Kaiser Family Foundation.

SUSAN DENTZER: Most people are used to having a doctor or nurse take their blood pressure. That's one of the so-called "vital signs" of good health.

NURSE: It's 150 over 90.

HEALTH CARE WORKER: Those two numbers measure the pressure that blood exerts in the arteries during two different phases of the heart's activity. The first number marks the systolic phase, when the heart muscle contracts to pump blood to the rest of the body. The second number measures pressure during the heart's diastolic phase, when the muscle relaxes. A normal blood pressure is systolic pressure at around 120 and diastolic pressure about 80. By contrast, it's considered high if systolic pressure is 140 or higher, and if diastolic is 90 or higher.

HEALTH CARE WORKER: Do you have any blood pressure problems?

SUSAN DENTZER: About 50 million Americans have high blood pressure, also called hypertension. The condition can ultimately damage arteries, weaken the heart, and even affect other organs like the kidneys. Untreated, it can lead to heart attack, congestive heart failure, and stroke. Those are among the leading causes of death in America. A growing body of research has shown that an elevated top measurement, or high systolic pressure, is by far the best predictor that any these serious diseases will result. That's especially true for middle-aged and elderly Americans. But even so, for various reasons most doctors have long focused more on the second measurement, the diastolic pressure, to determine whether a patient's blood pressure was high. Yesterday an expert committee appointed by the National Heart, Lung, and Blood Institute in effect scolded the medical profession for not taking systolic pressure more seriously. It issued a special advisory to doctors calling for a "major paradigm shift." That would make systolic pressure the main measurement for determining whether a patient needed treatment.

MARGARET WARNER: Ray Suarez has more.

RAY SUAREZ: And we turn to Dr. Ed Roccella, coordinator of the high blood pressure education program at the national heart, lung, and blood institute. He served as executive advisor to the committee that issued the new report. Well, Doctor, should we conclude from this report that there are a lot more Americans out there than realize it who are suffering from high blood pressure?

DR. ED. ROCCELLA, National Heart, Lung, and Blood Institute: Well, indeed, Ray. There are many people out there that need to start being concerned about their systolic blood pressure. As we get older, blood pressure begins to rise. Systolic pressure will increase. Thus we'll see more heart attacks, stroke, and kidney failure if we don't pay attention to it.

RAY SUAREZ: And this message is going out not only to people who seek treatment but to physicians, too, right? Reminding them that the systolic number should be important to them?

DR. ED. ROCCELLA: Indeed. We have a clinical advisory that will be going out to doctors, it's on our web site, it's going to be published in the journal "Hypertension" this month, in May. The advisory reminds physicians about the ability of systolic blood pressure to predict future strokes, heart attacks, and heart failure. But in addition, we've got good news. There are clinical trial data, evidence that shows the benefits of lowering systolic blood pressure: A 27% reduction in heart attacks, a 37% reduction in strokes, and a 55% reduction in heart failure. That's remarkable data, and good news for practicing doctors.

RAY SUAREZ: If we know that, and we've known for some time that treating that systolic number was important, why did we have that old idea? Why were doctors telling people leaving their consulting rooms that, "no, don't worry, it goes up with age," that first number?

DR. ED. ROCCELLA: Well, we've had some information that shows that indeed systolic pressure does rise with age. And we believed that was a normal part of aging. We were concerned about diastolic pressure. That's the second number, that's the pressure in the arteries when the heart relaxes. We thought of a duration effect, that is, it's a longer time for that diastolic pressure in the arteries, caused more death and disability. But it wasn't until the late 80's that we thought we had some information about the value of lowering the systolic pressure. And when that information came in, we were just astounded in terms of the ability of systolic pressure's lowering effect to prevent death and disability.

RAY SUAREZ: So should everybody go running to their doctor tomorrow?

