The MacNeil/Lehrer NewsHour

MR. LEHRER: Good evening. Leading the news thisTuesday, economic summit leaders cleared the way for World Bank and other economic help for the Soviet Union. They also said sanctions against Iraq should be maintained. And in this country Federal Reserve Chairman Greenspan said the Fed has stopped trying to lower interest rates. We'll have the details in our News Summary in a moment. Robin.

MR. MacNeil: After the News Summary Defense Sec. Cheney discusses the new warnings to Saddam Hussein. From Moscow, Charles Krause has a political profile of Mikhail Gorbachev as he meets Western leaders and Roger Mudd looks at the new difficulties facing Robert Gates, the President's choice to head the CIA.NEWS SUMMARY

MR. MacNeil: Leaders from the world's largest industrial democracies today hailed Mikhail Gorbachev's efforts to create an open and democratic Soviet Union. The leader's statement came in a broad ranging political communique at their London summit. They stopped short of offering cash, but said they would provide various forms of technical assistance to help reform the Soviet economy. They're also expected to offer the Soviet Union a special membership in the International Monetary Fund. But that too would provide only technical assistance, not cash. Mr. Gorbachev arrived in London late today. He will meet with President Bush tomorrow. Among other issues, they're expected to discuss a strategic arms reduction treaty. Sec. of State Baker told reporters the two sides still differ on one issue, the explosive force allowed on new missiles.

SEC. BAKER: It remains a difference. There are no -- and let me say one other thing -- this was not a case of saving one issue so that the two Presidents could close this out in London. That's not the case. This is a -- as I said earlier, this is a very serious treaty. It deals with the strategic balance for the next fifteen or twenty years, and we are determined to get it right.

MR. LEHRER: On the Middle East, Baker said Syria's acceptance of peace talks had created the possibility of direct bilateral negotiations between Israel and at least some of her Arab neighbors. Today's summit communique endorsed a Middle East peace conference. It called on the Arab nations to end their economic boycott of Israel and for Israel to stop sending Jewish settlers into the occupied territories. The communique also called for the creation of a United Nations Arms Register to alert the world to countries building up weapons stockpiles. The seven leaders had strong words for Saddam Hussein. They said sanctions should remain in place until Iraq has complied with all United Nations resolutions. President Bush said there was strong, strong support for new allied military strikes against Iraq if it does not disclose and destroy its nuclear capabilities. In Washington, Defense Sec. Dick Cheney was asked about Iraq's nuclear potential.

SEC. CHENEY: We know we did serious damage to his nuclear capability during the war. We have received additional information since then from various sources and we continue to work the problem. But I wouldn't want to be any more precise than that. He's got a lot less now than he had a year ago but he still has some.

MR. LEHRER: Cheney also said he did not think U.S. forces would return to Clark Air Base in the Philippines. He said last month's eruption of the Mount Pinatubo Volcano had caused massive damage. Sec. Cheney will be here for a News Maker interview right after this News Summary.

MR. MacNeil: Federal Reserve Board Chairman Alan Greenspan said today the nation's Central Bank has stopped lowering interest rates for the time being. He said the Fed's policymakers were concerned about triggering inflation. He said they had adopted a posture of watchful waiting amid indications the economic recession was ending. Greenspan spoke at a hearing on Capitol Hill.

ALAN GREENSPAN: There are compelling signs that the recession is behind us. Although the turning point has not yet been given a precise date, a variety of cyclical indicators bottomed out by early spring and some have moved noticeably higher in recent months. Such data strongly suggest that the economy is moving into the expansion phase of the cycle. Nevertheless, convincing evidence of a dynamic expansion is still rather limited. And we must remain alert to the chance that the recovery could be muted or could even falter.

MR. MacNeil: Insurance regulators in New Jersey today received court approval to seize control of the Mutual Benefit Life Insurance Company. The company's board had requested the take over yesterday as real estate losses threatened Mutual Benefit with failure. It is the sixth and largest seizure of an insurance company this year. Today's order also freezes all cash withdrawals by policyholders to prevent a run on the company's assets.

MR. LEHRER: The Senate Intelligence Committee today postponed confirmation hearings for Robert Gates. They will now begin in September for the White House security official who has been nominated by President Bush to be director of Central Intelligence. The chairman said the committee wanted to first hear testimony from at least one former CIA official before hearing from Gates. The issue is what Gates, the former No. 2 man at the CIA, may have known about the Iran-Contra Affair. Sen. David Boren, the committee chairman, spoke to reporters this afternoon in Washington.

SEN. DAVID BOREN, Chairman, Senate Intelligence Committee: No one on this committee is out to try to be unfair to this nominee, certainly not the chairman and the vice chairman. We have worked with him. We have high regard for him. As I say, there are a flurry of allegations, but there has been nothing at this point substantiated as to these allegations but we also have a responsibility to ask questions that need to be asked and to thoroughly investigate all allegations.

MR. LEHRER: We'll have more on the Gates story later in the program. Clarence Thomas made another round of visits to members of the Senate Judiciary Committee. Today's major stop for the Supreme Court nominee was at the office of Sen. Edward Kennedy, Democrat of Massachusetts. Thomas's confirmation hearings are expected to begin in mid September. Frank Rizzo died today. The former Philadelphia mayor was in the middle of a political comeback. He died of an apparent heart attack after a campaign appearance. He was 70 years old.

