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administrative marker by the William J. Clinton
Presidential Library Staff.
Collection/Record Group:
Clinton Presidential Records
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Speechwriting
Series/Staff Member:
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FolderlD:
Folder Title:
[Press Clips] Tuesday May
1993 [2]
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Shelf:
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91
5
10
2
�White House
News Report
Monday, April 12, 1993
National News Magazines
Produced by the News Analysis Staff
Room 162, OEOB (Ext. 7151)
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�GRAPEVINE
By CHRISTOPHER JOHN FARLEY
Testing, Testing
• THIS IS HOW AN ARMS RACE BEGINS. RUSSIAN PRESIDENT BORIS
1
• Le^lScW.f- .:^
• Ima^netf&n with the ;
legal Bmarts of a John
Grisham ncrrd and a sci-fi
cohceptVriWer than Deep
. SpaceNinL Reginald and
Warringtmi'Hudlin, the
filmmakers behind House
Party andBoomerang, are
indiacuisiDM-withNew
York Uruversity law proiesBorTiaridi Bell about
making a mime version of
a short story in BeD's book
Faces atihiBottom of the
; blacksteAmerica and
' trahsjiQrt&minto outer
space^^iplosthis"
job at HanranlLaw School
aftertakmgan extended
- leave toprotef the lack of
• minoi ity wiuuen on the
faculty, isBtod working on
a TVprojecffw-PBS that
deals withlK&Declaratjon
of Independence.
YELTSIN has sent word to the White House that if the U.S. lifts
its current ban on the testing of nuclear weapons, Russia will
also resume testing. Currently, the U.S. military is prohibited
from testing until July 1, when the moratorium mandated by
Congress ends. The Pentagon wants to resume small-scale
testing of bombs under 1 kiloton (explosive force = 1.000 tons
of TNT). Yeltsin's warning is a signal that if that happens, the
nuclear race could be back on.
Good Morning Again, Vietnam
PRESIDENT CLINTON SOON MAY FINALLY LIFT THE ECONOMIC
embargo on Vietnam, the last step before restoring diplomatic
relations. Senator John Kerry, Democrat of Massachusetts, is
taking a fact-finding trip to Hanoi later this month, and if the
Vietnamese come through with more MLA-POW information,
the U.S. will remove the 18-year-old restrictions.
An Arafat Administration?
PUBUCLY, ISRAELI PRIME MINISTER YITZHAK RABIN HAS RE-
jected a proposal, backed by a faction within his Cabinet, that
Israel withdraw from the Gaza Strip before reaching an agreement with the Palestinians on arrangements for the West
Bank. But a Palestinian leader has told TIME the plan is being
discussed in secret talks between the Israelis and the Palestine Liberation Organization. Such an agreement may run
into a snag named YASSER ARAFAT. The P.L.O. chief favors the
deal only if he gets to head the Palestinian administration that
would replace Israeli authorities in the Strip.
:
;
NOT AGAIN:
An old crater formed by
Russian nuclear testing
When Friends Spy on Friends
IN THE POST-COLD WAR WORLD, INDUSTRIAL SPYING IS A HOT
issue. Recently the threat of espionage cast a pall over U.S.
firms planning displays at June's Paris Air Show. Now the
CIA, the FBI and other American intelligence agencies are racing tofinishtheirfirst-eversystematic study of the problem of
foreign governments' spying on American companies. "There
is an ongoing effort right now to scope out the size of it," says a
senior intelligence official. "Our answer in the past has been
too anecdotal. The point of this study is to move from the anecdotal to the analytical." An initial report could be ready by
next month. The results, of course, will be classified.
:
Making a Name
For H e r s e l f
Hillary Rodham Clinton
is already a standout '
-among First Ladies. .
Just take a look at a
program for the John F.
Kennedy Center for the
Performing Arts,
pictured above, where
she's an honorary
chairman of the board
of trustees, along with
seven former First
Ladies. The others are
listed as female versions
of their husbands (Mrs.
Gerald R. Ford, Mrs.
Aristotle Onassis), and
only Clinton is entered
under her own name.
VOX
Dr. Political Prisoner
CHEN ZIMING IS ONE OF CHINA'S LEADING POLITICAL PRISON-
JAILED SCHOLAR:
Chen, cantar, is imprisoned,
but Ms mind is free
ers. Accused of helping to organize the 1989 student protests
in Tiananmen Square, he's serving a 13-year sentence for "inciting counterrevolutionary propaganda" and "subversion."
However, Chinese officials have decided to allow Chen to work
toward his doctorate degree while in jail. Peking University
has rejected Chen, but he awaits word from People's University. He plans to study the history of intellectuals in China or the
history of Chinese civilization. Why are Chinese leaders allowing an alleged mastermind of student protests to get a
higher education? To improve China's image.
•
TlME.MAyi7,19<13
POP
Will tfie second coming
of Jesus Christ occur
sometime around the
year 2 0 0 0 ?
No
20%
49%
Not sure
3 1 %
Yes
Fnm a MKOra pol ol 1.000 a M fcnancm
Mai to m u m m * r i a-291* Vattowcti
Paton kc S n ^ m m r a £ ] X
n
13
�1 1
Clinton threatens to take o the Serbs, but I
n
a wary America fears a Balkan quagmire
4
:
• IV: -yj* \
domes and computers of Air Force AWACS
planes direct the jets to targets nestled in
M RC N K O W A A W R IN forests and pastures of Bosnia and
E I A S NW H T
A the
the desert is like. Many remem- Herzegovina. Ahead of them, electronicber a bitter conflict in the jungle. warfare jets swoop down to jam any SerbiNow they must imagine one in an antiaircraft radar that might still be
the mountains:
working.
On a balmy Adriatic evening,
In a valley in eastern Bosnia, American
U.S. Navy attack planes leap Special Forces troops with blackened
from the deck of their carrier on tails of faces silently slip out ofa tree line to point
flame. As they climb through the gather- laser beams at Serbian artillery pieces,
ing darkness, signals from the radar ammunition stores and fuel dumps. The
By BRUCE W. NELAN
A
26
TIME. MAY 17,1993
F/A-18 Hornet and A-6 Intruder aircraft
from the carriers roar in, lock on to the laser spots and send their bombs streaking
toward the targets.
Air Force F-15s, British Tornadoes
and French Mirages, launching from
bases in Italy, join in with precision bombing of Serbian militiamen. The attacks go
on night after night for months. Meanwhile allied agents supply the bedraggled
Bosnian Muslim troops with new artillery
and tanks, along with advisers to show
�how the weaponry works. Before long, the
land battles among Bosnia's warring peoples become more evenly matched. At that
point, perhaps, the Serbs mightfinallybe
willing to make peace with the Muslimdominated Bosnian government.
That is the BUI Clinton plan for getting
tough with the Serbs. At least it is the essence of the ideas Secretary of State Warren Christopher was shopping around Europe last week as the U.S. sought support
for a way to push the Serbs toward the
peace table and end a slaughter that has
taken at least 134,000 lives. The U.S. proposal is to exempt Bosnia from the U.N.
embargo on arms sales and use air strikes
to protect Muslim enclaves from Serb attacks until their forces are strong enough
to defend themselves.
There was a glimmer of hope at week's
end that none of this would be necessary.
At Sarajevo airport, the commanders of
the rebel Serb forces and the Bosnian
army signed a cease-fire agreement aimed
TIME. MAY 17,1993
at "a cessation of armed attacks" throughout the country on Sunday. They also j
agreed to demilitarize the encircled Mus- c
lim towns of Srebrenica and Zepa.
»
It was far from clear that the truce I
would hold. Many such accords have bro- \
ken down over the past year, and the!
Serbs have not honored their April 18 \
agreement to halt the siege of Srebrenica.;
The Bosnian government is also mixing its l
signals. It formally asked the 9,000 U.N.)
troops in the country to leave because!
27
•X
�their governments are using their presence as an excuse for not lifting the arms
embargo.
If Clinton does decide he must use
military force, he will have to do a major
selling job not just to the allies but to a divided Congress and a skeptical American
people. In a TIME/CNN poll, only 36% of
those surveyed said the U.S. should do
more to stop the war in Bosnia, vs. 52%
who said the U.S. has already done
enough. For many Americans, the horror
of Bosnia is a modern-day Holocaust that
carries a moral obligation to intervene.
Some Americans think the U.S. can do so
at a low cost in lives, expecting the fastacting, high-tech precision of the Gulf
War. But many shudder and see the frustration of Vietnam, the years of domestic
conflict and the long black slabs of the
Vietnam Memorial engraved with 58,000
names.
For Clinton, history offers little guidance because there is no direct parallel for
28
the action he is considering. If he uses military force in Bosnia, he cannot know
whether he will succeed. If he bombs the
Bosnian Serbs, their brethren across the
Drina River in Serbia proper might heed
the call of blood and join them for a war of
annihilation against the Muslims. Or the
Serbian militiamen who now bestride 70%
of Bosnia may simply dig in and refuse either to negotiate or pull back.