DR. ED. ROCCELLA: Well, it's not an emergency situation, but it's something we want people to be concerned about. If your blood pressure isn't less than 140 over 90, ask your doctor why, and what the two of you should be doing about it.

RAY SUAREZ: Now, that second number, the diastolic number, also changes with age, too, doesn't it?

DR. ED. ROCCELLA: It seems it does change with age. It tails off as we get older. Therein lies one of our other challenges. If we have been concerned about diastolic pressure, and it goes down as we get older, some people have said, "oh, well, the blood pressure problem is resolved. Therefore we should do nothing. Let's just leave grandpa alone because the diastolic is coming down." But we know the value of treating systolic blood pressure now.

RAY SUAREZ: So what should someone who is on the bubble, around 140, around 150, what's the first thing they should do?

DR. ED. ROCCELLA: We've got some good news. If your blood pressure is around the 140 over 90 level, and you should be working with your doctor, but there's some lifestyle changes that some folks can do that will work to control blood pressure. One, lose weight if overweight. Shedding even ten pounds will help. Two, eat more fruits and vegetables, and reduce salt in your diet. Most Americans consume more salt or sodium than they need. Read food labels, read the packages. That's why those numbers are on the packages, so people can see what they're eating. Three, if you are a couch potato, please get up. 30 minutes, even most days of the week-- that could be two 15- minute walks with your dog-- will help. And if you choose to drink alcohol, do so in moderation -- no more than two drinks a day for men and one for women.

RAY SUAREZ: Should you use the lifestyle modification program first, and try to do it that way instead of taking drugs?

DR. ED. ROCCELLA: Well, if the lifestyle will work, by all means let's give it a try. Let's really work at it. But if it doesn't, there are a variety of new anti-hypertensive agents that are available. Working with your doctor, a combination of lifestyle changes and drug therapy can help bring that blood pressure down.

RAY SUAREZ: How often should you have your blood pressure taken? I mean, for millions of us it's just a normal part of visiting the doctor for any reason. But if you're in generally good health, is there target number of times you should be watching per year?

DR. ED. ROCCELLA: We have described that in our clinical guideline, and we say that if your blood pressure is optimal in the 120 over 80 range, then you can go eve two years without having it measured. But if it starts creeping up, you might want to go more frequently. Remember, there is a clear relationship between a rising blood pressure and an increase in cardiovascular events. By that, I mean a heart attack, or stroke, or kidney failure. The higher the blood pressure, the greater the risk. There's nothing magical about the 14over 90. And in the presence of other cardiovascular risk factors-- diabetes, elevated cholesterol, cigarette smoking-- the risks increase remarkably.

RAY SUAREZ: Should that number go up from once every two years when you start to get older?

DR. ED. ROCCELLA: It wouldn't be a bad idea to have your blood pressure measured on visits to your doctor.

RAY SUAREZ: And that would mean, what, once every six months?

DR. ED. ROCCELLA: Well, every year, every six months, whenever you get in to see your doctor. Most clinicians will measure your blood pressure on most visits.

RAY SUAREZ: So really the report is just a warning, a reminder?

DR. ED. ROCCELLA: It's a warning and reminder, but good news -- it's good news that we can do something, and it's a good news remind that by treating the diastolic pressure, as a reminder now, we have been able to reduce death and disability. Since the advent of the national high blood pressure education program administered by the National Heart Lung and Blood Institute in 1972, strokes have declined by 60%. Heart attacks have declined by 50%. But we want to do better, and we can do better by applying this new information to practice.

RAY SUAREZ: Dr. Ed Roccella, thanks a lot.

DR. ED. ROCCELLA: Thank you.

FOCUS - PERU'S CHALLENGER

MARGARET WARNER: Next, the challenger who's turned Peru's presidential election into a horse race. Terence Smith reports.

TERENCE SMITH: The ballot counting in Peru's presidential election last month turned out to be a cliffhanger. A surprise challenger, Alejandro Toledo, denied two-term President Alberto Fumitory the 50% he needed for a first-round win.