MR. MacNeil: A South African judge today gave Winnie Mandela a reprieve on her six year jail sentence. Mrs. Mandela, the wife of opposition leader Nelson Mandela, won the right to appeal her convictions on kidnapping and assault charges. The ruling was delivered by the judge who found her guilty of those charges in May. Mrs. Mandela will remain free during the appeal process, which could take several years. That's our summary of the top news stories. Now it's on to a News Maker interview with Dick Cheney, a political profile of Mikhail Gorbachev, and the troubles of Robert Gates. NEWS MAKER

MR. LEHRER: We go first tonight to a News Maker interview with the Sec. of Defense, Dick Cheney. He's here to talk about the Iraqi nuclear capability that won't go away among otherthings. Mr. Secretary, welcome. Is it going to take more military action to finally get rid of Iraq's nuclear capability?

SEC. CHENEY: It doesn't have to, Jim, and we hope we'll be able to resolve it by other means. But clearly that option does exist and the President's made it clear that we will use it if we have to.

MR. LEHRER: What is it that you want -- you meaning you the United States and the other UN countries -- what is it that you want Saddam Hussein and Iraq to do?

SEC. CHENEY: Well, if you look at the UN Security Council resolutions that ended the war that Iraq agreed to -- I mean, these were not imposed upon them, this is something they signed up for - - they are required to give up -- first to identify and then give up their weapons of mass destruction. And that capability should be provided to the UN Commission. It's been established for this purpose, ultimately to be destroyed. Well, what has happened, of course, is that they have provided information on their capacity, for example, to produce nuclear weapons that was inaccurate, that clearly didn't track with what they had, subsequently had to amend it. And what we really are trying to obtain from him is all of the equipment that he has acquired over the years that he would use to make a nuclear device. Now a lot of his facilities were destroyed by a bombing during the war. A lot of damage was done to that capability but he still has some. One of the things we've learned since the war was the fact that he had embarked upon trying to enrich uranium, which was an early step to building a bomb with a technique that had been used back in the 1940s but was extremely inefficient that we did not know he had prior to the onset of war. Now that's some of the equipment that the UN inspectors have been chasing around the countryside in Iraq. We want him to scarf all that up, in effect, to comply with the UN resolutions before we'll be prepared to move forward in terms of lifting the sanctions.

MR. LEHRER: With all of those thousands of bombing raids, why - - and the nuclear capability being at the top of the list, of every priority list that everybody involved, including you, said was there, was that not destroyed?

SEC. CHENEY: Well, we, I think, did a number on his nuclear capability. There's no question about that. But there were certain types of equipment that he had.

MR. LEHRER: Like what?

SEC. CHENEY: Well, specifically it has to do with a process for separating out the uranium isotopes and enriching the uranium. You have to mix the uranium before you can build a bomb with it. And it's a process that we used in the 1940s in the Manhattan Project. But it is extremely inefficient. And you consume a lot more energy than you can produce with a weapon so no one had assumed he would be doing it. But we discovered after the war as a result of a defector coming over that, in fact, he had made an investment of billions of dollars in trying to develop this process as well. So now we want that equipment.

MR. LEHRER: So we were going after the wrong target.

SEC. CHENEY: We went after the right targets and we hit a lot of it, except I think it would be fair to say that we did not know everything he had. This is a man who runs a police state, a very secretive society, a very tight security system, and he clearly had some capabilities in this area that nobody knew about.

MR. LEHRER: Is it just through the defector that we're getting information on what he actually does have now?

SEC. CHENEY: We have a number of sources, Jim, that I really can't go into --

MR. LEHRER: Sure.

SEC. CHENEY: -- for obvious reasons. But we have obtained additional information since the war that's given us a more complete picture of what he has left and that's what we're now trying to scarf up.

MR. LEHRER: Are you confident about that, about the information?

SEC. CHENEY: I'm confident about the information that he does have capabilities that he did not previously admit to but did survive the war. But I'm also confident that we set back this program by years. It'll be a very long time before he could build a nuclear weapon. But again to come into compliance with the UN Security Council resolutions he has to give it all up.

MR. LEHRER: Now what is his capability now?

SEC. CHENEY: At this point he has some capability to enrich uranium but I think it would take him a very long time if he were left to his own devices to build a usable nuclear weapon.

MR. LEHRER: If he had a bomb.

SEC. CHENEY: If he had a bomb.

MR. LEHRER: Or something that could be fired at a missile or something that had to be dropped out of an airplane, something sophisticated, something simple.

SEC. CHENEY: There are various degrees of sophistication. You can build a relatively crude device, for example, and put it on a truck. And you couldn't drop it out of an airplane. It wouldn't be weaponized, wouldn't be an effective nuclear weapon, although you could probably achieve some low level yield, low level detonation. That would be the crudest kind of device. The next thing would be something fairly big such as we dropped on Hiroshima during World War II, a very large bomb that was dropped out of a big airplane. Building a nuclear weapon into a missile warhead requires a lot of sophistication. You really have to be able to master the technique of producing nuclear weapons in ways that probably they wouldn't be able to do for some time yet. But the point is that with outside assistance, which unfortunately Saddam was able to acquire in the past, oftentimes from Western firms, with outside assistance he could accelerate the process. Our view is that he should be left with no capacity to produce nuclear weapons and for that reason and to ensure compliance with the UN Security Council resolutions, we'll continue to insist upon his coming forth with all of the equipment he does possess.

MR. LEHRER: Trying to get a feel for the extent of what he -- of the damage he might do, let's say that for whatever reason he continues to do what he's doing now. Are we talking about the possibility of his creating nuclear weapons that could -- I mean - - cause great instability in the Middle East, could destroy Israel say? I mean, are we talking about small things that are more psychological than real? Can you give me some general feeling for that?