The prospect of stumbling into a quagmire or of outright failure looms large for
a President who was elected to cure domestic ills and who, as he begins his second 100 days in office, is already in political trouble. Clinton told a television
interviewer last week that he was distressed when he heard the Bosnian Serbs
had refused to go along with the peace
plan negotiated by Cyrus Vance and Lord
Owen. " I don't want to have to spend any
more time on that than is absolutely necessary," Clinton said, "because what I got
elected to do was to let America look at our
TIME, MAY 17,1993
own problems and our own challenges and
deal with those things."
T
H ADMINISTRATION WAS U P E
E
NR -
pared at this early stage to deal
with a foreign policy problem of
such high risk and low payoff,
one that even the old hands in
the Bush Administration had
shied away from. "The question
raised by Clinton's performance," says a
U.S. diplomat, "is not just his backbone but
his basic competence." A measure of the
Clinton team'sfrustration:at the last meeting of the President's advisers before his
May 1 decision to send Christopher to Europe with a sample case of options, a frustrated participant asked, "Isn't there anyone outside the government with some
bright ideas? Someone who could help us?"
The meetings in which top advisers developed Bosnia proposals to offer Clinton
were often rudderless, according to a close
associate of one participant. In a break
�FRONT LINE:
A Muslim fighter
crouches to avoid
Croat snipers near
the ruins of
Muslim homes
in Vitez
into such detail on the
military options, an attendee said, that he
may have undercut
the Administration's
position by stating the
drawbacks so clearly.
Other White House advisers have been
even more forcefully opposed to militaryintervention. One official believes the Presidentfindshimself in a comer "because he
has no strong views of his own," and warns
that if Clinton gives in to the impulse to put
Americans into Bosnia, " I think he'll lose
his presidency."
Yet Clinton decided that after speaking so boldly on Bosnia in the past, inaction carried great political risk. "He wants
to be a Big President," says a senior Administration official. "He wants to do Big
Things." The Administration finally arrived at an approach designed to rally the
out, the U.S. would have to live up to its
promise to contribute as many as half of the
60,000—or more-peacekeeping troops sent
to Bosnia. It was a pledge that most of Washington thought would never be called in.
Karadzic's surprising acquiescence
abruptly refocused Christopher's discussions. Air strikes were virtually off the
agenda as the allies began talking about
patching together a peacekeeping force of
three or four divisions. .AJl the major European countries, including Russia, said
they were ready to police Vance-Owen
with ground troops in Bosnia.
No sooner had Washington been sobered by this possibility than the Bosnian
Serbs reversed course again. At a meeting
of their self-designated parliament at Pale,
in the mountains east of Sarajevo, they refused overwhelmingly to accept the
Vance-Owen plan and Karadzic's signature on it. They ignored his pleas for sup-
world's conscience
public, but one that, if it failed, would not port, as well as those from Serbian Presidamage the presidency. "We didn't want dent Slobodan Milosevic, who had
to be stuck," says a senior official. Air supported andfinancedthem.
strikes alone did not make sense, because
The Serbs, particularly their militia
they could not end the war. So the White leaders, were adamant, arguing that the
House decided to try to exempt the Bosni- Vance-Owen plan meant giving up land
an government from the embargo, and they had bled for—something they would
hoped that might push the sides toward a never do. "Let them bomb us," smirked
cease-fire and negotiations. Meanwhile Radoslav Brdjanin, a faction leader from
the U.S. would use air attacks to keep the Banja Luka. "We will win the war." SerbiSerbs from grabbing all that remained of an commanders had already begun movBosnia while the Muslims were rearming. ing their headquarters and supply centers
That would aim air power at a clear goal out of towns and into caves and wooded
for a limited time and not just be an "act of areas. After 17 hours of debate at Pale, the
lashing out."
assembly voted to submit the peace proThe choices narrowed a lot more posal to a referendum among Bosnian
quickly than the White House had intend- Serbs on May 15. The move was a ploy that
ed. When Christopher took off for Europe allowed Karadzic to claim Vance-Owen
with tradition at such meetings, the lower- after a four-hour policy session on May 1, had technically not been rejected.
Clinton, who had spent days getting
echelon advisers tended to pipe up freely, he was under instructions to feel out the
sometimes carrying on debates among Western allies and Russia about the com- used to the idea of securing peace in Bosthemselves, while senior officials like bination of air strikes and rearming of the nia with American troops, was dumbfounded by the rejection of
Christopher offered sensible observations Muslims. Clinton knew the
the peace plan. "It showed,"
but were mostly silent. Defense Secretary Europeans were against those
said a White House official,
Les Aspin was just the opposite, caroming measures, and he fully ex- II' llu- I :.S. wore
from subject to subject, the official said. pected to amend his proposal lu ^(.'1 militiii ily in- "that the chain of influence
was less strong among the
Foreign policy experts Tony Lake and after Christopher made his volved in Hosiiiii,
Serbs than just about everySandy Berger, meanwhile, wanted to posi- rounds of the allied capitals. which would he
body predicted." The Presition Clinton as a forceful leader, to set him In calls to several Presidents I lie most likdy
rcsuli—ii quick .iiul dent responded to the Serbs'
and Prime Ministers, Clinton
apart from Jimmy Carter.
successful effort,
go-to-hell decision by urging
This vacuum of authority has led to the sketched out what he had in like l l i e I'ei'sillll
mind, stressed it was not a fithe "international communiemergence, ironically, of Joint Chiefs of
nal decision and asked for Cull'War, or a
ty to unite and to act quickly
Staff Chairman Colin Powell as a central
lnn<i and cosily
and decisively." What the
figure in the Administration's security pol- support.
one. like Viol nam?
U.S. sought, he said, was "not
icy. Powell, who has clashed openly with
The
strategic game
Clinton on issues like gays in the military, changed abruptly when the Persian Gulf Vietnam to act alone, not to act rashly,
not to do things which would
found himself thrust into a key role in de- leader of the Bosnian Serbs,
42% draw the U.S. into a conflict
veloping a Bosnia plan, even though he had Radovan Karadzic, showed up 46%
not of its own making and not
serious reservations about intervention. In on May 1 in Athens to sign the
of its own ability to resolve."
meetings with Congress last week, Aspin Vance-Owen plan to partition
and Powell left no doubt about the situa- the country into 10 provinces.
Clinton and Lake distion. Powell dominated the session, going If the plan were to be carried
cussed the next steps and deTIME, MAY 17,1993
29
�Europeans. "This is a concided to press the Europeans
Should the U.S.
tinuing process," he said.
for tougher measures. White
bomb Serbian
House spokesman George SteThe stakes for the PresiIbices in Bosnia?
phanopoulos explained later
dent, meanwhile, have escathat everything depended on
lated. By sending Christopher
Ys N
e
o
what the Europeans might
abroad and calling for prompt
agree to do. "Thefirstgoal," he 36% 52%
action after the Bosnian-Serb
said, "is to reach a united front
rejection, Clinton generated
with our allies and makefinaldecisions and momentum toward a confrontation. It
then go to the American people and explain would be awkward for him to back down.
what our policy is."
"Once you say you're going to do someWhen Christopher returned to the thing," explained a congressional leader
White House on Saturday, however, he who was briefed by Aspin last week, "you
was nearly back where he had started a have to do it. There is no turning back
week earlier. Though the allies listened without a big cost." Even so, Clinton is not
sympathetically, they were not convinced planning to order any military moves unithat either lifting the arms embargo or laterally or suddenly. He intends to ask
launching air strikes would hasten a set- Congress for a vote of confidence and the
tlement. They professed concern about a U.N. Security Council for a resolution.
wider war and revenge attacks on their
The council could present an obstacle
thousands of troops on peacekeeping duty because the Russians, who hold veto powin the former Yugoslavia. After Christo- er, insist on taking the Bosnian Serbs' May
pher reported to the President on Satur- 15 referendum seriously. Russian Foreign
day morning, Stephanopoulos told report- Minister Andrei Kozyrev said he hoped
ers there would be more talks with the "the population will be wiser than its leg-
islative branch." Moscow he said, was not
excluding "any option, including tough
measures" if the Serbs remain defiant, but
Washington wonders if Russia would approve air strikes against fellow Slavs.
Russians and other Europeans see another good reason for delay: Milosevic's reaction to the Bosnian Serbs' refusal to follow his instructions. After the vote in Pale.
Milosevic stalked out. flew back to Belgrade and announced that he was cutting
off all Serbia's assistance to them except
for food and medicine. But many Western
militarv- experts contend that Milosevic
cannot really seal the Serbian border and
that Bosnian Serbs have stockpiled at
least two years' worth of war materiel and
food.