ALEJANDRO TOLEDO, Peruvian Presidential Candidate (Translated): I come here tonight to announce to you that collective democratic stubbornness has just triumphed.

TERENCE SMITH: As the election results were announced last month, demonstrators took to the streets of Lima, the capital, charging that Fumitory was rigging the election. Toledo led more than 40,000 protesters in a march on the presidential palace.

DEMONSTRATOR: (Translated): The people are sick to death of Fumitory. Today we have said that it's about time we got rid of this dictatorship.

TERENCE SMITH: Fumitory turned Peruvian politics upside-down ten years ago when the former college dean came from out of nowhere to capture the Peruvian presidency. He now faces his strongest challenge from a surprising source. Toledo, is one of 16 children born to a peasant family in a remote farming village in Ancash Province. He scrapped out a living as a street vendor, shoeshine boy, and teenage newspaper correspondent. Later, two U.S. Peace Corps volunteers helped him move to California, where he won a soccer scholarship and ultimately earned a doctorate in economics at Stanford University. Toledo later worked as an economist at the World Bank and taught at Harvard. On the campaign trail, he delights in calling himself "el cholo from Harvard." El cholo is the term for mixed Indian-Latino heritage, which includes most Peruvians. Now 54, Toledo first ran for president in 1995 when Fumitory easily won reelection. (Singing in Spanish) Today, the runoff campaign is in full swing between Toledo and President Fumitory, who refers to his own Japanese ancestry by calling himself "el chino." Fumitory is campaigning on his record of eliminating triple- digit inflation, combating terrorism, and fighting narcotics traffickers. On those issues, Toledo gives the president credit. For him, the central issue of the campaign has become the alleged election fraud of the Fumitory camp. And indeed, the campaign is already getting rough. Toledo, who frequently campaigns wearing a bulletproof vest, was recently pelted with eggs and flour by Fumitory supporters at an appearance on the outskirts of the capital. During a recent visit to the United States, Toledo talked with the News Hour.

TERENCE SMITH: Mr. Toledo, welcome.

ALEJANDRO TOLEDO, Peruvian Presidential Candidate: It's a pleasure.

TERENCE SMITH: You have suggested that you might not participate in the runoff election in Peru if the conditions are not what you want. Tell me what those conditions are, and what it will take?

ALEJANDRO TOLEDO: Essentially, what we are proposing is to rescue the credibility of the national office of our electoral board that is in charge of actually operationalizing the election. The amount of irregularities that have been detected are such that they have lost credibility, and, therefore, we... one item that we are dealing or attempting to deal with is rescuing that credibility, Secondly, the need to have minimal level of equal access to communication media, particularly television. There is nine TV channels in Peru; eight of them are controlled by the government. Third, we think that because this is so unique an election in Latin America, given the previous presidents, it is vital to have a minimum level of political ethics. We do not want to go into the second round under the same conditions that we had in the first round.

TERENCE SMITH: What were those conditions, and what was your problem with them?

ALEJANDRO TOLEDO: Very uneven. We had no access to communication medium. A lot of hassling, intervening in our telephones, threatening, attempting to discredit using those communication medium to which we do not have access, discredit our candidacy -- and finally, a blunt fraud that when, not only in the process of the campaign, but rather the actual date of the election.

TERENCE SMITH: And the counting of ballots?

ALEJANDRO TOLEDO: And the count of the ballots. Fourth, it is needed more than ever today that international observers be in the field during the 30 days process of the second round, rather than coming just the week before the day of elections. And finally, it has been now as a piece of data that firms that do polls in Peru have fallen to the same situation that the TV channels orders. That is, they have been kidnapped by the government, and therefore, we need to have the presence of international polls firms that do with some independence and provide us some new elements of judgment.

TERENCE SMITH: What's your level of confidence that you're going to have the access to the Peruvian television and media that you need?