SEC. CHENEY: I would never want to suggest that a nuclear weapon in the hands of Saddam Hussein isn't something to be taken very seriously. Obviously, it is. Given where he's at today though, the damage that's been done to his society, he would find it very difficult to do anything even if we were to pull back and just leave him with the equipment he has. This process, for example, electromagnetic isotope separation requires enormous amounts of electric power. This power grid has been significantly damaged by our attack on it during the war so just taking what he has now and trying to produce nuclear weapons is something he'd find very difficult to do. But over time, he could go back and try to regenerate that capability and that's what we want to make certain he cannot do.

MR. LEHRER: All right. Let's say for whatever reasons over whatever period of time, has he been given any deadlines as to when -- we keep saying "he" -- we mean the Iraqi government -- we mean Saddam Hussein -- but has the Iraqi government been given any deadlines by which they must fork over these machines or tell us about them or whatever?

SEC. CHENEY: The Security Council members earlier, a few days ago, basically said that he has until July 25th to respond to the concerns that have now been conveyed to him. It's important for him to come back and to satisfy our requirements and satisfy the UN Security Council.

MR. LEHRER: Okay. Let's say that by whatever -- the time comes when the decision is made by the powers that be and they turn to you and they say, okay, Mr. Secretary, take him out. Is the U.S. military prepared to do that?

SEC. CHENEY: We are prepared to do whatever the President directs us to do. I wouldn't want to speculate on precise plans, but clearly, we have the capacity as we've demonstrated pretty conclusively earlier this year to take whatever action is necessary to make certain he does comply.

MR. LEHRER: But without being difficult here, we had all this capability, we had complete air superiority, we had everything going for us, and we couldn't do it, you know, the first go-around. What's changed? In other words, why do you think you could do it this time when you couldn't do it the first?

SEC. CHENEY: We did do it the first time. We did enormous damage to his capabilities the first time. We wiped most of his power grid and we destroyed almost 4,000 tanks. We got rid of probably close to half of his air force. We wiped out most of his transportation system. We shut down most of his petroleum producing capabilities and a lot of his chemical, biological and nuclear capabilities too. I mean, we -- there's no question but what we seriously damaged the strategic assets of Iraq. If we are asked and if we're directed by the President to undertake additional military action, clearly we will do that. And we would have the capacity, I'm confident, to impose whatever level of damage is desired.

MR. LEHRER: The reason this is particularly relevant today and in our conversation tonight, as you know, there is something called "The Lessons of the War" paper that your, that the Pentagon has - - I don't think it's been released publicly but there was a huge leak about it today on the wires, and it seemed to confirm what Gen. Schwarzkopf said in interviews -- or not in interviews -- in testimony on the Hill when he came back that the big problem for the military commanders of Desert Storm was that intelligence wasn't very good. There were a lot of things that they did not know and there were all kinds of problems over damage assessments and all of that. So what I'm asking you is, are you, are you sure enough this time based on the intelligence that you can go in there and take care of it?

SEC. CHENEY: First of all, let me come back to --

MR. LEHRER: It's a very long convoluted question.

SEC. CHENEY: It is.

MR. LEHRER: And I apologize.

SEC. CHENEY: But let me touch on both parts of it. First of all, I'm confident that we have a pretty good idea of what he has left by way of his capacity to produce nuclear capabilities. But you never know what you don't know. You're always going to be working that problem. But based, for example, on intelligence sources, I think we have a pretty good degree of confidence that we have a pretty good picture on what's remaining of his capability. With respect to the overall question of "Lessons Learned By the War" and intelligence, I'd put a different spin on it than you did.

MR. LEHRER: Okay.

SEC. CHENEY: We are producing, have produced for the Congress an interim report on lessons learned from Desert Storm. We have to give them a final report in January, but we produce an interim report now. There's both the classified and unclassified version. The question on the quality of intelligence I would describe as follows. I would say that we had better intelligence to fight this conflict than we've ever before had in history. And we had more information in a timely fashion about, for example, the Iraqi order of battle and where their basic strategic assets were and the capacity that mobilized our intelligence assets in ways that previous commanders have only dreamed of. Was it perfect? Of course not. Are there places where we can improve on it? Certainly. Are there problems that develop in terms of translating the nationally collected and evaluated intelligence into something that's in usable form for the battlefield commander? Certainly. But I think overall my judgment would be that the intelligence community did perform very well, but there are ways we can do our job even better.

MR. LEHRER: Mr. Secretary, are you one of those who's sitting now in Washington frustrated at the result of the war after the war is over, that you and I have just spent, we had to spend eight or nine minutes talking about Saddam Hussein as the leader of Iraq, after all of this this man is still running the country and all the reports at least, all the reporting that we are getting in the public press at least is that every day that goes by he gets stronger rather than weaker, does that really bother you?

