The NewsHour with Jim Lehrer

ELIZABETH FARNSWORTH: Good evening. I'm Elizabeth Farnsworth. Jim Lehrer is on vacation. On the NewsHour tonight Switzerland, neutrality, and the Nazis' gold, Charlayne Hunter- Gault interviews the man responsible for a new report; also, Sen. Daniel Patrick Moynihan and former CIA Head James Woolsey debate how much government secrecy is enough; an update from the Hague on the Bosnian War Crimes trial; and new FCC regulations aimed at promoting competition in the telephone business. It all follows our summary of the news this Wednesday. NEWS SUMMARY

ELIZABETH FARNSWORTH: Switzerland helped prolong World War II and finance Nazi war efforts with gold Germans told from Jewish Holocaust victims. That was one of the findings in the U.S. Government report released today. The study said there was conclusive proof German Nazis melted down jewelry, coins, and dental fillings taken from concentration camp victims. A portion of that gold was re-smelted into ingots, which the Swiss banks accepted and used in foreign trade. The report said Switzerland did not know the origins of the gold. Commerce Undersecretary Stuart Eizenstat directed the 11-agency project that produced the findings.

STUART EIZENSTAT, Secretary of Commerce: We have no desire to single out a country, Switzerland, that is a robust democracy, a very generous contributor to humanitarian efforts, and a valued partner of the United States today. But the purpose and scope of this study regarding Nazi gold means that Switzerland figures prominently.

ELIZABETH FARNSWORTH: The report also criticized the U.S. Government for not pressurizing--excuse me--not pressuring Switzerland harder to make restitution. The Swiss foreign minister said the report did not reflect the threats faced by a small, neutral country bordered by axis powers during the war. We'll have more on the story right after the News Summary. In the Netherlands today the United Nations War Crimes Tribunal issued its first conviction for atrocities committed during the Bosnian war. It was also the first war crimes conviction since the end of World War II. The three-judge panel at the Hague found a Serb police reservist guilty for his role in an ethnic cleansing campaign of Bosnian Muslims. Dusan Tadic faces a maximum penalty of life in prison. The tribunal is not allowed to impose the death penalty. We'll have more on this story later in the program. In Zaire today President Mobutu exited the capital, Kinshasa, as 200 civilians and 100 government and rebel troops were killed in fighting near Kenge, 150 miles to the East. We have more in this report from Saira Shah of Independent Television News.

SAIRA SHAH, ITN: In a no-nonsense operation President Mobutu's convoy discreetly left the capital, Kinshasa, this morning. Few people turned out to watch him leave for what his aides insist is only a two-day visit to nearby Gabon to attend a regional mini- summit. The airport was sealed off for his departure. Its suddenness, at a times when the rebels are poised around the capital, has led to open speculation here that he will never return. To many Zairians, who have endured three decades of his corrupt rule, which has all but bankrupted the country, that's a matter for celebration. Spontaneous demonstrations of joy broke out here and there in the capital. Zaire's defense minister was left to rally government troops. He warned them--in the face of the rebel advance--they had the choice of standing together or suffering together. The rebels are advancing on the capital, Kinshasa, on three fronts. In the Northeast they're at Bandundu, 200 miles from the capital. The rebels are also moving on Kinshasa from Kenge in the East. From here the international airport is in their path. Mr. Kabila's forces are also moving in from the West, from the seaport of Matadi. In the meantime, western forces continue to wait in neighboring Congo for a possible evacuation of western expatriates.

ELIZABETH FARNSWORTH: The sergeant major of the army, its top enlisted man, was charged today with sexual misconduct. Gene McKinney also faces charges of adultery, indecent assault, and obstruction of justice, as a result of his behavior toward three female soldiers and one female sailor. McKinney has been suspended from his post as the senior enlisted man advising the army's chief of staff. McKinney has denied all the charges .He spoke briefly at a news conference.

MAJOR GENE McKINNEY, United States Army: I want the American people to know and I certainly want the American soldiers, soldiers of America's armies to know, that I have done no wrong in these charges. I am still a soldier, a sergeant, and I still believe in human rights, dignity and respect for people. And I continue to believe that way. I was raised that way, and I will die that way because that is the way I have lived and raised to be.

ELIZABETH FARNSWORTH: Also in Washington the Federal Communications Commission implemented part of the 1996 telecommunications law today. The panel lowered the amount long distance carriers pay local phone companies for routing calls to long distance lines. FCC officials said customers with only one telephone line should see their bills drop by about $2 a month after the cuts take effect in July. FCC Chairman Reed Hundt spoke to reporters after the panel's meeting.

REED HUNDT, Chairman, FCC: Long distance prices are going down. We have a written, binding commitment from AT&T. We have statements that I completely believe in from the other long distance companies. Long distance prices are going down. This is a good thing. It is a good thing if the Communications Act leads to prices going down. It means volume goes up. It means more people will be employed. It means economic growth. It means that the pie is getting bigger. It means that we have more money that we can use to meet the universal service goals. It is all a good thing. Let us enjoy this.

ELIZABETH FARNSWORTH: The FCC also instituted a plan to help put the nation's school system on the Internet. Customers will more than one phone line must pay an additional charge in order to finance the arrangement. This plan was also devised to comply with the new telecommunications law. In Congress today the Senate Governmental Affairs Committee held a hearing on government secrecy. Witnesses testified a new system is needed for classification and declassification of documents. We'll have more on this story later in the program. Several agricultural deals were announced today during President Clinton's state visit to Mexico. Agriculture Secretary Dan Glickman said Mexico agreed to reduce tariff barriers on citrus fruit imported from Florida and Arizona. Glickman said the U.S. agreed to accept Mexican pork and wheat exports. This was President Clinton's third and last day in Mexico. In a speech at the National Auditorium in Mexico City he stressed the binational partnership.