Beyond the statecraft is Clinton's biggest assignment: persuading the American people that their children and their
billions should be spent on Bosnia. (Maintaining a fully deployed armored division
of 25,000 at peak readiness in Bosnia for
one year could cost $5 billion.) It is a long
.^5
r
SDE C NE T T PA E
U D N O V RS O E C
SlolxiiLin Milnscvic,
RADOVAN KARADZIC
30
TIME, MAX 17.1993
�reach to argue that vital U.S. interests are
involved, beyond a preference for peace
and stability in all parts of the worlij. With
the rationalizations peeled off, the West's
concern is prompted by the moral imperative and is essentially humanitarian. That
is why France and Britain sent troops to
escort aid shipments and do not feel any
urge to do much more.
One of the more sour speculations
about White House motives was offered
last week by Ross Perot in an interview
with U.S. News < World Report. The Texan
£
suggested that Clinton was out to "get a
little war going" to "distract the American
people" from economic hard times and
broken campaign promises. An indignant
Stephanopoulos responded that Perot's
assertions were "outrageous" and "illconsidered and intemperate."
Congress is divided over the issue in
some surprising ways, with veteran
hawks and doves swapping roles. The Republican leader in the Senate. Bob Dole, is
calling for military action, but former
Vietnam naval aviator-and Pow-Republican John McCain is a leader of the opposition to bombing. Many members of Congress are calling for clear explanations
from Clinton. Democrat Sam Nunn, chairman of the Senate Armed Services Committee and one of Capitol Hill's leading
military experts, says, "There ought to be
a clear exit point. We ought to know how
we're going to get out."
Leaders in both houses agree, nevertheless, that after hot debate, a majority
will support the President on what he asks
for. "You can't really beat a President on a
national-security issue," says Lee Hamilton, chairman of the House Foreign Affairs Committee. "I'd expect him to get
what he wants when the time comes."
At the Pentagon, preparations have
been at full speed for months. Planners are
ready for the order to go, starting with a
quick strike on Serbian artillery positions-quick because surprise is vital to
catch them in place. The targets have already been mapped and reported to operations officers by U.S. Special Forces teams
moving stealthily around Bosnia. Events
may be pushing the decision makers.
"Things are going so fast," says Brent
Scowcroft, who was George Bush's National Security Adviser, "and nobody
knows quite where we are headed."
When it is time for the go or no-go decision, however, Clinton will have to
make it himself. He has only a few
choices. He can go ahead with air strikes,
stall for more time or risk a loss of credibility by backing away. He can also be certain that if Bosnia is an annoying distraction today, it will become a monumental
headache that crowds out his domestic
programs if he sends American forces
into action.
—Reported by Mich—I Duffy,
J.F.O. McAiUster and Bruce van Voorst/WasMntfton, wffli ottwrtaiTMiii
H W THE MUSLIMS
O
W U D BE ARMED
OL
THE MUSLIM DEFICIT: Small arms are no answer to Serbian tanks
•
^
VEN IF BILL CLINTON CAN PERSUADE A BALKY U.N. SECURITY COUNCIL
I • i to open up an arms pipeline to the Bosnian Muslims, it will not be an
B - l easy operation. Administration planners have only just begun to look
I
I seriously at which weapons to send, who would pay for them and how
M ^ they would be delivered to landlocked Bosnia. Light weapons could
flow in quickly, but training on more sophisticated equipment could take weeks.
U.S. intelligence estimates that nearly one-third of the 50,000 Muslim forces
do not have enough heavy weapons. Until now, they have keptfightingby stealing arms left behind by the Yugoslav army and clearing smuggling channels
through Croatia. That means they mainly use old Soviet-bloc equipment, and to
save training time, Pentagon officials say, the U.S. may attempt to tap those former Warsaw Pact arsenals for additional materiel. Slovak plants could provide
T-72 tanks. Small arms, including the Kalashnikov AK-47rifle,might be obtained from Afghan arms bazaars or a sympathetic stockpiler like Syria. To
counter the Serbs' 105-mm artillery pieces and T-72 tanks, the Muslims could
use Western-made counterartillery radar, which Washington would have to
supply directly or through allies. The Pentagon would want to ship TOW antitank weapons and light armored vehicles-fast, mobile carriers useful for keeping forces together—as well. One noniethal item of great utility would be tactical
radios to improve Muslim command and communications. Since the U.S. is reluctant to get involved on the ground, it might turn to Turkey, which already
smuggles weapons to the Muslims, to provide the necessary training advisers.
Who would foot the bill depends, of course, on who agrees to ease the arms
embargo. If the Afghanistan war of the 1980s is any guide, the U.S. might lead
the operation, then pass the hat. The Muslims' current smuggling operations
suggest the best paymasters: oil-rich Islamic countries like Saudi Arabia and
the gulf states that have already shelled out money to Bosnian Muslim businessmen, who then procure the weapons. The smuggling routes also suggest
how the newly sanctioned equipment would wend its way to Muslim fighters.
Arms are shipped orflownto the Croatian capital of Zagreb, then transferred
into Bosnia by lighter aircraft and trucks. But all equipment must pass
through Croatia, which has extracted a sizable portion of the weapons that
cross its lands. This Croatian usury is unlikely to dimmish.
If Croatia suddenly balks at being a stop on the pipeline, there are chancier
options. Heavy equipment can beflowninto the U.N.-controlled Sarajevo airfield—at least until the Serbs close it down. Ammunition and light weapons
can be parachuted into the region by the same C-130 aircraft the U.S. has used
for humanitarian missions. With arms, though, the planes would have to fly
lower to the ground to ensure that the weapons reach their pinpointed targets-and do not fall into Serbian hands.
•
TIME. MAY 17.1993
31
�The Political Interest/Michael Kramer
Chiefs of Staff Chairman Colin Powell, who believes intervention should be massive or not at all), the President seems bent on adopting a feelgood strategy-a limited action designed, above everything, to ensure a
swift exit, a policy that defines success as merely having done something without regard to the ultimate result. By all accounts. Clinton aims to "level the killing
fields." to borrow the words of British Foreign Secretaiy Douglas Hurd. The Serbs, says the President, have
benefited from the West's de facto intervention: the
United Nations-sponsored arms embargo has had the
"unintended consequence of giving the Serbs an insurmountable military advantage, which they have
pressed with ruthless efficiency." Lifting the embargo
under the cover of allied air support will "at least increase the right kind of violence,'' says Richard Bartholomew, one of the Administration's Bosnian policymakers. Then the Muslims can decide for themselves
"how they will die," says Senator Joe Biden.
Clinton's Feelgood
CANDIDATE CLINTON SAW NO AMBIGUITY LAST AUGUST:
"History has shown that you can't allow the mass extermination of people and just sit by and watch it happen." President Clinton added a caveat last week: The
U.S. will not act alone in Bosnia. "America is ready to
do its part," Clinton said. "But Europe must be willing
to act with us. We must go forward together." The impulse is noble, but the effect could be pernicious. Multilateralism, the collective action by peace-loving nations
against malefactors, can either empower or paralyze. It
can confer a legitimacy that unilateral efforts might
otherwise lack (as in the Gulf War). "Or," says a selfdescribed White House hawk, "the insistence on conAssuming the allies finally follow (which seems
sensus can stay our
likely, since their
hand if it can't be
appetite for recalciachieved." As Waltrance appears to
ter Lippmann once
» have run its course),
warned, multilateraS these minimeasures
lism can become the
° could begin almost
internationalism of
I immediately. "It's
the isolationist.
the ultimate cop-out
to let them fight it
What's worse, the
out,"
says Lord
ill-timed and poorly
Owen, who has been
managed pursuit of a
trying to broker a necommon strategy can
gotiated settlement
disarm the threat of
for almost two years.
force as a weapon
Owen aside, there is
capable of causing
no assurance that
the enemy to retreat.
the genocide will
"Which is what some
moderate. Does anyof us have come to The brass will salute, but they fe« - half measures may fail
one seriously think
think of Chris' misthe Serbs will picnic as their opponents arm. or that
sion to Europe," says an Administration official about they'll suddenly respect the lightly defended enclaves
Secretary of State Warren Christopher's recent Conti- where innocents have gathered to escape the slaughnental tour. Coupled with the President's insistence on a ter, the so-called safe havens they are currently shellconcerted response and the allies' resistance to his op- ing with impunity? Similarly, there is no certainty that
tions menu, "it's not surprising that the Bosnian Serbs the war won't widen in the Balkans anyway, and hardconcluded we were bluffing and so voted against the ly any chance that the battle will be decisive enough to
Athens agreement," says this official. "We either should roll back the Serbs' territorial gains (although a new
have had our ducks in a row before Chris left, or he balance of power could conceivably precipitate serious
should have stayed home and hid behind his poker face. negotiations). "All of that may be true," says a Clinton
As it is, we looked like beggars, when we know from ex- adviser, "but at least the President will be able to make
perience that the allies will fall in line if we toughly set the case that we've done the best we could without putout what we're going to do. This business of the Presi- ting our own troops on the ground-assuming he isn't
dent saying we can't lead if the allies won't follow ig- tempted to do so if things go badly. And he'll be able to
nores the lessons of the past 40 years. They'll follow if stand behind multilateral action, which is the Demowe lead. Indeed, their domestic politics almost always cratic [Party] politicians' historic preference. The
demand that we lead so their officials can tell their pub- President's created a political problem for himself, so
lics that they're merely following. For a democratic he's seeking to get out of it politically, with tactics that
superpower, consultation is important, but it should have the look and feel of real, muscular action. That's
always be essentially cosmetic."
the game now. The morality rhetoric-the Holocaust
The road from here seems clear enough. Having in analogy and all that-will of course continue as the
effect said the Bosnian Serbs must cease and desist, President rallies the country. But as the underlying
Clinton must act. But enthralled by multilateralism reason for action, morality takes a back seat to
and fearful of a Vietnam-like quagmire (and against politics."