SEC. CHENEY: No. First of all, I don't see it in quite those terms, Jim. I think what we did in the war was a tremendous success. We liberated Kuwait, we rolled back capability's forces, we denied him the ability to dominate the world supply of energy, we eroded, perhaps eliminated his capacity to threaten his neighbors for a good many years to come. He's still in power, but we never stated that as one of our military objectives. It would be nice if somebody else governed in Baghdad, but I don't have any reason to believe he'd be any better than Saddam Hussein has been over the years. And while it would be satisfying, I suppose, to see him depart, I don't think that that in any way, the fact that he's still there anyway reflects badly upon the policy or upon our conduct of the war. I think from the standpoint of his overall position, is he stronger today or weaker, my judgment is he's weaker, that, in fact, he has been able to hang on because of his control over the security services because he rules by fear, but that eventually the Iraqi people will be fed up with his rule. We've seen reports that he's executed a large number of officers since the end of the war, successful officers, people who won battles, presumably that is won battles in the Iran War. Nobody won many battles, of course, in the liberation of Kuwait on the Iraqi side, but that he -- the fact that he has to execute these officers had, indeed, served to show that there is a lot of unhappiness, that he is feeling threatened in terms of posture and so I would not argue that he's stronger now than he's been previously; I would argue that he's in big trouble and he knows it and he's hanging on by sheer brute force, but that until he satisfies our requirements, those of the United Nations, until we lift sanctions and he can begin to rebuild his economy, he's got big trouble.

MR. LEHRER: Finally, Mr. Secretary, on another subject altogether in the news today on the Philippines, Clark Air Force Base, is it now ruined beyond repair? Is the United States not going to try to go back in there?

SEC. CHENEY: That's correct. We have made a decision this afternoon that we simply do not want to go back in and try to reuse Clark Air Force Base. The cost of doing so would be several hundred million dollars. It's in an area that's still threatened by continuing eruptions by the volcano. There are massive potential mud slides in the area, the volcanic dust that's been deposited around is very hard on jet aircraft engines. It simply doesn't make sense for us to go back in there, so we have made a decision that we are not interested in going back into Clark Air Force Base.

MR. LEHRER: What does this do to the strategic -- how does the - - the functions that Clark Air Force Base performed, how will they now be performed?

SEC. CHENEY: Well, Clark has been important in the past as a weigh station, certainly as a major facility in the Southwest Pacific. We clearly want to continue a relationship with the Philippines. We'd like to be able to work out an arrangement so that we can continue to have access to Subic Bay Naval Base.

MR. LEHRER: Subic Bay would continue to function, right?

SEC. CHENEY: Subic would continue to function if we're able to work out an arrangement with the Philippines. Clark was important both as a weigh station to the Persian Gulf, for example, from California. There are important training ranges there that we've used with our units all over the Pacific that have gone to Clark to train. We'll have to relocate those functions elsewhere, perhaps at Anderson Air Force Base on Guam, other places in the region where we can pick up the slack. But the cost and the difficulty of operating out of Clark for some time to come simply doesn't justify our going back in there.

MR. LEHRER: And with all of this, Mother Nature has solved the great tension problem between the United States and the Philippines over the lease of these bases, has it not?

SEC. CHENEY: Mother Nature has. It speaks in strange ways, but clearly at this point the negotiations that have been underway for some years were significantly disrupted by the volcano.

MR. LEHRER: And they're over?

SEC. CHENEY: And they're over basically.

MR. LEHRER: And the United States doesn't have to pay anybody any money?

SEC. CHENEY: They're over with respect to Clark Air Force Base. Again, Subic is a separate proposition. We would like very much to be able to continue to operate out of Subic, but that depends upon whether or not we can reach an agreement with the Philippine government.

MR. LEHRER: All right. Sec. Cheney, thank you very much for being with us.

SEC. CHENEY: Thank you, Jim.

MR. MacNeil: Still to come on the NewsHour, a political look at Mikhail Gorbachev and the new scrutiny faced by Robert Gates. PROFILE - MAN IN THE MIDDLE

MR. MacNeil: We turn now to the man who's been the talk of the London summit all week even though he's only just arrived. Mikhail Gorbachev is scheduled to have lunch with President Bush tomorrow and to meet with each of the other six heads of state after that. By now everyone knows what he wants, help for his disintegrating economy. At today's London summit, Sec. of State Baker was asked whether Gorbachev's appeal for help will be ignored.

JAMES BAKER, Secretary of State: I would submit to you there is no chance that he will leave here empty handed. In the first place, I think if you think back two or three years, youwould have -- and considered whether or not the President of the Soviet Union would be attending an economic summit, you would probably have concluded no chance and here he is and he is coming and he will not leave empty handed. There will be any number of things I think that the -- that the countries here will agree should be done. And so that's just -- I just don't think that's a situation that can occur. We're already talking, as you know, about helping integrate the Soviet economy into the world economy. We've talked at length about assistance in converting the defense industries of the Soviet Union to civilian use, something that they say they want to do, to creating investment in the energy sector, assisting in the development of that sector which can earn them some very hard currency, helping cure their lack of an effective distribution system. So there's no chance that he will come here and leave empty handed.

REPORTER: Is there any chance he leaves here with any kind of direct aid?

SEC. BAKER: Well, I don't know what you mean by direct aid. The things that I just mentioned are direct aid. If you mean cash grants, he's not coming here asking for those and his letter doesn't ask for those.

MR. MacNeil: The Gorbachev who arrived in London is a commanding figure in international politics both among his fellow world leaders and for many citizens in Europe and the United States. But at home, it's a different story. Correspondent Charles Krause has been in Moscow for the past month and prepared this political profile of the Soviet President.

MR. KRAUSE: Hardliners in the army, the Communist Party, and the KGB are demanding his ouster. In Moscow, and other large cities, workers and average citizens blame Gorbachev for the country's deepening economic crisis, worsening shortages, inflation, and unemployment.

CITIZEN: We still have the problems.

CITIZEN; Nothing will help us.