PRESIDENT CLINTON: Drugs are not simply a Mexican problem, or an American problem. They are our common problem. The enormous demand for drugs in America must be stemmed. We have just a little less than 5 percent of the world's population, yet, we consume 1/3 of the world's cocaine, most of which comes from Mexico. The money we spend on illegal drugs fuels narco traffickers, who in turn attack your police and prosecutors and prey on your institutions. We must face this curse together because we cannot defeat it alone.

ELIZABETH FARNSWORTH: Following an afternoon of touring old ruins in Teotihuacan, the President and the First Lady traveled to Costa Rica for a summit of Central American leaders. And that's it for the News Summary this Wednesday. Now it's on to Switzerland, neutrality, and the Nazis' gold; the cost of government secrecy; a Bosnia war crimes update; and promoting competition in the telephone business. FOCUS - PAST ACCOUNTING

ELIZABETH FARNSWORTH: First tonight a painful legacy of World War II. Charlayne Hunter-Gault has that story.

CHARLAYNE HUNTER-GAULT: A simmering controversy over assets of Holocaust victims was reignited last year when the World Jewish Congress uncovered newly declassified documents in the National Archives. The documents suggested that Switzerland, which took the official position of neutrality during World War II, was still holding on to financial assets, assets that belong to victims and their families. The president of the World Jewish Congress asked for those assets back at a congressional hearing last December.

EDGAR BRONFMAN, President, World Jewish Congress: [December 11, 1996] Mr. Chairman, to put it concisely, we are seeking moral and material restitution. During the past six months we have been undertaking research in U.S. archives to determine the facts behind what is undoubtedly the greatest robbery in the history of mankind.

CHARLAYNE HUNTER-GAULT: Survivors began demanding their assets back as well.

GIZELLA WASHES, Holocaust Survivor: They can't help me to bring my family back but at least justice, because these people, they worked for their money, and it's their money, so why should the Swiss keep it?

CHARLAYNE HUNTER-GAULT: Under renewed pressure, investigations began on several fronts, including one by the Swiss government. In February, Switzerland pledged to create a special fund for Holocaust victims. It has now reached $185 million. The government has also proposed setting up another larger fund to help survivors and for other humanitarian purposes. It is waiting legislative approval. Meanwhile, another commission, led by former Federal Reserve Board Chairman Paul Volcker, is continuing to investigate dormant accounts that may still be in Swiss banks. And today, the United States released the initial conclusions of a seven-month look at the role Switzerland and other neutral countries had in handling Nazi assets during and after the war. The report also examined the role of the United States and the allies in trying to reclaim those assets after the war.

CHARLAYNE HUNTER-GAULT: Joining us now is the U.S. official responsible for today's report, Stuart Eizenstat. He is Undersecretary of Commerce and International Trade. And here representing the Swiss government is Amb. Thomas Borer, who heads a task force studying his country's wartime role. And, starting with you, Mr. Eizenstat, what was your major finding, in a nutshell?

STUART EIZENSTAT, Undersecretary of Commerce: Our major finding basically was that this was the greatest theft by a government in world history; that the Germans looted from the central banks of the countries they overran some $580 million in gold, which would be worth $5 + billion today; that they transferred the large part of that to Switzerland so that they could convert it into Swiss franks to purchase what they needed to sustain their war effort; that the role of the neutral countries and well-established principles of neutrality collided in the case of World War II with morality; and that many of the actions taken were really actions that--by all the neutral countries--this is not just Switzerland, but Sweden, Portugal, Spain--really contributed to prolonging the war effort.

CHARLAYNE HUNTER-GAULT: And was it known at that time that some of that gold actually came from the bodies of victims?

STUART EIZENSTAT: We have no evidence that the Swiss government or any other government willingly and knowingly accepted victims' gold; however, it is absolutely clear from our report that the Swiss National Bank did know that they were accepting looted gold; that is, gold that had been stolen from central banks. And what the Germans did, the Reich Bank combined gold that they stole from the central banks and victims' gold. They re-smelted it. They put disguised markings on it; and then they shipped that largely to Switzerland. Again, there's no evidence the Swiss knew of this, but the Germans certainly did, and they also--we also found that at the end of the war some of that victims' gold, as we call it, down to teeth fillings from concentration camp victims, actually went into a gold pool called the Tripartheid Gold Commission that was supposed to re-distribute to the countries from which it was stolen. That meant, therefore, that some of the victims' gold, which should have been given to survivors, actually went back to the governments thinking that they were getting their own gold back.

CHARLAYNE HUNTER-GAULT: And when you say neutrality collided with morality, what do you mean?

STUART EIZENSTAT: There was a well-established tradition. Switzerland has been neutral for hundreds of years, and there was a legitimacy to neutrality. It enabled small countries to stay out of the frequent European wars. But many of the neutral countries in World War II, Charlayne, failed to recognize that Nazi Germany was not just another opponent; that World War II was not just another of a long series of European wars. It was one of the most evil forces in history. It was killing civilians at a record rate. It was threatening western values. Each of the countries--Sweden was supplying critically needed ball bearings--Spain and Portugal and Turkey critically needed items like chrome and cobalt and taxon. The Swiss were serving, in effect, as bankers or facilitators for the looted gold. And so, altogether, this contributed to a war effort. It was, in fact, neutral, but by, in effect, cooperating with such an evil force it did prolong the war.

CHARLAYNE HUNTER-GAULT: Mr. Ambassador, do you accept that indictment of Switzerland's role in the war?