•
the private advice of senior military officers like Joint
36
TIME. MAY 17,1993
�THE WHITE HOUSE
Remaking of the President
Accused of lacking focus, Clinton hires a new aide, pushes back the health-care
plan and apologizes to Bob Dole. But will he go to bed earlier?
Clinton moved quickly to add one major
N THE MIDDLE O THE A T R O N grown-up to his staff:
F
FEN O
last Wednesday and in a rare break Roy Neel, the top adviser
from meetings on Bosnia, the White to Vice President Al Gore
House first team met in the Roosevelt for the past 15 years,
Room to get the Administration back "on joined Mark Gearan as
message." There were the President and deputy to chief of staff
Hillary, Vice President Al Gore and Tipper Thomas McLarty. Neel
and the senior staff, plus Democratic Na- and Gearan will handle
tional Committee chairman David Wil- the day-to-day operahelm and campaign consultants Paul Be- tions, allowing McLarty
gala and James Carville. The day before, to concentrate on mindthe President had surprised reporters by ing Clin ton and worrying
admitting in the Oval Office that he could about long-range planuse a little "tighter coordination" and "a ning, which will initially
mean holding three-daylittle better focus."
Hillary, the Clinton who has both focus a-week 8:30 a.m. conferand coordination already, said people had ences aimed at shepto understand what the President was try- herding what remains of
ing to accomplish and the best way to do Clinton's economic plan The President will travel to shore up his approval ratings
that was for him to resume trips outside through Congress. Neel
the Beltway. Thus Clinton is scheduled to at 47 exceeds the median age in the White
The wisdom about Clinton is that he
visit Cleveland, Chicago and New York City House by at least a decade and brings adult doesn't make the same mistake twice, but
this week to sell his budget proposals. supervision to the place. But no one has a he can make the same mistake for a long
One of those present said Carville pointed mean word to say about Neel, and therein time. Even in a week when the President
to Clinton and said it was important that may lie a problem. Says a White House aide: was trying to focus, he introduced an $8
the President should not become part of "We now have the three nicest guys in the billion city-renewal plan, legislation for
the "culture of Washington" that prefers world-Mack. Mark and Roy-in the chief of campaign-finance reform, a scaled-back
more of the same over change. Clinton has staff operation."
immunization program and prepared to
begun quoting some of Carville's latest
One of the people who could make the send up a pared-down stimulus package.
folk wisdom: "If you never want to stum- White House stop behaving like a dorm on He is as slow to criticize his staff as to end a
ble, stand still."
a perpetual all-nighter is Harold Ickes, meeting, as quick to solicit advice as to igThe White House knew matters had de- who took himself out of the running for nore it, and he has a weakness for imposing
teriorated when Clinton, making a routine the deputy chief of staff job in January unrealistic deadlines on himself. He admitappearance at the White House Correspon- when an old allegation surfaced about a ted to this final failing last week, rememdents Association's annual dinner the pre- union he once represented having ties to bering that it was his self-imposed Christvious weekend, bombed with jokes about organized crime. The President consults mas deadline on filling his Cabinet that led
Senate minority leader Robert Dole and ra- Ickes frequently, and he will be spending him to pick Zoe Baird as Attorney General.
dio talk show host Rush Limbaugh that time at the White House this week. Asso- When he decided this week to postpone anturned out not to be funny. The dinners are ciates urging Ickes to do more say that he nouncing his health-care plan until midone of the few times that the permanent does not want to until the union inquiry is June, he did so because he doesn't want to
have a legislative pileup. But he also admitWashington establishment is primed to completed.
fawn over the President. But
The other gray-haired ted, says an aide, that "getting it right is
the range of acceptable presipresence called in by the Pres- more important than getting it out on
Mas I'.ill C l i n l o n
dential behavior is narrow,
ident is old friend and former time."
from self-deprecation to grov- paid C I K I I I ^ I I
Inaugural chairman Harry
Staff changes are likely to continue
eling, and by no means can the a t l e n l i o n lo H K ;
Thomason, who will tempo- this week while Clinton takes his program
evening be used to settle c o u n l r y ' s mosi
rarily move into an office in on the road again, trying to shore up his
iiiipoi I,ml
scores—even with the person
the Old Executive Office 48% job-approval rating. But the one thing
who killed your stimulus pack- p m h l r m s ?
Building. One aide says Tho- the toughest staff can't do is put him to
age. The dinner produced
mason is the perfect person to bed. On Wednesday, after the President
Yes
N
o
three days of apologies and rebring in: "He has three hit finished a round of late-night meetings on
tractions and gave Dole the optelevision shows, $40 million Bosnia, he went back to the residence and
37% 56%
portunity to charge that Clinand so no agenda but the Pres- unwound watching the Los Angeles Clipton has a bunch of' sophomoric
ident's." What will Thoma- pers-Houston Rockets basketball game.
kids workingfor him, engaging
son be doing? "Whatever is He did not get to bed until well after
in minor-league politics."
asked," Thomason replies.
midnight.
•
By MARGARET CARLSON WASHINGTON
I
TIME, MAY 17.1993
41
�am
Mission Half
Accomplished
Hard lessons from Mogadishu as Clinton pursues
military intervention in Bosnia
By GEORGE J. CHURCH
B
ILL CLINTON S MIND WAS PLAINly on that other war, in Europe,
when he greeted soldiers just
home from Mogadishu in a photogenic ceremony on the White
House lawn. The imagery was intentional:
a President welcoming U.S. troops back
from exemplary military intervention
abroad. While the occasion was to honor
their service in Somalia, its real object was
to make Clinton look more like a Commander in Chief as he contemplates a
much tougher operation in Bosnia. "Your
successful retum reminds us that other
missions lie ahead for our nation," he said.
"You have proved that American leadership can help to mobilize international action to create a better world."
Well, yes and no, if Somalia is the example. When American Marines began
landing there Dec. 9, armed bandits had
made the country unsafe for anyone who
had anything worth stealing. Five months
later, as the U.S. pulled out almost all its
remaining troops and handed over responsibility for Somalia to the United Nations, armed bandits were still making
most of the country unsafe for anyone who
had anything worth stealing.
So was Operation Restore Hope a failure? The U.S. sent in 25,800 soldiers
armed with machine guns, tanks, rocket
launchers, antitank weapons and helicopters at a cost of $30 million to $40 million a
day to carry out a humanitarian mission.
They accomplished the primary goal: saving thousands of Somalis from imminent
starvation. The Americans and their allies
in the 24-nation expedition created at
least some oases of safety in a desert of anarchy. And they blazed the way for a new
kind of U.N. force-not the lightly armed
peacekeepers of the past but "peace-enforcing" troops toting enough weapons to
tight a real battle and authorized to shoot
when needed.
To the U.S. military, the job is finished.
The hand-off to the U.N. officially began
42
on May 1 when Secretary-General Boutros
Boutros-Ghali started paying the bills.
Last week Turkish General Cevik Bir took
command of the 30-nation contingent that
will eventually number 28.000. U.S. troops
are streaming home. By June 1 only 4,000
will remain-1,300 as a rapid-deployment
unit, plus 2,700 others left in charge of
logistics.
Yet the unfinished, in some cases unstarted, tasks the Americans are handing
over are staggering. Somalia's underlying
problems-the absence of any central government, the lack of basic security, the
clan warfare and banditry, the destruction
of the country's infrastructure—have not
significantly improved. Charged with
broad responsibility for national repair
and reconciliation, the U.N. troops will
have much more to do than the U.S.-led
force. They will be more lightly armed, deploying weapons such as mortars but no
tanks or heavy artillery, and they will be
stretched over the whole of Somalia, not
just the southern and central population
centers.
The U.N. forces are supposed to complete the disarming of Somalia's warlord
gangs and free-lance bandits and create a
police force capable of maintaining law
and order, two tasks the U.S.-led contingent barely began. The warlords who have
spilled so much Somali blood have in fact
gained undeserved authority because the
Americans felt compelled to negotiate
with them to head off clashes between
theirfightersand U.S. troops.