CITIZEN: Nothing will help us.

CITIZEN: It's -- [drowned out by chattering in public market]

MR. KRAUSE: Do you think the future -- there's no future in the Soviet Union?

CITIZEN: No future for us, for our children.

MR. KRAUSE: In the republics, it's Gorbachev who's accused of misreading and cursed for mishandling the ethnic and nationalist unrest that's tearing the Soviet Union apart. Activists from seven different republics recently demonstrated in Moscow, demanding sovereignty and independence from the Kremlin. Pazur Arikian, an Armenian who helped organize the protest, said he and millions of other nationalists are fed up with Gorbachev's failure to grant their demands.

PAZUR ARIKIAN, Armenian Nationalist: There is independence or no. There is freedom or no. Gorbachev like to keep empire using new ideas, but it is same ideas. I am fighting for independence of Armenia, for democratic Armenia, and we like, for example, to have very good relation with Russia, but we don't need Gorbachev. We can do it without Gorbachev.

MR. KRAUSE: According to public opinion surveys, Gorbachev's approval rating has dropped precipitously to just 15 percent. Nikolai Popov is chief of political polling at the respected Soviet Center for Public Opinion and Market Research in Moscow. Gorbachev's biggest problem, he says, is the economy.

NIKOLAI POPOV, Pollster: You may call it bread and butter issues. He was saying all along so many things for these five or six years and he did not deliver. The situation is deteriorating by the day so obviously, in our, in this country, like in many others, people are blaming the one who is in charge. And in this country, unlike many other countries, the one who is on top is really in charge.

MR. KRAUSE: In terms of nationalism, in terms of the Russian view of whether or not a break up of the Union is desirable or acceptable, has Gorbachev's resistance to independence for the Baltic states, for example, contributed to the decline in his popularity?

MR. POPOV: To some extent, yes, but if you look at the huge country on one of those maps, still for the public, especially the bulk of the population in Russia, which has still the majority of the voters in this huge country, for them it's a peripheral issue. It's not so decisive and important to base their attitudes towards the political leader on that base.

MR. KRAUSE: But there are powerful hardliners in the army, the Communist Party, the government bureaucracy, and the KGB for whom break up of the Soviet Union is unthinkable. Their leader is Col. Viktor Alksnis, an active duty air force officer who heads Soyeuse, which means Union, a block of ultra conservative deputies in the Supreme Soviet. Alksnis has called for Gorbachev's ouster, saying the President has forfeited his right to power.

MR. KRAUSE: Do you blame President Gorbachev for allowing the nationalism in this country to get out of hand?

COL. VIKTOR ALKSNIS, Deputy, Supreme Soviet: [Speaking through Interpreter] Yes, I do accuse him of that. He and no one else because he is responsible for what's happening now and the blood and sufferings of millions of people are on him and he has to answer for that.

MR. KRAUSE: This winter there was a chilling preview of what might happen if the nationalities issue continues to fester. Army troops moved against separatists in Lithuania apparently without Gorbachev's prior knowledge or approval. Thirteen civilians were killed in what was a clear challenge to Gorbachev's authority. Since then, Gorbachev has moved to reach agreement with the republics, giving them more sovereignty and more control over their own internal economic and political affair. Speaking for the right, Alksnis says the so-called nine plus one agreement is unacceptable.

COL. ALKSNIS: [Speaking through Interpreter] This is another trick of Gorbachev when the world's public opinion and this public opinion in this country is fooled. None of those feudals which we are seeing so many of today will be reluctant to limit his political ambitions. Everybody wants to be a member of the United Nations. Everybody wants to be met in private by President Bush. Everybody wants to see the Guard of Honor meeting them at the airports of foreign countries. They want to see their national flags flowing in foreign countries. They want to hear their national anthems and nobody would be willing to limit his political ambitions.

MR. KRAUSE: Beleaguered and increasingly isolated, Gorbachev seems more like a political prisoner in the Kremlin than its master. He's still capable of out-maneuvering his opponents, as he did recently when he thwarted a move by Alksnis to limit his Presidential powers. But except for his carefully orchestrated appearances in the Supreme Soviet, Gorbachev is rarely seen in public anymore. Not even his closest advisers deny that he and his policies are unpopular. Surprisingly, there seems to be more an air of resignation than a determination to fight.

GEORGI SHAKNAZAROV, Gorbachev Aide: Nothing could be done. I believe that it is the fate of all great reformers.

MR. KRAUSE: Georgi Shaknazarov is one of Gorbachev's chief political aides.

MR. KRAUSE: Do you think that in some respects President Gorbachev's role is unappreciated here in his own country?

MR. SHAKNAZAROV: Well, certainly according to -- we blame this, that there is no market in his own country. Of course, he's -- because he gave to this country, he gave freedom -- and almost everybody is inclined to blame his Presidential capacity, his politics and so on.

ANDREI GRACHEV, Communist Party: Any reformist leader of the scale of Gorbachev should be prepared to know that his true contribution to the progress of his country would be in the best way assessed by the future generations.

MR. KRAUSE: Andrei Grachev has often served as a spokesman for Gorbachev, most recently at the 1989 Malta Summit. Now at Communist Party Central Headquarters in Moscow, Grachev says Gorbachev is under attack because he's a centrist.

MR. GRACHEV: The conservatives are not happy with the amount of change he's introducing in this country with the transformation he's bringing about. Radicals thing that he's too slow, he should be their President and not the President of this backwards, retrograde society, but this is the society and in order to be its leader, and in order to assume the necessary responsibility for its evolution and the conduct of this country on the world scene, he has to remain the national leader. That means a leader that doesn't break ties and relationship with this society, irrespective of how backward or how slow to absorb the change it is.