THOMAS BORER, Swiss Task Force on Nazi Victims' Assets: Let me first thank Amb. Eizenstat and his team for this monumental work. The Swiss government made it clear on several occasions that we want to know truth about our history during the Second World War, and I think this report is a very important step to the truth. It's known that after the Swiss government discussed if all the findings of the Eizenstat report are right, we take this and it's up to the historians to judge the role of Switzerland 50 years ago. We today should more keep in mind what Switzerland of today is doing--

CHARLAYNE HUNTER-GAULT: All right. Let's--

THOMAS BORER: --to get to--to get down with its history.

CHARLAYNE HUNTER-GAULT: Excuse me, Mr. Ambassador. I didn't mean to interrupt you. We're going to get to that in a minute, but let me just ask you, just looking back historically, did the Swiss government know what they were doing? I mean, do you at least know that and accept the finding that there was evidence that they knew?

THOMAS BORER: Of course, as Amb. Eizenstat made it clear, neither the Swiss National Bank nor Switzerland as a government knew that the Germans were melting down concentration camp gold and mingling it with other monetary gold and transferring it to Switzerland and other European countries. This was not known to us till this morning when the Eizenstat report was revealed.

CHARLAYNE HUNTER-GAULT: All right. Let's just put a pin in that and go back to Mr. Eizenstat because your report said that there was incontrovertible evidence that the Swiss bankers and the national bank, the private banks--the private Swiss bankers and the National Bank of Switzerland knew.

STUART EIZENSTAT: Now, what they knew, Charlayne, was not that they were getting victim gold, which the Reich Bank cleverly disguised. What they knew was that they were getting looted gold that the Germans had looted from central banks. Now, it's important when we look at this whole issue of neutrality that we look at it in a realistic format. During the early parts of the war Switzerland and the other neutrals were only a panzer division away from being invaded. Switzerland was surrounded on all sides by the axis. During the latter stages of the war, however, when business as usual still was conducted by the neutrals with Germany, that fear had dissipated, and our particular concern, and what is least understandable and least explicable is that the post war conduct of the neutrals, including a Switzerland with the possible exception of Sweden, was such that they dragged out negotiations with the allies; they paid only a fraction of what ought to have been paid; and here the U.S. role comes into account.

CHARLAYNE HUNTER-GAULT: All right. Before we get to that, what about that indictment, Mr. Ambassador, that there as a business as usual attitude and that you were doing business at a time when negotiations were going on--post war--stalling things? You heard the indictment.

THOMAS BORER: If you talk about this part of our history, one has to understand the special situation of Switzerland. As I can show here, Switzerland was surrounded even 1943 by Nazi Germany and the axis powers. And the only way for the Swiss to survive was by dealing with Nazi Germany. And the gold trade was part of this dealing. And as Amb. Eizenstat made clear, this was totally accepted by the allies till about '43, '44. My government continued at this time after '44/'45 this gold trade because it took a very legalistic attitude based on the international law which was enforced at this time. It lacked the moral attitude, as we take it today.

CHARLAYNE HUNTER-GAULT: So you acknowledge that the Swiss failed the moral call?

THOMAS BORER: At this time, yes, because the basic principle of Switzerland's foreign policy at that time was neutrality. And on the basis of the neutrality law, they were at that time--it was lawful to accept gold which was looted from other countries because under International Law of 1907, the occupation power had the right to seize the state-owned gold of an occupied country. This is something which in today's eyes is not anymore reasonable, not moral. But that was the days of this--

CHARLAYNE HUNTER-GAULT: Is that an--

THOMAS BORER: --of this time.

CHARLAYNE HUNTER-GAULT: Sorry.

THOMAS BORER: I don't want to say this is an excuse. I just want to explain why the Swiss government at this time took this gold, and it never took the gold just for free.

CHARLAYNE HUNTER-GAULT: Right.

THOMAS BORER: It took the gold as a payment for other goods and- -

CHARLAYNE HUNTER-GAULT: And survival.

THOMAS BORER: --survival.

CHARLAYNE HUNTER-GAULT: Is that acceptable, Mr. Eizenstat?

STUART EIZENSTAT: Well, that's what we mean by neutrality colliding with morality. It obviously was understandable, perhaps, during the early parts of the war when the German war machine was at its apex, but by late 1943, with the invasion of Italy, then D- Day in June of 1944, the Soviet advances from the East, the threat of invasion really dissipated, and most particularly, most particularly, Charlayne, it's what happened after the war when there obviously was no threat of invasion, and here the Swiss and the allies agreed on a very minimal settlement in 1946, and yet, even with that minimal settlement, it took six more years for Switzerland to pay the amounts they should have. Portugal took until 1960. The Turks agreed to pay a little over a billion dollars. They never paid any. So--

CHARLAYNE HUNTER-GAULT: So it wasn't just Switzerland?

STUART EIZENSTAT: It was not Switzerland. All the neutral countries and what also is, I think, most disturbing is of the token payment that Switzerland ultimately made in 1952, a much smaller amount than they had agreed to in 1946, that effectively was paid for by Germany, the reason being that they held onto the German assets in Switzerland for these six years between the 1946 accord and their payment in 1952. Why? Because they wanted that as leverage, as did the other neutrals for the wartime debts that Germany owed to the neutrals for shipments of arms and other things. And then once they got the payment from Germany they turned right around and paid this minimal amount to the allies. So, effectively, the Germans paid all the neutrals' amounts to the allies.

CHARLAYNE HUNTER-GAULT: Ambassador, a brief response to that.