Now the U.N. is supposed to tame these
warlords enough to make possible the formation of some sort of national government. The alternatives are grim: a kind of
permanent U.N. protectorate over Somalia, as in Cyprus, where U.N. troops still
patrol almost 30 years after going in to
preserve a truce; or Somalia's relapse into
chaos, anarchy, famine and mass death.
Says Patrick Vercammen, the U.N. humanitarian official in the town of Baidoa:
"The Americans could have done 10 times
more than they have done. Fifty times.
TIME. MAY 17,1993
They thump on their chests, but the biggest part of the job has yet to be done."
U.S. officials have a ready rejoinder:
Operation Restore Hope was never intended to be more than a stopgap. Washington
originally moved unilaterally because only
the U.S. had the power and will to get soldiers on the scene immediately. The mission focused narrowly on saving lives by
moving food supplies past the guns of looters, instituting just enough law and order
to get that done but leaving the longerrange jobs of pacification and nation building to the U.N. Says Robert Oakley, the
U.S. special envoy who oversaw the political side of the operation: " I compare our
mission to taking someone with hysterics
and slapping him out of it. There will be violence in Somalia for a long time, but it
will be low-level violence. The cycle [of anarchy and starvation] has been broken."
The famine that snuffed out 300,000
�NOT YET DISARMED:
A U.S. Marine searches
a Somali for weapons
not intervene in the worst
fighting in the port city of
Kismayu in February, opting
instead for a "show of force"
that accomplished nothing.
Marines avoided forays beyond the town of Bardera because it would have placed
them at risk from land mines
and marauding gunmen.
That policy has done little
to suppress the bandits, who
at first melted into the countryside but lately have resumed depredations inside
the towns. The continuing
looting and shooting has prevented most displaced Somalis from returning home to
their farms andfields.Particular targets of the armed
thugs are relief agencies and
their workers, who are
among the few people in Somalia still possessing cash or
other valuables. Over the
past four months, four foreign aid workers have been
killed, more than in the two
years prior to the Marines'
arrival.
Armed guards formerly
• employed by relief agencies
; to safeguard food supplies
S have lost their jobs, and
> many have turned their guns
\ on their employers. In Febru' ary jobless guards besieged
S the Mogadishu office of
s CARE, demanding $500,000
j in alleged "back pay." CARE
" refused to comply, then flew
" out most of its personnel and
suspended food deliveries to
avert holdups. Other relief agencies are
pulling out altogether for safety reasons.
All of which increases the stakes, and
the risks, for the U.N. Operation Restore
Hope pioneered a new type of American
military intervention, one driven by humanitarian concem rather than economic
or strategic interests. Taking over in Somalia now poses a test case for the ability of
the U.N. to damp down the internecine
wars, actual and threatened, that have
burst out since the end of the cold war. Are
the suffering people of Bosnia less deserving of help? Then maybe even some of the
strife-torn republics of the former Soviet
Union? Perhaps-if the Somalia mission
can actuallyfinda way to bring permanent
order and stability to the country. But if it
fails, the U.N., and the U.S.. will have demonstrated their impotence more clearly
than ever.
-HwortadbrAimBtackinan/
W t n t n and Andnm Purvb/Banfera
aM go
"The Americans could have d n 1 times m r
oe 0
oe
than thev have done. Fiftv times."
lives in 1992 may have passed its peak before the Marines landed. But there is no
doubt that the American-led intervention
saved many. Julie Bryant, a Red Cross
nurse outside Bardera, recalls that often
children were trundled in in wheelbarrows, too weak to walk. "Look," she says,
pointing to a boy registered in her logbook.
"That child should have been dead. Now
there is such life here: they argue, they
play football." As she speaks, a group of
kids runs past chasing a pet baboon with a
red cross painted on its bottom.
Somalis jamming into the towns where
foreign troops are stationed have found
protection as well as food. But security in
Somalia is a very, very relative term. The
U.S.-led troops have generally stayed inside the main towns rather than venturing
into the countryside, and they have negotiated pacts with local warlords rather than
trying to disarm their followers. That policy certainly helped avoid casualties: eight
U.S. servicemen have been killed in Somalia infivemonths, no more than would
have lost their lives in training accidents if
they had stayed home.
Critics charge that the U.S. command
did everything it could to protect American soldiers at the expense of an effective
peacemaking mission. The Marines refused to take on the task of forcible disarmament on any large scale, even.with
their superior hrepower. U.S. soldiers did
TIME. MAY 17.19m
43
�WALL STREET
HW L N W L H B
O OG I T E U
L
Despite high stock
prices, most market pros
aren't too worried, yet
Much of the money propping up share
prices comes from small savers who have
put their money into mutual funds simply
because returns on alternative investments have got so low. With money-market deposits and CDs barely eking out 2%
By JOHN GREENWALD
in interest, individuals poured a record
HE WARNING SIGNS ARE EVERY- $11.3 billion into stock mutual funds in
where. Share prices in the relent- March, snapping up shares so fast that
lessly upbeat stock market now managers barely had time to invest all the
stand at sky-high levels by histori- cash. Buyers feasted on all kinds of funds,
cal standards, and dividend yields from those that purchase slow-growth
have fallen to near record lows—classic utility stocks to aggressive acquirers of
signals that the bull market that began 2 2 speculative new firms. But the binge
K
years ago has got dangerously long in the failed to satisfy the public's ravenous aptooth. At the same time, companies con- petite for shares. "If I had more money, I
tinue tofloodWall Street with new issues think I'd put it all in the market." says
to cash in on the bull's run before it can Winston Mason, 72, a Los Angeles retiree.
stumble—another omen that the market "Oh yes, I think right now is the time."
may be overheated and headed for a fall.
This stampede into the risky world of
Even the current rush of little-guy buyers stocks has only heightened concern that
is usually a harbinger of a bear market.
the market may soon come tumbling
T
:I
44
down. Never far from bearish minds is the
1987 crash, which saw the Dow Jones industrial average plunge 508 points on
Black Monday. Even more frightening was
the more recent, and more devastating,
collapse of the Japanese stock market that
began in 1990, when the bloated Nikkei average plummeted from nearly 39,000 to
less than 15,000 in 2 > years. Then there
H
are recollections of the Great Crash itself,
which have become part of America's
memory. "People start thinking of the '20s
and '30s," says author and retired fund
manager Peter Lynch, "and almost everyone seems to have had an Uncle Louie who
lost everything and ended up selling
pencils."
So is this the time to get out of stocks?
In spite of the danger signs, few Wall
Street gurus foresee a sharp downturn
anytime soon, as long as interest rates
stay low. Thafs because investors still
TIME. MAY 17,1993
Y
�The bears further point out that stocks
tain that the recovery is taking hold."
One source of concern is the Clinton are returning little to investors in the way
Administration, which many on Wall of dividends. On average, dividend
Street now regard with disdain. Investors payouts currently equal just 2.8% of stock
fret that Clinton's proposed tax hikes and prices, the lowest yield since August 19S7.
•3000 - forthcoming plans tofinancehealth-care "The market has rarely been this high in
reform would slow the economy, squeeze terms of price to earnings or dividends,"
corporate profits and thereby bring stock says James Grant, an investment-magaprices down. At the same time, critics zine editor who predicts a break in prices.
charge that Clinton's often wishy-washy "The eternal paradox is that people will
style has helped chill business and con- buy more cars or canned goods when the
•2500 —
sumer confidence. "A weak presidency al- price is down, but they seem to buy more
ways makes markets very nervous," says stocks when the price is up."
Stephen Bell, the Washington-based manMany investors are increasingly huntaging director of Salomon Brothers. "We ing for bargains abroad, where stock
saw that late in the Bush Administration, prices and yields are often more attrac2000 - and we're seeing it now under Clinton. tive. "We are moving to markets in
People are having doubts that Clinton is Europe, where levels are clearly a lot
up to the task."
cheaper than in the U.S.," says Barton
r •' The national economy is throwing off Biggs, managing director of equity reits own confusing messages.
search for Morgan Stanley.
"And to Asia, where the real
1500 — A continuing sluggish recov^
, ....
W E E THE
HR
economic growth in the world
ery is certainly bad news: it
.r<f'.. . . l i i f : :
threatens to trim corporate
S A L I V S O is taking place." Chicago's
ML NET R
has alprofits and cause stock prices
H S HIS M N Y Wanger Asset Group million
A
OE
ready collected $160
to slump. But a robust recovin its overseas funds only severy might have the same ef- Stocks Bonds
1000 — fect: by boosting interest
en months after opening for
NYM
hulili' IHIIMI
business. Much of the money
rates it could entice investors B AM.IHI: • MiiMinn.iib
is headed for Japan, where
back to banks and money
• I (jiiily
• RIUKI tnnd:.
-if.
the stock market is slowly remarkets and put the bull to
tuiHl:;
covering from its speculative
flight. The key to everything Cash
Other
meltdown. Americans investseems to be interest rates. "If
CD:.