MR. KRAUSE: Charles Ruud says the references to backward Russia are interesting and quite accurate. A historian in Moscow this summer to write a book about the czar's secret police, Ruud says Gorbachev is in many ways linked to a tradition going back to Peter the Great.

CHARLES RUUD, University of Western Ontario: Not only Peter, but various modernizers who came after Peter thought that they could transform the country from above somewhat along Western lines. And all of these efforts and projects were generally defeated by those who opposed them. But the very strong theme in Russian history, the fate of reform, particularly the fate of liberal reform -- now Peter was not a liberal reformer by any means -- but those who came after him were. They wanted to take Peter's ideas of economic development and to supplement them with political and social change. But one after the other they came to grief.

MR. KRAUSE: So far, Gorbachev has managed to retain his power by lurching from right to left, appeasing his opponents in the party and the army one month, joining forces with Yeltsin and liberal democrats the next. But Popov says his polls show that average people don't like Gorbachev's maneuvering.

MR. POPOV: They don't trust him because some day he's saying that okay, no problem with those republics, let all of them go if they wish, the other day he's saying, no way, we are for the great, glorious huge super Soviet power and so on. One day he is for human rights, the other day he says that all those critics are not right. People don't like it. They like more open people, more straightforward, more logical, consistent. At least they should look consistent.

GEORGI ARBATOV, Director, USA-Canada Institute: Sometimes I see more tactics, clever tactics, than really, you know, very clear strategy and very clear course. Maybe he wants to mislead his opponents, but over time he misleads his allies.

MR. KRAUSE: Georgi Arbatov, director of the USA-Canada Institute, usually advises and never criticizes Soviet leaders. But he is critical of Gorbachev, saying he's been too cautious and leaned too far to the right.

MR. ARBATOV: Here is one of his mistakes. Maybe I am wrong. This is my personal opinion. I think he can do much more help than he thinks he can. And he would have much bigger support in democratic reforms than maybe he imagined.

MR. KRAUSE: It's a critique that draws blood from Grachev.

MR. GRACHEV: I'm not sure that Mr. Arbatov knows much better than Mr. Gorbachev which way and at what speed this country should evolve. And this is not to undermine the capacity of analysis of Mr. Arbatov but just to, to make sure that everybody understands that with Mr. Gorbachev and under his leadership, this country has achieved and at a rather low price I would say without important or very dramatic civil conflict the degree of change which would have been considered as unprecedented and unbelievable even by Mr. Arbatov if he was asked about the possibility of achieving it about five years ago.

MR. KRAUSE: Sergei Stankevich is deputy president of Moscow's City Council and a leading democratic theoretician. He says despite Grachev's passion, Arbatov is right, relying too heavily on tactics, Gorbachev has failed to form a dependable alliance with either the democratic left or the conservative right.

SERGEI STANKEVICH, Moscow City Council: Many times in our political history, of perestroika, Gorbachev attacked democrats. He called them "so called democrats." He portrayed them as irresponsible bad guys. They also attacked him critically but several times in critical situations, they had to support him and he had to ask them for support. This is irony of perestroika.

MR. KRAUSE: And the irony continues with Stankevich, Boris Yeltsin and other democrats who would once support Gorbachev if he decides to go forward with the kind of radical economic reforms demanded by the West. But on the eve of his trip to London, no one here in Moscow was quite sure what Gorbachev believes or how far he's willing to go to dismantle what's left of the Communist system. With the Soviet economy already in crisis, what Gorbachev apparently fears most is that radical economic reforms will plunge the country deeper into the hole before a new free market system begins to revive it. In London, he's expected to try to convince the West to provide aid, credits, and investments to help cushion the transition and alleviate the immediate suffering.

MR. GRACHEV: I think there is no single sum of money with which you can buy the success of perestroika within this country. So one thing that can be achieved with the gradual and rather limited assistance provided by the Western world would be just the softening, I would say, of the difficulties of the pains of this transition period. And the second aspect is we hope to make it quicker, to speed it up. That is possible.

MR. KRAUSE: Do you as a democratic leader of this country want the West to give Gorbachev enough aid to keep him in power?

SERGEI STANKEVICH: The West should not give money to any level of government. It is our understanding -- neither to all Union government and Gorbachev personally, nor to republican government and to Yeltsin, and personally, and not to even Moscow City Council for Stankevich or Popov, no money for any level of government but it is necessary to provide us with very serious and intensive help in order to create entrepreneurial sector of our economy and this is the aid.

MR. KRAUSE: For the past week, Moscow has been filled with talk, analysis and speculation about the prospects and outcome of the G- 7 meeting in London. For Mikhail Gorbachev, it will be another important appearance on the world stage where the drama of this troubled country will once again unfold. FOCUS - UNDER SCRUTINY

MR. LEHRER: Finally tonight the Robert Gates problem. Gates is the career CIA officer President Bush has nominated to be director of Central Intelligence. Four years ago, President Reagan nominated him for that same job but it was withdrawn. Today the Senate Intelligence Committee said it would postpone confirmation hearings on Gates until mid September. Now as then the problem, real or imagined, is the Iran-Contra Affair. What did Mr. Gates know and when did he know it is the question. Roger Mudd reports.

PRES. BUSH: [May 1991] He's a good man and I'm proud to send his name up to the Senate. Helen.