ALEJANDRO TOLEDO: I'm optimistic by definition, though realistically I don't perceive the political will from the part of the government to allow this access and, therefore, my guess is they are buying time. And meanwhile, the dirty work still continues, and, therefore, one needs to think through carefully what might be the eventual scenario if no significant changes take place and the rule ground for a second turf, second round.

TERENCE SMITH: And what might that scenario be?

ALEJANDRO TOLEDO: I don't want to anticipate anything yet, but let me share with you our firm conviction of not going to a second round if no significant changes take place with respect to the first round.

TERENCE SMITH: You literally will not compete, will not...

ALEJANDRO TOLEDO: I'm not saying that. I'm not saying that. What I'm saying is we are entertaining some contingency plans, but I don't want to anticipate anything that would undermine the jobs of the mediators who has just begun working two days ago.

TERENCE SMITH: What are the prospects for unrest and either in such a circumstance as you describe, or with an outcome that is not persuasive to the public?

ALEJANDRO TOLEDO: This is no longer an issue of a competition between President Fumitory and Alejandro Toledo. This is not even an issue only of an election in Peru. We have here a new style of government in which a combination of a military apparatus with intelligence service, and in complicity with the government, have created a monopoly of political institutions that have captured the legislative branch, the judicial system, the electoral board, the communication media, the armed forces. That's... that is really counterproductive, and to change the constitution for a third term, it is...

TERENCE SMITH: In order to permit...

ALEJANDRO TOLEDO: In order to permit President Fumitory to run again. It is sending dangerous signals to Latin America, and it appears in other... Four countries already that temptation of modifying the constitution to benefit reelection.

TERENCE SMITH: How important will outside observers be in this election? And, particularly, what are you asking the United States to do in that role?

ALEJANDRO TOLEDO: I think international observers have played a critical role in the first round. In fact, the cumulative effect of the national response to noticeable fraud, the cumulative action of the national response together with the reaction of the international community have, in effect, stopped from declaring President Fumitory, with a fraud, winner in the first round.

TERENCE SMITH: Hmm-hmm.

ALEJANDRO TOLEDO: We led what the country was telling us. We have now people that are participating with us that do not belong to our... to our political party: University students, national professional organizations. It is a clean-cut line. This is authoritarianism versus democracy and respect for institutions and respect for institutions, respect for the will of the voters.

TERENCE SMITH: And, so, that's the choice for the Peruvian people...

ALEJANDRO TOLEDO: That...

TERENCE SMITH: From your point of view?

ALEJANDRO TOLEDO: From our point of view, we are not defending just our political platform of the candidacy of Alejandro Toledo. It is my firm conviction that I'm going to go all the way through in this fight for respect for democratic institutions and respect for the will of the people and, in a country where there is checks and balance, because when you have an institutional vacuum, the temptation for authoritarianism are much greater.

TERENCE SMITH: When you had doubts about the election in the first round, you led thousands of people at a march in Lima on the presidential palace. Are you prepared to do that again?

ALEJANDRO TOLEDO: We don't have the tanks, we don't have money, we don't have an intelligence service. We only have the will, and we will listen closely to our people. If there is no significant changes, we peacefully-- respecting private property, within the frameworks of the laws and constitution-- we are prepared to go to the streets again.

TERENCE SMITH: And what would you forecast if you did that?

ALEJANDRO TOLEDO: Well, eventually I that the government will have to listen to what is... People telling them. Enough is enough. I recognize several of the accomplishments of President Fumitory, and moreover I want to build over his accomplishment new steps that the country need to go into. But I think that it is not very wise for President Fumitory and his advisors to persist in a third term that eventually might erase the good things that he did with the right hand and might undo it with the left hand.

TERENCE SMITH: Mr. Toledo, thank you very much.

ALEJANDRO TOLEDO: Thank you, kindly.