THOMAS BORER: I don't want to dispute the historical facts, but this--all this has done in negotiations between Switzerland on one side and the other is on the other side, and Switzerland at that time was not in a very strong position. The allies were in a much stronger position. They just won the war.

CHARLAYNE HUNTER-GAULT: Excuse me. Why didn't the allies press harder, including the U.S.?

STUART EIZENSTAT: We were very honest and candid. We knew that if we were to shine the spotlight of history on other countries we had to look at our own role. The U.S. Government and the allies accepted these agreements, these minimal amounts. Why? The reason is quite clear. The policy of the United States and of the allied powers changed dramatically after the war. The Soviet threat, the need to create NATO, the need to rebuild post war Europe, the need to incorporate Switzerland, and the other allied countries into the western body of countries, given the Soviet threat, all superseded the desire to press the allies--for the allies to press the neutrals to give them what should have been done. Also, it was quite clear, Charlayne, that the allies knew that in the end the Germans were going to be paying part of what the neutrals needed to pay, and we didn't want to burden a post-war Germany with any more burdens than we had to.

CHARLAYNE HUNTER-GAULT: I know you both want to talk about what happens next. Let me start with you, Ambassador. What do you see happening next?

THOMAS BORER: Switzerland has taken unprecedented steps over the last months. We have established a historical commission within independent historians, also Americans. We have established a special fund for needy Holocaust victims. You mentioned it was-- for the time being we have 100 million U.S. dollars in this fund. We want to do justice. We want to get down to the truth, and we have taken the lead in dealing with our history.

STUART EIZENSTAT: We applaud those steps, and we think the following should be done. Each of the neutral countries should do as they've now begun to do to create historical commissions and come to terms with their own past, as Switzerland is trying to do. Second, we need to declassify all the documents in the gold pool so we know where it came from. Third, we should have an international conference where we share all this information, and last, there's still $70 million in gold left in this gold pool not yet distributed. We believe that a substantial portion of that should go to the Holocaust victims and other victims of Nazi atrocities and not to the central banks and governments who have already gotten their lion's share of this gold pool.

THOMAS BORER: Let me just make--just let mention that--

CHARLAYNE HUNTER-GAULT: Gentlemen, sorry, we have to go now. Thank you very much. We have to end it. FOCUS - TELLING SECRETS

ELIZABETH FARNSWORTH: Next tonight, is too much information kept secret by the U.S. government? Some of the documents from the National Archives revealing the extent of Switzerland's use of Nazi gold became available to researchers only last year. Before that, they were classified, or top secret, as we just heard. We have a debate on government secrecy but first some background.

ELIZABETH FARNSWORTH: Consider some of Washington's landmarks. What do they have in common besides their status as tourist attractions? They are repositories of millions of secrets--old ones from Cold War days and new secrets too--as every minute some document or study or letter is stamped confidential, secret or top secret, or even more secret than that. Confidentiality is as old as government, but it became more institutionalized during World War II and the Cold War, especially with the coming of the atomic age. There is no one law that covers what should be classified. Every President since World War II, with the exception of John Kennedy, has issued his own secrecy rules. The result: millions of newly classified documents each year. And some 1.5 billion pages of government documents more than 25 years old remain classified. President Clinton mandated automatic declassification of most of those old documents in an executive order that took effect last year; but so far only about 10 percent have been. And, in March, a federal commission on government secrecy said the Pentagon has largely ignored the President's order, as has the CIA. Yesterday, CIA Director-Designate George Tenet vowed to comply.

GEORGE TENET: It is time for us to better distinguish that information which really ought to be kept secret from information that ought to be made available to the American public.

ELIZABETH FARNSWORTH: The bipartisan Federal Commission on Secrecy is headed by New York Democrat Senator Daniel Patrick Moynihan. In its recently released report, the commission recommended secrecy be returned to its limited but necessary role. Information can better be protected, the report said, if secrecy is reduced overall. The commission also recommended that Congress enact a law that would: establish the principles for what may be declared secret; require the declassification of all information after 30 years unless disclosure would harm an individual or vital government activities; and require officials to weigh the benefits of secrecy against the cost of releasing information to the public. Today, the authors of that report went before the Senate Governmental Affairs Committee to urge that Congress act on those recommendations.

REP. LEE HAMILTON, [D] Indiana: We recommend a whole new approach to the business of classifying information. We think the key decision is made at the point of classification. That's where too many things get classified today.

ELIZABETH FARNSWORTH: A member of the commission recognized its proposals may be controversial.

REP. LARRY COMBEST, [R] Texas: All portions or none of these recommendations may be adopted. They will not be without controversy or opposition, but I would suggest that we carefully examine the basis for opposition to see if it is based on sound judgment or on turf.

ELIZABETH FARNSWORTH: A witness who has written about the CIA, David Wise, warned against legislation that could affect freedom of the press.

DAVID WISE, Author/Journalist: The statute could lead down the road to criminalizing news stories and prosecuting reporters and writers, although I'm sure that is the opposite of the commission's intent.

ELIZABETH FARNSWORTH: Legislation to set the rules on government secrecy was introduced in Congress today.

ELIZABETH FARNSWORTH: Now for more on this we turn to Sen. Daniel Patrick Moynihan, Democrat from New York, who was the chairman of the Commission on Protecting and Reducing Government Secrecy, and James Woolsey, director of the CIA in the first two years of the Clinton administration and now a lawyer here in Washington. Thank you both for being with us. Senator, how important is this? How dangerous is the current system of classifying and declassifying secrets?