• K'IMI Kl.ilc
ed more than $3 billion in
you get a major rise in rates,
»
Japanese stocks in this year's
it will kill the market," says
first quarter alone.
Marty Zweig, who runs the
1973
Zweig Funds.
Wall Street's numerous
lul.il.iv.rlv U.Mitiilliiin
1986
bulls, however, counter that
A big jump in interest
traditional measures of stock
rates would also clobber the
value have become misleadbond market, to which mutuing in today's fitful economy.
al-fund buyers have flocked
38% 32.6%
They say price-earnings raas well. Bonds took off on a
tios are out of whack because
powerful rally last November
many companies wrote off
that has pushed long-term
m m ^
restructuring costs and took
yields to their lowest level in
other special charges that
20 years (the higher a bond's
1983
depressed profits last year.
price, the lower its interest
lnl;il iisscls 14701 trillinn
"Ariyone who says the maryield). A spurt in interest
ket is overvalued is not
have plenty of liquid funds left: they hold rates would have the opposite
looking at the whole picnearly $3 trillion in low-yielding invest- effect, halting the boom and
ture," asserts Bill LeFevre, a
ments like bank CDs and are likely to con- sending bond prices spiraling
veteran Wall Street watcher
tinue moving them into stocks. Even if down.
who puts out an investment
share prices start to tumble, experts say,
Even without higher innewsletter. "Why did we
fund managers and cash-rich individuals terest rates, Wall Street
have such crummy earnwill swiftly scoop up bargains and there- bears argue, the market is
ings? A lot of it was the huge
by halt the slide before it can erode the perilously overvalued. On avwrite-offs."
market 20%-the level that indicates a erage, stocks now fetch
1993
bear market has begun. Last Friday the prices that are 23 times as
In the same way. bulls say
nl;il .-issots S8.?68 In
market closed at 3437.19, up 9.64 points high as corporate profits as
the current low dividend
for the week and down 41.42 points from measured by earnings per
yields remain in line with the
its April 16 peak.
share: the stock of a company
returns on bonds and other
interest-bearing investments.
Still, many investors-and especially with profits of $3 per share
A 2.8% dividend payout
>mall investors-are starting to get would therefore sell for a
doesn't look so bad, they
nervous. "The mood is sour but not pan- whopping $69. This heady
note, when compared with
icky," says John Markese, research direc- price-earnings multiple is
the low level of interest rates
tor of the American Association of Indi- nearly twice the average for
in general. "This cycle is unvidual Investors. "People are less certain past markets and stands even
like anything since the Secabout the economy, less optimistic about higher than the one just beond World War, because we
the political environment than they were fore the 1987 Wall Street
haven't got to the point where
at the start of the year, and not quite cer- crash.
m
UU?
RN
45
TIME. MAY 17,1993
\
�r
i
rates have gone up. and a rise doesn't
seem to be on the radar scope," says
Charles Blood, director of financial-markets analysis at Brown Brother's Harriman. Concurs LeFevre: "With lower interest rates it is understandable that stocks
command a lower dividend yield because
stocks have growth whereas bonds don't."
Most market watchers doubt that a
sharp spike in interest rates is on the horizon. With inflation still hovering near a
mild 3%, the Federal Reserve Board would
seem to have little reason to tighten the
money supply and push interest rates up.
Moreover, Fed Chairman Alan Greenspan
has been calling for years for the White
House and Congress to take the tough action needed to bring down the deficit. Now
that such efforts are under way, a Federal
Reserve source notes, "Alan doesn't want
to discredit the enterprise" of deficit reduction by jacking up rates and further
weakening the recovery.
Market optimists alsofiercelydispute
the conventional wisdom that small investors rush into the stock market just before
it crashes and then sell out in a panic. On
the contrary, many experts say, the little
guy is increasingly in for the long haul,
with an eye toward putting his children
through college or investing for retirement. In the 1987 crash, for example, it
was institutional investors, rather than
individuals, who fled wholesale from the
market.
Still, there is no way to avoid risk when
buying and selling stocks. Unwary investors who switch from risk-free CDs or
Treasury bills to the stock market can find
themselves in a frightening new world
where prices can rapidly decline. Minneapolis, Minnesota, high roller Irwin Jacobs
says that because of low interest rates,
"people are being forced to make investments where they never would have been
otherwise. That is going to be scary for a
lot of people who are very naive and inexperienced out there." Says Blood of Brown
Brothers Harriman: "You just know that
some people are making inappropriate investments. There are people who are buying funds who don't realize that one day
they can wake up and lose three years of
accumulated income."
Experts say the remedy for such rollercoaster rides is to invest for the long term
rather than trade frequently in an effort to
time market swings. "Stock market declines are normal," says Peter Lynch, who
notes that the Fidelity Magellan Fund he
managed fell nine times during his 13year tenure. "Stocks have still averaged
an 11% return through depressions and
world wars," Lynch adds. "But if you're
unable to stand volatility, you should not
be in. If you spend more than 14 minutes a
year worrying about the market, you've
wasted 12 minutes."
-Reported by
Money Angles/Andrew Tobias
Where Else to Invest?
I AM IN AN OPEN LAND ROVER. AT NIGHT, HUNGRY LIONS TO MY RIGHT AND
left, worried. Not about the lions: about them I'm merely terrified, which
is different. (We are told they regard Land Rovers as harmless six-headed animals that smell bad and make funny noises. Just don't stand up,
we are told, lest you break the Land Rover silhouette they're used to seeing. I am glued to my seat.) What has me worried-and excited-is the
South African utility bonds I've just bought. I am excited by their 20%
yield, worried about South Africa's future and about the morality of investing there.
But with U.S. stocks high and interest rates low. one looks for alternatives. Let me suggest a few more prosaic ones, then retum to South
Africa.
1) You can't be as sick of hearing this as I am of saying it, yet twothirds of you still haven't done it, so: Pay off your credit cards! Not having to pay 12% or 20% in credit-card interest is exactly the same as earning 12% or 20% risk free and tax free. A fantastic return.
2) Pay off your car loan. Yes! You can do this! Many Americans don't
realize it. but it is actually legal to buy a car for cash. Not having to pay
10% on a car loan is as good as getting 10%—again, risk free and tax free.
And don't lease cars, either. With a lease, you're essentially borrowing
the full cost of the car.
3) Pay down your mortgage—maybe. Mortgage interest is tax deductible, so paying down a 10% mortgage is equivalent to getting a risk-free,
but taxable, 10% return. Depending on how low your rate is, sending the
bank a separate check each month, clearly marked PAY-DOWN OF PRINCIPAL, can be a good way to "invest."
4) Buy staples in bulk when
they're on sale. Not staplegun staples—staples! Like ^
^
shaving cream and sweat ^ K J W
socks. Consider a family
*'
that buys one bottle of
wine each week. With the
10% discount many stores
offer on wine by the case,
they would be saving 10%
every 12 weeks—more than
40% a year, tax free and largely riskfree.(One risk: that having so much wine around would lead to in- »
creased consumption. This is less a consideration with sweat socks.)
;
5) Set up a self-insurance account. It would be like any other small ;
savings account, only it would be reserved for small catastrophes that \
you'd no longer have to pay others to "protect" you against—the occa- ;
sional cracked windshield or stolen stereo. By giving you the cushion \
you need to feel comfortable taking high auto- and homeowners-insur- 2
ance deductibles-$ 1,000, say, instead of $100 or $250-it would cut your \
insurance bill and spare you the hassle offilingsmall claims.
So what about my South African Eskom 13.5% bonds? They actually
yield more than 13.5%, because you get to buy them with the "financial
rand," which sells at a discount, but get your interest in "commercial
rands," which do not. There are risks, such as a collapse in the value of the
rand or nationalization of private businesses and repudiation of their
debt. But I'm an optimist. Most U.S. brokers won't take orders for South
African investments. (One that will, in amounts of $25,000 or more: Noyes
Partners, in New York City.) Personally, I see little moral harm in buying
them. But to hedge my bet. I donate the interest to a worthy outfit called
Medical Education for South African Blacks, in Washington.
But if I were you, I'd stick with tips 1 through 5. To venture much further these days could be like standing up in an open Land Rover.
•
flia
John F. OWnrton and Jane Van Tauef/New York
and MflMam MeWMrtor/CMcago
TIME. MAY 17.1993
�conscientious objector has become the conscientious warrior.
This declaration was greeted as a breakthrough, a new vision of America in the post-cold war world. A breakthrough it
is. And a dangerous one. It is getting us into Bosnia where, despite convoluted attempts at fashioning some rationale based
on some vital American interest, everyone knows we are going in for reasons of conscience.
Is conscience a good enough reason? Many liberals think so.
Indeed, for many, conscience is the only good reason. The new
liberal orthodoxy is that only disinterested intervention is pure
and pristine enough to justify the use of force. Violence undertaken for the purpose of securing American interests is not.