FOCUS - POLITICAL WRAP

MARGARET WARNER: Finally tonight, our end-of- the-week political analysis with Shields and Gigot: Syndicated columnist Mark Shields, and "Wall Street Journal" columnist Paul Gigot.

Well, you all and Jim last week talked about Gore being on the attack, and he was at it again this week, Paul. And one of the new targets was Social Security. He said Bush had a secret plan to privatize Social Security. One of my favorite lines, "He wants to risk your retirement savings in the game of stock market roulette." Why so tough now, why on Social Security?

PAUL GIGOT: Well, in fact he called up the "Washington Post," Dan Balz, the reporter, after not having done interviews for weeks, called him up to say I want to be interviewed on this subject. So he clearly thinks it's a winner. He thinks, like most Democrats since Franklin Delano Roosevelt, that they can beat Republicans and this Republican, George Bush, on the issue of Social Security, and especially this time because George W. Bush is doing something, says he's going to do something, said it in that interview with Jim, that Republicans haven't done in a long, long time -- and that is go on the offense on Social Security and say I as a Republican can do better than this Democrat in fixing it, because I can work with Democrats to fix it and I'm willing to do what Democrats and liberals don't want to do, which is give at least a portion of the payroll tax, invest it in stocks, bonds, and allow even average workers to get the benefit of compound interest that well-to-do people have had for years. Gore thinks, wait a minute, I can hit them on the change argument, I can say it risky, so you have a real debate being joined here.

MARGARET WARNER: It really is from Gore the traditional Democratic message, isn't it, the same old song about they want to ruin Social Security?

MARK SHIELDS: Well, it is, and I think Margaret, this is a case where there's a disconnect between the elites in Washington, including many of us in the press, and the general public. It is the single -- Social Security is the single post popular program ever created by the government of the United States, alone, by itself. Now you're hear people say young people don't expect to get paid and all the rest of it.

MARGARET WARNER: And that is true -

MARK SHIELDS: It is the single -- no, it is the single most popular. Young people have confidence in it. This is a Peter Hart survey. They think they're going to get it. They think they're going to be paid off, they're afraid of people tampering with it. And this in my judgment is a mistake for George Bush. It's a mistake for George Bush. Maybe Al Gore overreacted, I don't know, time willtell on that. But it's a mistake for Bush for a simple reason, and that is he has left open raising the retirement age. He refuses to rule that out. And I have to say for people like you and Paul and me, who have jobs we love, and enjoy, that's not a threat. But for somebody who's carrying trays at a diner, for somebody who is a night porter in an airport, the idea of extending the retirement age is not an opportunity to continue to be creative and fun and enjoyable. And I really think in this case this is one where George Bush opened himself up, and I think he's been essentially sure footed, exceptionally sure footed since March 7th since he sewed up the nomination, and I think when he starts talking about a plan, undeveloped principles, but not quite defined yet, I think it's an area he doesn't have to go to politically.

MARGARET WARNER: Now, his campaign says he's going to lay out details in a speech next week, in fact it was supposed to be Monday, but I think he's going to Cardinal O'Connor's funeral. So he obviously doesn't think it a risk.

PAUL GIGOT: No. That's why it's so interesting. Both sides think they have an advantage, Bush thinks he has an advantage. He's not going to lay out precise details, and he would be foolish to - but he's going to lay out some principles. One of the reasons he's going to say the retirement age is on the table, he's not saying I want to raise it, he's saying I want to leave it open, because he doesn't want to be boxed in, in fashioning a solution. He wants to keep some things on the table. Just about everybody who is responsible on this subject says you have to keep that open, that might be part of the, that has to be --at least you have to think bit as part of the solution. It's something they did in 1983 when Greenspan and Moynihan came up with their bipartisan solution on Social Security at that time. But Bush thinks he may have an advantage here because of the demographics. You have a lot of the New Deal seniors who are dying, and the post war seniors who are now dominating, are people who are familiar with the stock market, they probably have big, you know, they have stocks, they know it. You have younger people who have seen the stock market boom. They may be willing to take a little bit more risk, and particularly we're not talking about an idea that is going to privatize the system completely. We're talking about a portion of it. It's going to be a fascinating debate to watch.