SEN. DANIEL PATRICK MOYNIHAN, [D] New York: The danger comes in the mistakes you make by not opening up decisions to the argumentation and exchange of views that open societies should have. I think Jim Woolsey, who's been director of federal intelligence, assistant secretary of the navy, undersecretary of the navy, will recognize this. The large fact about our intelligence system of the post--the Cold War era is that it completely failed to anticipate the collapse of the Soviet Union. As Stanfield Turner, Adm. Turner, one of the distinguished predecessors, wrote in 1990, he said, "We should not gloss over the enormity of this failure." They missed by a mile. Now, what is the point of acquiring all these pages and documents and such if in the end you miss the most important assignment you have and we think that in many important ways secrecy can be an impediment to intelligence, which doesn't really mean you don't need secrecy, but too much about certain kinds of central issues will mislead you.

ELIZABETH FARNSWORTH: So it's really important for national security, in your view.

SEN. DANIEL PATRICK MOYNIHAN: To open up.

ELIZABETH FARNSWORTH: To open up, right. What do you think about that, Mr. Woolsey?

R. JAMES WOOLSEY, Former CIA Director: I have two very different reactions. First of all, let me pay Sen. Moynihan, the chairman of this commission, a compliment. This is a sound, well-written report. It points in a positive direction towards balancing the needs of secrecy and the needs of openness for the future and particularly in its last chapter on information, security-- information system insecurity. It does an excellent job of beginning to come to terms with some of the serious problems of the future. Dealing with paper is sort of the past. The future is electronic. And this report breaks some new ground in pointing a direction towards how one could begin to deal with this very tough problem. As the Senator knows, with respect to his and Stan Turner's view of the CIA's performance during the Cold War, I'm in pretty much total disagreement. By the way, what he said is not in the report. But that's another subject.

ELIZABETH FARNSWORTH: But do you disagree with his contention that an open--a more open system would actually be better for national security?

R. JAMES WOOLSEY: I think that a more open system with respect to policy is a good idea. During the Reagan administration it was pretty well known that Sec. Schultz of State of Sec. Weinberger of Defense disagreed on a large number of things, and most of those disagreements were sort of out in the public in one way or another, didn't harm the United States security, meant for a more informed public, went to a more informed public. Some administration try to keep there from being any leakage of any policy disagreements, and normally, I think that just stifles debate. But with respect to intelligence sources and methods this report is really quite good. It talks about the extreme importance of protecting intelligence sources and methods and gives the director of Central Intelligence the authority to not have this central office which the report talks about doing declassification, be given all very sensitive documents. I think it'sa balanced report, and I think on that issue it points away toward a very positive way to deal with these situations.

ELIZABETH FARNSWORTH: Senator--

SEN. DANIEL PATRICK MOYNIHAN: Could I just give you our central proposition, which is that secrecy is a form of government regulation. It tells you what you may know. And we've been dealing with this question of regulation through most of this century. And in the 1930's we began to get law professors and started asking, what are these public regulations, these New Deal agencies are issuing, are they laws, and if Congress didn't pass them, what began in 1935, the Federal Register, which was printed. In 1946, we established the Administrative Procedures Act, and there are means of discovery and litigation and adjudication. We have no system toward this enormously vast world of creative--of the regulation of what the public may know. In the last year we created 400,000 top secret documents. But now let me tell you something. Can I tell you a secret? Because we keep track each year on the number of confidential, secret, and top secret documents we create. But those aren't the real ones. The real secrets are higher than that, but I haven't--I have to tell you that their names are classified.

ELIZABETH FARNSWORTH: How do you--

SEN. DANIEL PATRICK MOYNIHAN: The names are classified. We don't even know--it's a secret--what that designation is.

ELIZABETH FARNSWORTH: How do you make available some of these secrets to citizens? How do you deregulate so that citizens can see them but not make too much available to enemies of the United States?

SEN. DANIEL PATRICK MOYNIHAN: Well, first of all, in terms of the present situation, most of the information we need is in the public sector. Ask George Shultz. Ask Jim Woolsey.

ELIZABETH FARNSWORTH: You mean, if you're an enemy?

SEN. DANIEL PATRICK MOYNIHAN: It's us--our analysis or anybody's analysis, it's all there. You're on the web. But the past--I thought Amb. Eistenstadt did a beautiful job tonight, and he used a phrase which I think is very important. He said, enabling people to come to terms with their own history. Now, we have a billion and a half documents, classified, from that time. The ones who heard they--it was in the archives--the National Security Agency and the Central Intelligence Agency had them from previous organizations. And we haven't opened up. We're learning about the history of Communist espionage in this country, for example, up until recently, from archives in Moscow. Now, the National Security Agency has come out and given us these wonderful encryptions, but we can open up so much more.

ELIZABETH FARNSWORTH: You don't disagree with that, do you, that we need to open up quite a bit more, or do you?

R. JAMES WOOLSEY: I agree with that. Let me give you an example of the way this has been happening. Both my predecessor as director of Central Intelligence, Bob Gates, and I, declassified virtually all of the national estimates dealing with the Soviet Union. The Soviet Union, after all, by 1991 was gone. And so it was quite possible with very few exceptions to let the scholarly community and the academic community, journalists, whoever wanted, they could do so now, review a lot of the documents which led to the national assessments about the Soviet Union that the Senator was talking about at the beginning. I would suggest that any fair assessment of that would indicate that CIA and the U.S. intelligence community did a very good job on the Soviet military capability.

SEN. DANIEL PATRICK MOYNIHAN: But, Jim, now--

R. JAMES WOOLSEY: --did an extremely good job on political stresses, did a poor job on estimating overall levels of Gross National Product, which Sen. Moynihan has called to. But overall, as an article about a year ago in the National Interest Magazine indicates, the CIA has indicated, did a very good job.