HELEN THOMAS: Mr. President, it's pretty clear that there are no qualms in this administration about opening up the Iran-Contra scandal again.

MR. MUDD: When President Bush nominated Robert Gates to succeed William Webster as director of the CIA, he seemed to know what the press would ask him before they asked him.

PRES. BUSH: What's your question to me?

MS. THOMAS: My question is do you have any qualms about --

PRES. BUSH: No.

MS. THOMAS: -- this question being opened up?

PRES. BUSH: I have no qualms at all.

MS. THOMAS: And you think that he'll be able --

PRES. BUSH: In fact, I've had consultation with the --

MS. THOMAS: Why did you --

PRES. BUSH: May I finish, please. We've had consultation with the people on the Senate Intelligence Committee and so far I'm very, very pleased with the way they've gone.

MR. MUDD: That's what the President said in May. This is what he said last week.

PRES. BUSH: We sent this nomination up sometime ago and if everybody's going to get flustered and panic because of some allegation by some -- where we don't even know that the person is accusing him of anything, all I'm saying is fair play.

MR. MUDD: For Robert Gates, the problem might be nothing more than bad timing. Last week, just a week before his Senate confirmation hearings were to begin, the Iran-Contra Affair rose again to cast its shadow. Ex-CIA official Alan Fiers pleaded guilty to charges that he lied to Congress in 1986 about his knowledge of the diversion of profits from Iran arm sales to the Contras of Nicaragua. Fiers did not implicate Gates, but reportedly did implicate others in the CIA above and below him. It was Iran-Contra that buried Gates four and a half years ago. President Reagan announced the scandal himself and when William Casey, dying of a brain tumor, resigned as director of Central Intelligence, Reagan nominated the agency's No. 2 man, Robert Gates, to replace him. His confirmation hearings were rough.

SEN. BILL BRADLEY, [D] New Jersey: [February 1987] Apparently you did not raise objections to the special mission to Iran by the former national security adviser, is that correct?

MR. GATES: That is correct.

SEN. BRADLEY: Nor did you ask for a complete briefing by Col. North and your subordinates in the CIA who were involved in planning and supporting the highly risky and objectionable covert action that was authorized by a finding you had never seen, is that correct?

ROBERT GATES, CIA Director Designate: [February 1987] That is correct.

MR. MUDD: The Senate Intelligence Committee thought his answers only minimally helped them. Under heavy questioning, Gates said he would not have approved selling arms to Iran and that in 1986, he knew nothing of the diversion of profits to the Nicaraguan Contras.

MR. GATES: One 1 October, our national intelligence officer for counter terrorism met with me to express concern about the operational security of the NSC's Iranian arms project. The NIO also speculated that some of the funds from the Iranian arms sales may have gone to support the Contras. On 9 October, the director and I met with Col. North to receive a briefing on his recent meetings with Iranians representing a new challenge to senior officials in Tehran. We then turned to Central America, the downing four days before of a Contra supply plane, and the capture of Mr. Hasenfus, and his appearance in Managua two days before. He told us that CIA is completely clean, quote, unquote, of any contact with those organizing and funding the operation. I recall that Col. North made a cryptic remark about Swiss accounts and Contras. Neither the DCI nor I pursued the comment.

MR. MUDD: Scott Armstrong, a former Washington Post reporter and a student of the Iran-Contra story, remembers Gates' testimony.

SCOTT ARMSTRONG, Iran-Contra Archivist: I think he knew that there was a diversion fairly early on. He's admitted that he knew it three or four months before it was made public. I think he knew earlier than that and I think there was some involvement in the private funding in the countryside. But I don't think it all adds up to all that much, except on the question of his integrity. Did he inform Congress when they asked him direct questions, when they indicated what they wanted to know, did he give them the answers that he could have given them? Did he give them clues? Did he tell them I'll go back and get more information? Or did he obstruct their inquiries?

MR. MUDD: The committee was not happy with Gates' answers. It announced it would not move forward on the nomination until all questions about the CIA and Iran-Contra had been answered. Two weeks later, White House Chief of Staff Howard Baker read a letter from Gates to the President.

HOWARD BAKER, White House Chief of Staff: [March 1987] It's dated today. "Mr. President, it is apparent that there is strong sentiment in the Senate to await completion at minimum of the work of the Senate Select Committee on Iran before acting on my nomination. I believe a prolonged period of uncertainty would be harmful to the Central Intelligence Agency, the intelligence community and potentially to our national security. Accordingly, I respectfully request that you withdraw my nomination to be director of Central Intelligence."

MR. MUDD: So to replace Casey, the President nominated William Webster, director of the FBI. Robert Gates quietly returned to work.

SCOTT ARMSTRONG: Well, he went back into the, first into the Central Intelligence Agency where he continued to be deputy for some period of time, then he went over to the National Security Council and developed an extremely close relationship with the President, basically the No. 2 person there.

MR. MUDD: But the work of Iran-Contra special prosecutor Lawrence Walsh never quite stopped and when Gates was nominated to replace the retiring William Webster, the cloud of Iran- Contra reappeared.

VINCENT CANNISTRARO, Former NCS and CIA Official: There's a perceptual cloud, rather than a substantive cloud.

MR. MUDD: Vincent Cannistraro is a retired intelligence expert who worked in the Reagan White House and with Gates at the CIA.