MARGARET WARNER: And there are some centrist Democrats who are critical of Gore.

MARK SHIELDS: That's right.

MARGARET WARNER: Yesterday Pat Moynihan said he considered privatization a scare word. And he was implicitly critical.

MARK SHIELDS: I mean, Pat Moynihan has been on this issue long before George W. Bush was. He introduced the idea five years ago, it went nowhere. Bob Kerrey, the Senator from Nebraska, has as well and the two of them and John McCain. This is a good move tactically for Bush because he identifies with bipartisanship, people are tired of gridlock in Washington, he can say I've got these leading Democrats with me; this is not a narrow plan. I submit that when one starts characterizing the other side of an argument as everyone who's responsible, I'd say, I think it's being out of touch. I really return to that essential element, I think George Bush ought to be aware of it, it is the most popular, you don't fool around -

MARGARET WARNER: You know what's going to be the most fun is that since the two of you disagree, we'll get to find out who's right.

MARK SHIELDS: That's right.

MARGARET WARNER: All rights. Let's turn to -

PAUL GIGOT: Can I make one other point?

MARGARET WARNER: Sure.

PAUL GIGOT: It's also a question of leadership for Bush. Bush has taken on something that he's supposed to be kissing the cobra. I mean, it doesn't get you a lot of points usually. And he's basically stepping up and saying I want to take this on, and he may get points, especially against Gore who's saying don't do anything - status quote. There are risks to doing nothing as much as there are risks to doing something.

MARGARET WARNER: There's another issue that Gore opened up an attack on this week and it was guns. And the Handgun Control Inc., A private anti-gun group, released both a video and an ad of the video of a speech given by an NRA vice President, urging his supporters to help elect Bush. We don't have the video, but we do have the ad that has some of the video. Let's watch.

AD SPOKESMAN: George Bush says if you want to know what he'll do as President, take a look at his record.

SPOKESPERSON: As Governor of Texas Bush signed a law that allows carrying concealed handle guns for the first time in 125 years.

SPOKESMAN: And he signed the law that allows carrying those concealed guns in churches, nursing homes, even amusement parks.

SPOKESPERSON: No wonder the NRA says:

SPOKESMAN: If we win, we'll have a President where we work out of their office.

SPOKESPERSON: Tell Governor Bush, the White House is our house.

SPOKESMAN: And it shouldn't belong to the NRA.

MARGARET WARNER: Now, Gore jumped right on this, saying that Bush would invite the gun lobbyists into the Oval Office - out of the lobby into his office. Is this a potent issue for Gore?

MARK SHIELDS: It's an issue for Al Gore. He didn't handle it well, in my judgment. He said Charlton Heston would be surgeon general, or something of the sort. Cain Robinson, the Republican chairman, Iowa, an NRA guy -- the key that people want a President, they want a President who is compassionate and caring but they also want one who is tough and can be ruthless and especially in dealing with special interests. I don't care if they're a Democrat -- Jack Kennedy saying to U.S. Steel you're not going to raise the prices of steel or whatever. This is a case, second in a row, where George Bush has failed to show spine and failed to show toughness, in my judgment. First was Ralph Reed on his campaign staff, Christian Coalition executive director, being paid by George W. Bush to be his political advisor, also on Microsoft's payroll -- being paid to lobby George Bush. Now, I can't imagine Franklin Roosevelt, Dwight Eisenhower, Ronald Reagan tolerating such a situation, you're gone. George Bush said well, we didn't know, we were surprised by it. This, you just say let's get one thing straight, nobody, the only people that have access to the Oval Office are the American people, and anybody who thinks otherwise - I'm telling you -- can go straight to hell. And he didn't! He took sort of a mealy mouthed, I'm my own man... I don't think it was strong enough and that's a problem if it becomes a pattern. And two in a row in the space of less than a month is not encouraging.