ELIZABETH FARNSWORTH: But should be released? Do you think a lot should be released, or are you worried too much will be now declassified?

R. JAMES WOOLSEY: Well, less than a third, according to this report, of the documents that are classified are classified by CIA. The vast majority are classified by the Department of Defense, and there are a number of documents with respect to policy and older defense programs that clearly could easily be declassified. The report makes a very clear exception for protecting intelligence sources and methods. That's the role of the director of Central Intelligence. I'm glad to see the report does that. That sort of thing generally needs to stay secret.

ELIZABETH FARNSWORTH: Senator, what next? You introduced legislation today. How would this new--if Congress passes a bill- -which would decide how to classify and how to declassify it, who would make that decision? How would it work?

SEN. DANIEL PATRICK MOYNIHAN: Well, this was a unanimous report.

ELIZABETH FARNSWORTH: And a bipartisan commission.

SEN. DANIEL PATRICK MOYNIHAN: Bipartisan. House and Senate introduced the same bill today. The President has said he thinks something should be done. What we hope for is a culture of openness in our government about which I want to say one thing with great seriousness. A majority of American people think the Central Intelligence Agency was involved with the assassination of President Kennedy. Now, that is outrageous.

ELIZABETH FARNSWORTH: And you think secrecy contributes to this?

SEN. DANIEL PATRICK MOYNIHAN: You get conspiracy theories when you can't say here, read. I mean, you know, I have a disagreement about the CIA made. We will settle it, or others will, because the documents are open. He opened them and let them go over and write their own books about it. But we have in an assassination records commission which sort of gives out a document of leak--something. And you go to the movies and you find the CIA did it, and oh, my God--

ELIZABETH FARNSWORTH: Do you want that opened?

R. JAMES WOOLSEY: I think the Senator is quite right about this. This process does take much too long. Let me tell you one of the reasons it takes a long time, particularly with respect to intelligence documents. The United States has sharing agreements with lots of countries around the world and in intelligence. And whatever we think about our own ability to excise sources and methods and just produce substance, our friends in other countries may say, we gave you that 30 years ago; we don't really want that turned loose. So one of the reasons why a lot of these documents come out with a lot of things blacked out on them is not so much American judgment about substance as it is protecting relationships with other countries that have shared things with us.

ELIZABETH FARNSWORTH: And Senator, we just have about a minute left. How would it work under your bill?

SEN. DANIEL PATRICK MOYNIHAN: We would hope to have a declassification center probably at the National Archives in which professionals would do this work, sensitive, just the things Jim talked about, but also sensitive--if you don't get some things out, it gets worse and then you have a real problem. As Stu Eistenstadt said today, you can really--there's a release that comes from saying, oh, all right, that happened; we can now live with it; we're not going to deny it. And if some of our allies get embarrassed once in a while, you know, that's their hard luck. They exist because we've made them allies.

ELIZABETH FARNSWORTH: Senator and Mr. Woolsey, thanks for being with us. UPDATE - WAR CRIMES

ELIZABETH FARNSWORTH: Still to come on the NewsHour tonight, an update on the Bosnia war crimes trial and competition in the telephone business. Lindsay Taylor of Independent Television News has the war crimes story: The conviction of a Bosnian Serb for atrocities committed in the first year of Bosnia's civil war.

SPOKESMAN: The International Criminal Tribunal for former Yugoslavia is now in session.

LINDSAY TAYLOR, ITN: It was a landmark judgment. Dusan or Dusco Tadic's trial was the first of its kind in over 50 years. Accused of war crimes and crimes against humanity, the judges listed the charges. They included persecution, inhumane treatment, rape, wilful killing, murder, torture, wilfully causing suffering.

GABRIELLE KIRK McDONALD, Presiding Judge: Although this is the first trial conducted by the international tribunal and thus has some historic dimension, the goal of the trial chamber was always first and foremost to provide the accused with the fair trial to which he is entitled. This we believe has been done.

LINDSAY TAYLOR: Then Tadic, who's always denied the charges against him, listened and took notes as the judges delivered a summary of their judgment.

GABRIELLE KIRK McDONALD: Count 11, guilty; count 13, guilty; count 14, guilty; count 16, guilty.

LINDSAY TAYLOR: He was found guilty of 11 counts of persecution and beatings; however, the tribunal found him "not guilty" on nine counts of murder and declared a further eleven charges inapplicable, a very significant judgment, according to his British defense lawyer. STEVEN KAY, Defense Lawyer: And a year ago the world wouldn't have given us a chance in this case, but it shows that we have done a job to achieve that result of "not guilty" count.

LINDSAY TAYLOR: Forty-one year old Tadic, a karate expert and former cafe owner, was arrested in Munich in 1994 while visiting family, his last moments of freedom caught on fire. The charges he faced related to events at the Bosnian Serb detention camps at Omarska, Trjnopoli, and Karaterm, as well as other places. Prosecutors alleged he had rounded up his former Muslim neighbors and tortured, raped, and killed them. However, from the very outset, it was clear there would be formidable problems for the tribunal in obtaining the necessary standard of proof in such a case. A hundred and twenty witnesses gave evidence. But while atrocities had undoubtedly taken place, the key question could not always be answered.

ATTORNEY: Who was hitting you at that time?

MAN: [speaking through interpreter] A person I did not know.

LINDSAY TAYLOR: Today in Sarajevo neither Bosnian Muslims or Serbs were happy with the judgment.

MIRZA HAJRIC, Bosnian Presidential Adviser: Generally speaking, we are not satisfied with the verdict because not all of the accounts of the verdict have been accepted. We believe more of Tadic's victims survived, the verdict would--would have more witnesses, so it would be fought, but unfortunately, it seems to us that he was quite efficient in running his concentration camp.