MR. CANNISTRARO: The point is that Bob Gates was deputy director of Central Intelligence from February 1986 on during the period when Bill Casey was running a lot of operations that weren't institutional operations, that were supported outside the agency by, by buccaneers, Dick Secord, Ollie North, of course, was there orchestrating it from the White House. These were problems that redounded to the agency and because Bob Gates was there, they redound to Bob Gates, I think unfairly because Gates had no operational responsibility for what Casey was doing in Central America, for what the White House was doing in Central America, or with the arms shipments to Iran, but because he was there, these questions are going to remain over his head.

MR. MUDD: Just because he didn't have operational responsibility didn't mean he didn't have some responsibility to know about it.

MR. CANNISTRARO: Well, it doesn't necessarily exclude it, but my contention is that he was not in the chain of command on Central American operations and the people that were actually implementing the operation and the people at the agency, the individuals at the agency that apparently were supporting it, were not reporting to Bob Gates. These were people like the deputy director of operations, Clare George, who was indicated by Alan Fiers' testimony as a person knowledgeable of the diversion. But Clare George did not get along with Bob Gates. There was a palpable antagonism between the two men and he didn't report to Bob Gates. He reported directly to Bill Casey.

MR. MUDD: But the emergence of Alan Fiers as a key player in the Iran-Contra Affair means he's also important to the Senate Intelligence Committee.

MR. ARMSTRONG: Fiers can, for example, indicate what was going on with the funding of the Contras. They can then ask Gates who's the head of intelligence, head of analysis, what it was that he was trying to find out about the Contras, how strong they were, how much funding they had, what he was learning, so he has that choice between either saying, well, we weren't very competent at finding out what people we were supporting were doing and where the money was coming from, or else admitting that he knew a great deal more than he's admitted to date.

MR. MUDD: Democratic Sen. Bradley of New Jersey will again be questioning Gates when the confirmation hearings begin.

MR. MUDD: So I gather it strains your credulity to think that the man above Gates knew and the man below Gates knew and Gates didn't know?

SEN. BILL BRADLEY, [D] New Jersey: It requires a more thorough explanation form Mr. Gates than we have gotten to date or than we got in 1987. It is not impossible but it does stretch your imagination a little bit, and therefore, he has to let us know. He has to reassure us on that issue. But again, you know, there are other issues. I mean, you know, how did the whole Iran-Contra thing start? It started on the basis of an analysis of the Soviet Union, which became the justification for a lot of the shenanigans that went on and a lot of the irresponsibility and violation of the public trust that we now know about as Iran-Contra.

PRES. BUSH: I believe firmly in Bob Gates's word and he's a man of total honor and he should be confirmed as director of Central Intelligence.

MR. MUDD: If President Bush has had second thoughts about Gates, he has given no indication of it. In fact, last week for three days in a row, the President went out of his way to defend his nominee.

MR. MUDD: What is it about Robert Gates that would cause President Bush to risk a reopening of the whole Iran-Contra Affair to his possible embarrassment?

MR. CANNISTRARO: You understand it and many people do, that George Bush is a person who rewards loyalty. He admires loyalty as a character trait. Bob Gates is very loyal. He's been very loyal to the directors he served at CIA and these are directors as disparate as Stansfield Turner, a Carter appointee, and Bill Casey, a Reagan appointee.

MR. MUDD: Somebody told me recently that George Bush regards Robert Gates almost as a son, that the relationship was so intimate.

SCOTT ARMSTRONG: The feeling I think is both one that comes from a close personal working relationship, but also from the fact that Bush understands the isolation that you have as a public policy figure when you're over at the CIA, what a difficult institution it is to work within, how difficult it is to get people there to take a stand and say that something they believe and something's going to happen in a particular time frame, to be precise, and straightforward about their intelligence, rather than hedge their bets. He found Gates to be somebody that was willing to go the extra mile to give him the information he wanted. Other people see that same characteristic as somebody who's willing to bend the information to look the same as what George Bush wanted to see.

SEN. BRADLEY: Clearly, Bob Gates is a very bright person, a very bright man. He is someone who has great knowledge of the intelligence field and has worked in many areas quite effectively. So I have some, I have real confidence in that ability and intelligence, and the real question is whether his judgment and candor and position during the Iran-Contra issue, particularly as it relates to what he knew and what he didn't know and what he chose to know and what he chose not to know should be areas that we probe in-depth, and I believe they should be areas we probe in- depth, because I think that the answers to those questions in addition to ability and experience are really central for someone we're going to confirm as director of CIA who will disappear behind a cloak of secrecy for as long as he's in that position.

MR. MUDD: The White House apparently had little choice today but to agree to the Intelligence Committee's two month delay in the Gates hearings. In addition to the extra time needed to prepare for Gates, there are three members of the committee who must also go to the judiciary hearings on President Bush's other big nomination, that of Clarence Thomas to the Supreme Court. So the question is: How much political capital will the President be willing to use to get both Thomas and Gates approved? RECAP

MR. MacNeil: Again the major stories of this Tuesday, Western leaders hailed Mikhail Gorbachev's at their London summit but stopped short of offering any direct financial aid. The leaders also issued a strong warning to Iraq to comply with the UN Gulf War cease-fire agreement. On the NewsHour tonight, Sec. of Defense Dick Cheney said he believed Saddam Hussein was in big trouble and was holding on to power by brute force alone. Sec. Cheney also said the U.S. had decided late today to abandon volcano damaged Clark Air Base in the Philippines. Good night, Jim.

MR. LEHRER: Good night, Robin. We'll see you tomorrow night with interviews from and about the economic summit. I'm Jim Lehrer. Thank you and good night.