PAUL GIGOT: I agree with Mark on the NRA. I think what that guy said is a typical, it allowed these lobbyists --

MARGARET WARNER: And we should point out this is a private meeting, they probably don't know there was a camera there.

PAUL GIGOT: Sure, but he's saying I'm a powerful guy, he's got influence, and he's also trying to rally people to the cause and say, to support Bush. But Bush, when that comes out, he should say, look, I'm not bought by anybody. And in fact, because he said that, that guy is not going to get into the Oval Office, and anybody who talks like that is not going to get in the Oval Office. I agree, that would have been a demonstration, particularly because Bush has on occasion disagreed with the NRA on some of their positions. So he ought to at least have the courage rhetorically to stand up to that.

MARGARET WARNER: Do you think Bush is going to have to look for a moment now to distance himself from the gun lobby?

MARK SHIELDS: Yes, somebody said the other day we have two Republican Parties divided by the issues of abortion and gun control. I mean, there's no question that the two parties see gun control as a lot different. Republicans see it - they see this as a winning issue for them. And the Democrats see it as the way back into the suburbs, especially with women voters. It breaks by gender, it breaks by region, it breaks by party, who is for gun control. But I think Bush cannot, especially with the concealed weapons hanging over him, first Texas governor, 125 years to sign it at the behest - importuning of the NRA., in Texas, with Texas legalizing carrying a concealed weapon, I think he has to at some point establish his bona fides and independence. Paul said Social Security is an example; that's an example where he's certainly breaking with the orthodoxy. I'm saying where he has to stand up to a powerful interest, and I'd say the same thing for Al Gore, and tell them no.

PAUL GIGOT: The issue in this case, this episode is more a leadership issue. On the gun issue, it's fascinating, there was a CNN/USA Today poll that came out I think a week ago that showed that Bush actually was leading Gore when it came to the issue of credibility on the gun issue, 43 to 37. And I think that that shows that the politics of gun control is not as clear as some of the Washington elites think it is in terms -- a lot of us in Washington have thought and the press corps certainly thinks that this is something that always helps the gun control people. It always doesn't. It didn't in 1994, it doesn't in rural areas; it doesn't where there's a history of gun ownership and sportsmanship. Intensity on the gun control issue has always been with the gun owners. The gun control concern in the suburbs is a little more general, diffuse. There are a lot of issues that suburbanites vote on. Some gun owners vote only on guns.

MARGARET WARNER: And the new "Wall Street Journal" poll showed Bush doing very well among suburbanites, ahead of Gore 15 points.

MARK SHIELDS: Yes.

MARGARET WARNER: And ahead of him with independents too -- how do you explain that?

MARK SHIELDS: The Gore argument is that a year ago Bush was 18 points ahead, now he's 5 points ahead. I don't think there's any question, when you look at the internals, that is who is voting for whom in this race, that the news is good for George Bush and not good for Al Gore; he's behind among women, he's only running even because of his support among African-American women. He's running behind among white woman, he's running behind among ticket splitters and independents. And this is at a day when unemployment went to 3.9%.

MARGARET WARNER: But does it suggest that Bush's moves to the center are working?

MARK SHIELDS: I think people are dying for, this is an election where people want both continuity and change. If Bush can assure people that he will continue the prosperity and at the same time be change, but non- threatening change, he's in a formidable position.

MARGARET WARNER: All right. We have to leave it there. Thank you both.

RECAP

MARGARET WARNER: Again, the major stories of this Friday: New variations of the "love bug" computer virus spread around the world, and unemployment dropped to 3.9% in April, the lowest level in 30 years. We'll see you online, and again here Monday evening. I'm Margaret Warner. Thanks for being with us. Good night.