DRAGAN BOZANIC, Bosnian Serb Spokesman: We are still not aware of the identity of Mr. Dusco Tadic. That person who is before the court in the Hague tribunal is not the same one they're talking about.

LINDSAY TAYLOR: The Hague tribunal has indicted 75 people on war crimes, only eight of whom are in custody. Those at large include the former Bosnian Serb president, Radovan Karadzic, and his army chief, Ratko Mladic. Tadic will remain in custody pending appeal and is due to be sentenced in the summer. Whether others will be similarly brought to justice may depend on the will of the international community. FOCUS - COMPUTING INTERESTS

ELIZABETH FARNSWORTH: Finally tonight, new rules for telephone companies and to economics correspondent Paul Solman of WGBH- Boston.

PAUL SOLMAN: In February 1996, President Clinton signed a bill to deregulate the telecommunications industry; everything from cable TV and computers to wireless phones.

PRESIDENT CLINTON: Today our world is being remade, yet again, by an information revolution, changing the way we work, the way we live, the way we relate to each other. But this revolution has been held back by outdated laws, designed for a time when there was one phone company, three TV networks, no such thing as a personal computer. Today, with the stroke of a pen, our laws will catch up with our future. We will help to create an open market place where competition and innovation can move as quick as light.

PAUL SOLMAN: For telephone companies, the act aimed at increasing competition. Long distance carriers like AT&T, MCI, and Sprint would be able to compete in local markets, currently run by regional monopolies: Bell Atlantic, Pacific Bell, GET, and others. The regional companies would, in turn, be allowed to offer long distance service. Since the breakup of AT&T, the regional companies have provided affordable serviced to rural towns and low-income Americans. The telecommunications bill expanded that so-called universal service to include rural hospitals and Internet hook-ups for schools and libraries. Long distance companies have helped subsidized universal service by paying the regional firms more than $20 billion a year in access fees--fees for access to the regional lines to carry their signal over the first and last few miles of every long distance call. Now, here's the essence of the new plan announced today: the long distance companies will pay several billion dollars less in access fees, savings they're expected to pass along to consumers. That means long distance bills--now an average of $22.50 a month--will go down by about $2 a month for most consumers. The more long distance calls you make, the greater your savings. So who will now pay for universal service, especially since it's being expanded to hospitals and schools and libraries? The FCC plan would raise money by charging consumers more for each additional telephone line that comes into a home--for computers, fax machines, teenagers, whatever, an average increase of something like $2.50 a month by January 1st. Businesses with multiple lines will see their bills go up even sooner--on July 1st--with an increase per line expected to be just over $2.50 a month and roughly $4.00 by January. Today, though, FCC Chairman Reed Hundt praised the plan as a victory for consumers.

REED HUNDT, Chairman, FCC: Let's not anyone in the American public forget the fact that this is the single best day that business and residential consumers have ever had in Telecom policy since the breakup of AT&T.

PAUL SOLMAN: How good a day was it and for whom? Well, for more, we turn to Gene Kimmelman, co-director of the Washington office of Consumers Union, and here in Boston, William Taylor, a telecommunications consultant with NERA, a Cambridge, Massachusetts, consulting firm. Gentlemen, welcome to you both. Mr. Kimmelman, you helped broker the deal between AT&T and the FCC that resulted in today's plan. For us consumers, who wins, who loses?

GENE KIMMELMAN, Consumers Union: Well, it's really a wonderful day for the people at the bottom end of the economic ladder. First of all, what has gotten no attention at all is the federal regulators have committed to insure subsidies for low-income families all across this country so that everyone can afford a basic telephone line. Still, 20 percent of people below poverty don't have a simple telephone line. So this is a very important step. Secondly, there is no increase in the flat rate, the monthly rate for consumers who have one telephone line, and in addition, rates will go down based on AT&T's commitment 5 percent for daytime calling, 5 percent for evening calling, 15 percent if you make your calls at night, and 15 percent on the weekend. So for the consumer who has seen long distance rates inch up year after year since we relaxed the regulation of AT&T, they'll finally get a rate cut; they'll finally have some savings. They come out ahead.

PAUL SOLMAN: Okay. So, Mr. Taylor, who loses?

WILLIAM TAYLOR, Telecommunications Consultant: Consumers lose who make few long distance telephone calls and have many lines. That's not many people. So on the whole, I think I agree with Mr. Kimmelman that consumers as a whole have won. Businesses as a whole, I believe, win as well because business, by and large, make many, many calls for every line that they have, and even though they will now pay more per line, they will save enough on their long distance charges, assuming that AT&T and MCI and Sprint pass those charges through, to more than break even.

PAUL SOLMAN: But now who gets penalized? If I have multiple lines in my home, my price goes up for each of those lines, then I get hurt?

WILLIAM TAYLOR: Yes. That's the only price that I can see that has gone up for consumers in this decision that's today.

PAUL SOLMAN: And what about businesses? Suppose I have a pizza parlor and I have a lot of lines because I need lines coming in or something, but I don't make long distance calls.

WILLIAM TAYLOR: You too will pay more but, remember, you're still not paying the full cost of the line that you're using. So yes, your bill--a bill for a pizza parlor may go up, but we still haven't reached what we economists would call an efficient level of price to begin with.

PAUL SOLMAN: Okay. Mr. Kimmelman, let's talk about telecommunications companies, themselves. Who wins and who loses there?