This is the key to understanding the amazing transmutation of cold war and Gulf War doves into Bosnia hawks: their
deep suspicion of motives of national interest. In a recent debate, Anthony Lewis called George Bysh a "gutless wimp" for
letting the Serbs overrun Bosnia. It was pointed out that the
gutless wimp took half a million Americans to war to liberate
Kuwait. "Yes," replied Lewis triumphantly, "he did because
of oil, O-I-L, the famous three-letter word." Any wimp, you
see, can go to war for some vital national interest. Real men go
to war for reasons of right.
For post-cold war liberalism, self-interest is a tainted, corrupting motive for intervention. It is not just a dispensable criterion for intervention; it is disqualifying. The apparent liberal
"If there is one overriding principle that will guide me in this flip-flops on intervention now begin to make sense. In the Persian
job, it will be the inescapable responsibility ... to build a peaceful Gulf, wbere American national interests are seriously engaged, they opposed armed intervention. In Somalia, where
world and to terminate the abominable injustices and conditions
American national interests are not at all engaged, they supthat still plague civilization."
ported armed intervention. And in Bosnia, where American
-U.S. Ambassador to the U.N. Madeleine Albright,
national interests stand to be seriously jeopardized by interFeb. 1,1993
vention, they are positively enthusiastic for intervention.
T HAS BEEN A LONG TIME SINCE AMERICAN LIBERALS HAVE
Not, of course, out of any desire to injure America. On the
been accused of excessive interventionism abroad. About contrary, out of the deep desire to purify, to redeem America by
30 years. John Kennedy in his Inaugural Address prom- making it an instrument of justice. The critics do not lack for
ised to "pay any price, bear any burden, meet any hard- patriotism. On the contrary, they sincerely wish to ennoble
ship, support any friend, oppose any foe to assure the survival America with a foreign poUcy of altruism. And because only inand the success of liberty." It was the single most ambitious tervention devoid of self-interest is morally unimpeachable, it is
formulation of American goals in the cold war.
the only kind that a good conscience can support.
Such expansiveness led Kennedy into Vietnam. And that
What to say of these liberal hawks? That they are marked
led liberals not just to desert the Vietnam adventure, but to de- by good faith but a terrible confusion. The confusioiiiis between
sert the very vision of American internationalism that Kenne- individual and national morality. In private conduct, altruism
dy, and Democrats from Harry Truman to Hubert Humphrey, is the ideal. For a nation, it can mean ruin. In private conduct,
had championed.
self-interest is a suspect motive. Intervening in a fight for reaWith Vietnam, American liberalism entered a period of sons of right is the stuff of western heroes. Intervening in a
profound isolationism. Just about every subsequent interven- fight because you need the weaker party's oil is not.
tion, from Nicaragua to Kuwait, aroused loud liberal protest.
But it is fatally naive to transfer such reasoning to foreign
The high-water mark was reached on Jan. 12, 1991, when policy. Nations are not individuals. Nations live in a state of naDemocrats led the fight to deny President Bush authority to ture. There is no higher authority to protect them. If they do
use force against Iraq-and came within three votes of carry- not protect themselves, they die. Ignoring one's interests,
ing the Senate.
squandering one's resources in fits of altruism, is the fastest
Another age, another presidency, another trumpet. Bill road to national disaster.
Clinton declared in his Inaugural Address that America will
In such a dangerous arena, thinking with one's heart is a
act "with force when necessary" to protect its "vital inter- serious offense. Foreign policy is not social work. Yes, we
ests." But he did not stop there. He then pledged American ac- should risk war when our will and conscience are challenged.
tion when "the will and conscience of the international com- But only when our most vital interests are challenged too.
munity is defied."
God protect us from our better instincts. In the post-Soviet
Thus was enunciated the Clinton doctrine of humanitarian world it is difficult to enunciate firm principles of American
intervention. Yes, there will be interventions for our nation- action. But until wefigureout what we must do, we can start
al interest. But there will also be interventions for reasons by prudently deciding what we must not do: allow ourselves to
of conscience. It has been a long road from Vietnam: the be driven to war by unreflective, overweening moral ism.
•
How the Doves
Became Hawks
I
74
TIME, MAV 17,1993
\
�j
�I
S
C O P E
VL-NK/.UKLA
I KXASI AX
B The Money Trap
H
e survived two bloody coup
attempts last year, but money may soon do in Venezuela's
President Carlos Andr6s PSrez.
Friends of P6rez say he will resign if, as he expects, the Supreme Court indicts him on
charges of misappropriating
government funds. According
to a Venezuelan congressional
probe, Perez was allegedly involved in a 1989 currency scam
that netted S10 million by conA call for reprisals: Bush visits Kuwait on the gulf-war anniversaryverting bolivares from secret
government accounts into dol.KKOKISM
lars at a preferential exchange
rate normally reserved for development funds. Perez denies
any involvement, and as president he is immune from prosean attack. Seething over that
he White House and State
cution. The Senate could legal"nonchalant attitude," State
Department are at loggerly clear the way for a trial, but
counterterrorism officials say
heads over how to respond to
friends say such a scandal
evidence that Iraq sponsoredi a U.S. policy is to strike back at
would be too much for Perez, 70.
plot to assassinate George Bush states responsible for terror"He's a man who has accepted
ism. American jets attacked
during his April visit to Ku•
Libya, for example, for its part his fate," says one.
wait. Sources in both camps
in the 1986 Berlin disco bombtold NEWSWEEK that 11 of the
16 persons Kuwaiti authorities ing that killed two U.S. servicehave charged in the plot were men. But White House sources
members of an Iraqi special-op- caution that most information
on the Bush assassination plot
erations team, trained and
equipped for the hit attempt by comes from the Kuwaitis. They
say FBI and CIA officers are
the government of Saddam
now in Kuwait checking its reliHussein.
While State officials are de- ability. Says a top White House
>
manding quick military retali- aide: "We need to corroborate
this stuff before we jump the
ation for "a clear-cut case of
gun and do something crazy." 'Accepted his fate': Perez
state-sponsored terrorism," a
White House official told
NEWSWEEK that the adminis(INVKNTK >NAI. WISIN )M WATCH
tration has no current plans for
'Nonchalant' on Iraq?
T
Only the Best
JP very president puts his mark
Con the White House Mess.
Jimmy Carter made sure Atlanta-based Coca-Cola flowed
cheaply. Ronald Reagan added
Pepsi, an old-line Republican
company. Bill Clinton has imported TCBY, "The Country's
Best Yogurt,"
from Little
Rock, where
campaign aides
lived on it. Now
they hardly
need to leave
their desks to
indulge.
•
6 NEWSWEEK : MAY 17, 1993
W
hile Democratic
hopes of retaining
Uoyd Bentsen's old Senate seat are wilting in the
Texas sun, GOP presidential hopefuls are
making hay for '96. With
Texas politicoa giving
GOP state treasurer Kay
Bailey Hutchison a strong
. edge in the racetth6k
: White House appears to
have written off Sen; Bob .
Krueger's chancesmthe
'June runoff. Qfiit(OWitf , i :
: aides say the preeidBhi- v
'• has no plans to vuit.Tex- ;
as. Meanwhile .GdI^
stars are Iming up^oaidiii:
'. Hutchisons-including. "\
' Sens. PhH Oramnrand Bob W
Dote, as well asJackKemp^
Dk* Cheney end Bffl fien:
:
t
, ner," says a Hatchiaon
.;':'aid&:And a^^'lfeiifec^..
Tl^'d aUJMrtwxpri^;
Low Blows
hy did
Clinton
W verbalaBillat Rush take a
jab
Limbaugh? At recent Washington
dinner, Clinton joked that the
talk-show host defended Janet
Reno after Rep. John Conyers
grilled her on the Waco fiasco
"only because she was attacked
by a black guy." Limbaugh complained he'd been called a
V^iBaBhake-ap?.TheXJV7wantedbldodandiadi8appomt^
"racist." White House aides
l ed heads didn't rolL Bat thia'Vnitaffocoe"blatheris
getting tind. A Biifiba rebound could be near. ; . - V ^ W r i , say Clinton—who's supersensitive about his daughter—was
getting back at Limbaugh for
PLAYERS
comparing Chelsea to George
BU \ PJtfiyjrk ^
Quagmires everywhere: Better stop thlhfc^ and Barbara Bush's dog, Millie,
• ry^J^'*- ~->.lng.tkbout tomorrow,finda winner POW/^Y
on TV. Limbaugh's producers
HIDanr; ^ ; -l
Mother Teresa media blitz worldn^Yob^ ; say he apologized after "the
' 'y'•:--': W^- can scramble the CWs eggs any tfan^^^^ wrong photo" was aired when
Chelsea was mentioned. They
M. McLarty . ^\.Uh-oh: Mr. Bhmd spending quality phicmer: say they don't recall if it was a
"
"•
tlnw with showbiz tycoon David Geffen.
photo of a dog.