GENE KIMMELMAN: Well, AT&T has promised to pass through every penny, every dollar it saves from this plan. And that's about $900 million based on the numbers the FCC released today. We anticipate that's about 500 million for residential customers, actually maybe 600 million even, and the rest for business. So they're not going to profit by this but possibly with bringing down rates, they're going to earn more goodwill with the public; maybe there will be more calling; maybe they will make money that way. What the FCC has done is started squeezing out the fat in telephone network pricing with this decision, something the local telephone companies don't like. We'd ask them to cut out $8 billion. We think there's a lot of excess in the pricing. They only did about a quarter of that today, but I'm sure the local phone companies won't like that.

PAUL SOLMAN: Mr. Taylor, is that true, AT&T is going to cut and cut and cut?

WILLIAM TAYLOR: Well--

PAUL SOLMAN: Pass on savings.

WILLIAM TAYLOR: AT&T has promised to pass on in the first year a given amount. What would force AT&T and then MCI and Sprint to pass on the future access charge reductions that come from this decision today would be more competition. I think we all agree that more competition in long distance is the secret to giving consumers the benefit from the rate reductions that the FCC made today.

PAUL SOLMAN: Do you agree with that, Mr. Kimmelman?

GENE KIMMELMAN: I absolutely agree with Mr. Taylor. We need more competition. Unfortunately, we're seeing a lot of consolidation in markets, particularly among the local telephone companies--Bell Atlantic and NYNEX, and everything--and so we're fearful that some of the companies are moving in the opposite direction. The Justice Department cleared that, and we're absolutely stunned that they did. So we want more competition, but until that occurs, we really need the regulators to keep squeezing out fat, bringing prices down to competitive market levels.

PAUL SOLMAN: Mr. Taylor, you--

WILLIAM TAYLOR: Well, I think part of the FCC's plan is to permit the forces of competition to do that. They deliberately took in this decision today what they called a market-based plan to reducing access charges. I think Mr. Kimmelman is a little careless about where access charges came from. It isn't fat that's being squeezed out. It's a form of contribution to keep local service prices low that has been with us since 1984.

PAUL SOLMAN: Now, in fairness, you've worked for local telephone companies. Mr. Kimmelman, would you like to respond to that?

GENE KIMMELMAN: What the FCC did was today adjust the productivity factor to reflect the declining cost that local telephone companies have experienced as we put more computers in the network fiberoptic lines, so their profits have been soaring because we haven't ratcheted down the prices appropriately as costs have come down. That's the real change. It wasn't a fundamental access charge change. It was an adjustment in the amount of money they're allowed to keep. And their profits have been soaring, so this was long overdue.

PAUL SOLMAN: But reasonable people could disagree a to the amount and whether or not they were really getting pressed too hard. Is that fair?

GENE KIMMELMAN: Well, reasonable people can disagree, but as I said, you know, we looked at the off-the-shelf prices of equipment today, and we thought prices could come down $8 billion. So this is really just the tip of the iceberg of cutting fat, as we see it.

PAUL SOLMAN: Okay. Mr. Taylor, is this FCC plan a done deal?

WILLIAM TAYLOR: No, probably not. There are parts of the plan and very important parts of the plan that have been put off for later decisions. Part of that is the--how the subsidy between rural customers and urban customers is to be handled, and that's to be decided once people know better what the cost of providing rural service is. That big decision has been put off for later. Other points that are put off for later, whoever feels he's lost in this debate will obviously appeal it to the court, and I think everyone is expecting an appeal.

PAUL SOLMAN: Mr. Kimmelman, you're expecting appeals.

GENE KIMMELMAN: I'm sure there will be legal challenges. There always are. We're actually hoping the FCC will come back and cut more. There's a lot more to be done. Mr. Taylor's right. We think there's a lot more opportunity for both local and long distance rate reductions.

PAUL SOLMAN: Mr. Kimmelman, do you think universal service will really be preserved at affordable rates by this plan? I mean, how sure are you of that?

GENE KIMMELMAN: Well, one can never be absolutely sure. But I'm very confident. I mean, to have an expansion of subsidies for the people who can't even afford a phone, that was a very welcome decision today. It really protects the people at the bottom end of the income scale. Also, even the schools and libraries program focuses the discounts on low income school districts so that were there inadequate resources to bring computer equipment and hook up to the Internet, there's a greater opportunity now that those school districts will actually be able to keep up with the information age. So I think they've really shown a commitment here to go to the people at the bottom who aren't helped automatically by the marketplace and give them a boost. And that's a welcome sign at the same time as they're cutting long distance rates. So I'm hopeful that we really are going to have affordable phone service if the regulators keep up their task.

PAUL SOLMAN: Okay. Very briefly, Mr. Taylor, how come the Telecommunications Act of 1996 has not driven down prices until this moment? But you only have a few seconds.

WILLIAM TAYLOR: It's done its best. As of right now we have--

PAUL SOLMAN: But prices were going up.

WILLIAM TAYLOR: Prices were. Competition has been opened in local markets. Local companies, the Bell Companies are not yet in the long distance markets. That's something that's yet to come. We're still working that out. No one would say we have full and effective competition in either market.

GENE KIMMELMAN: And we fear they deregulated too fast so the prices shot up, and now we need adjustments to put a lid on those rates.

PAUL SOLMAN: Well, thank you, gentlemen, we're going to have to leave it there. Thanks both of you. RECAP

ELIZABETH FARNSWORTH: Again, the major stories of this Wednesday, a U.S. report said Switzerland helped prolong World War II and finance Nazi war efforts by trading in gold the Germans stole from Holocaust victims, and the sergeant major of the army, Gene McKinney, was formally charged with sexual misconduct, behavior which he has denied. We'll be with you on-line and again here Thursday evening. I'm Elizabeth Farnsworth. Thank you and good night.