•
R. NMI>
. . ^ ^ ftew dei^chl<±may help with the Senate^;
j . ^ > . j ^ ^ f e ? ^ y ^ B i B : g i i B ^ ^ > - d e s i g n a t e d hltteiv ;^
Scorn aplenty: Limbaugh on T
V
8. Staph:'::
UndereinpTc^ a* spokesman. Will he
WhiteHouse Shake-Up Edition,
WHITL HOUSI:
Making Hay
•^nrasi rmconventional Ws o ;:^f|ig3
id m
:
:
r
;
(Llnmanuai . A Rahmbo.ft^
v.^'«^'."'Li;.:
mlesas callow minister of retribution. ; •; "'j
CLOCKWISE FROM TOP LETT QXJTANIA—AFP,
GENTILE FOR NEWUWKEK. CHENET—NEWSW^K,
SLOAN—NEWSWEEK
�E
R
I
S
C
O
P
IHl-: CLINTONS
E
MOVIKS
KRI PICKS
C
andy makers know kids love to say
" Ewwww!"as much as " Yum!" Offensive "shock" sweets are this year's
trend. Some faves, rated by preteens:
Power Flowers
was
posed to be the
A nd George Bushking ofsupthank-you notes. Every White
House staffer recently received
a pink rose and a card signed—
with an autopen—by Bill and
Hillary Clinton, saying:
"Thanks for being part of the
first 100 days." The gifts were
paid for out of the White House
budget, but aides say the cost
for the several hundred cards
and roses was modest. "With an
in-house florist, we get a good
deal," says Press Secretary Dee
Dee Myers. Top officials got
swankier memorabilia of the
first 100 days.
The Clintons
sentoutabout
70 sterlingsilver Tiffany
key chains.
Cutest of all:
each came
with a tiny silver saxophone
'Thanks': Gift attached. •
T
he grunge look is dead, in
Seattle anyway. Hipsters
there are mending torn jeans or
buying new, hole-free pantsannoyed that their overexposing attire is now overexposed.
"Bands are pissed because the
look they sported, simply because they were poor, is being
copied and glorified," says Bill
Koonce of Crocodile Cafe, Seattle's top club. Flannel is out,
too, and leading rockers are
trimming their hair to bootcamp length. The biggest taboo
is the "G word" itself. Says
Koonce: "To say it is an instant
giveaway that you re new to the
scene—and ignorant."
•
Changes: Old look (left), new
A
bout "Mattress Mac," the
movie mogul. Jim Mclngvale, who turned a $5,000 investment into a $50 million
Houston bedding empire, is
spinning his
poly/cotton
loot into celluloid gold with
the Chuck
Norris karate
kaper "Sidekicks." The
film, bankrolled by Mac
for $16 million, has been
*
boffo at the box office. But it's
Mac's old-time marketing style
that's most endeared him to
Hollywood. In a throwback to
the '50s, Mac—who stars in his
own TV bedding ads—has Norris barnstorming theaters
around the country.
•
SNOT: So what if
adults find the
sugary goopfilled noses
(full name: Super
. ., Nauseating Ob.\'v;>noxious Treat)
•^repellent?
U^Kidssay .
^ t h e y ' r e "cool"
r.'J'and funny.
Mad Dawg: Forget to
study for that math test?
Chew up one of these and
claim you're "rabid."
Withfiveflavorsand froth
colors to choose from, kids
give Mad Dawg top marks.
M r J l l l ( l l l l l a
M c , l
v a l e
Screamln'.
SaucereSbur'
^ ^ ^ ^
Goodbye, G Word
Hollywood Is
Talking...
raspberry loir v
The Glenlizzie
r y ' - ' f ^jnimths More annoy- ; "
he Queen Mother takes it
eif HUe. a hideous
with soda. Princess
ance: cdktainer lids double
Margaret sips hers at dinner.
riflyingducs.
•'•^' .':'\.
Tongue Splashers: The
Now commoners, too, can drink
Sherwin-Williams of
r''
Scotch whisky worthy of the
gum, in colors like "slime
Windsors, for it's on sale
green" and "slurpin' puramong the tea cozies at
ple." Kids' reaction to
the Balmoral Castle gift
vivid spit "That's cool!"
shop. Faced with the novelty
of income tax—and Windsor
Busted!: Ten innocentCastle still badly in need
looking gum balls: seven
of repairs—Queen Elizabeth
fruity, three "way hot"
isfloggingdistinctively
A prankster's joy, or a game like ^
labeled, miniature bottles
Russian roulette. Kids caU it "avresomS .
of a 15-year-old singlemalt whisky at her Highlands estate. Though she
icits for 1992's last quarter. But already runs a pub for
KM.TII CAKI:
Children's Hospital, for examBalmoral staffers
ple, has $329 million in re(called The Old
serves. Massachusetts General
^ Vic), this is the
hould nonprofit hospitals be has socked away $144 milfirst time that
criticized for treating health lion. Hospital officials faScotch, as
care as a business? A Boston
miliar with the report don't
Buckingham
health-department report to be dispute the sums. They say
Palace dryly
released this week slams top
they're sensibly saving for
noted, has been
local hospitals for declaring
leaner times. Says Mass
"part of our
losses and doing little charity
General's Martin Bander.
product line."
work, while erecting new build- "Under health-care reform
ings and sitting atop millions in [hoepitals] are at risk of becomGIIOOST
CIEIO and
PATRICK
cash. Six hospitals reported def- ing an endangered species." •
ROOIRB untkbureau reporU
1
;
T
:
Second Opinion
S
LEFT TO RIGHT (TOP TO BOTTOM* McNAMEE FOR NEWSWEEK.
JEFFREY ENGEL3TAD (2). CHENET—NEWSWEEK (7). NC. CWP WA8S
�BY T H E O D O R E C . S O R E N S E N
Averell Harriman at age 69 was no longer up to any
demanding role, the President shunted the former cabinet
member and New York governor into a roving ambassador-at-large position in which Harriman could set his own
pace. He sure did. Uncomplaining (and newly equipped
with a hearing aid), Harriman soon proved the equal of a
dozen younger men and rose rapidly in both Kennedy's
esteem and the State Department's hierarchy, first to
assistant secretary of state and then to under secretary.
Overnight flights to faraway capitals and endless negotiations did not faze our "youngest" diplomat.
Solid judgment: Age is by itself no predictor of success in
government. After the 12 years of Ronald Reagan and
George Bush, theappearanceof so many youthful faces in the
Clinton entourage (beginning with the President and First
Lady) is a marked, almost startling, contrast, welcomed by
most, if worrisome to some. But it is sawy, not looks, that will
determine the value of these young men and women to
government. Gray matter, not gray hair, is what's required.
No doubt, long before the Clinton administration has run
its course, some of its younger members will have proven to
the most dubious skeptic that their judgment is solid and
their advice astute—and some will have proven to be failures. The same will be true of Mr. Clinton's oldest appointees and all those in between. And at least the younger ones,
less cynical, less blase, will
be more likely to retain the
stamina and enthusiasm
that their responsibilities
require.
Nevertheless, I do hope
that Clinton appointees of
every age and office will
take every opportunity to
get more sleep, more exercise and more time with
their families. Even among
the fittest, the fatigue produced by constant roundthe-clock sessions can cloud judgment and strain tempers,
as I witnessedfirsthandduring the Cuban missile crisis and
on other occasions. Fortunately, with a little luck, the pace
may be less intense in the months and years ahead (except
when war threatens, Congress balks, disaster looms, budget
deadlines approach or a dozen other kinds of all too common
emergencies disrupt a more orderly workweek). Kennedy,
for example, after sending 277 separate new requests to
Congress during his first 100 days, sent fewer than that
during the next 12 months.
Looking back 32 years, I confess to a little shock myself
over how young I was to be advising the President of the
United States. Certainly I have seen a lot more of the world
now than I had ever seen then. But I have also seen, in dozens
of countries as well as our own, countless young presidential
advisers and cabinet ministers who brought to the service of
their respective countries a discerning wisdom and thoughtful insight that no elder statesman could surpass.
Youthful appearance and age, in short, are not disqualifications for high government service. Nor are they enduring.
No doubt White House Communications Director George
Stephanopoulos is annoyed when he is repeatedly described
as "even more youthful in appearance than his age.'' But bear
with it, George, as you may recall I did when Teddy White
applied those very same words to me in 1959. Come to think of
it, you may not remember—you weren't even born yet.
he reports about the Clinton White House all sound
familiar—the lights burning after midnight in the
West Wing, the early-morning briefings in the Oval
Office, the Saturday meetings in the Cabinet Room,
the schedules disrupted by an unruly foreign crisis,
the jet lag suffered from crisscrossing the country for
speeches, the social engagements canceled, the all-night
drafting sessions. "Those were the days," Robert Kennedy
ruefully remarked after we stumbled at the Bay of Pigs,
"when we thought we were succeeding because of all the
stories on how hard everybody was working."
The early weeks and months of each new activist American presidency require the young in heart and health, if not
necessarily in years. The rush to set the national agenda
after a long wait in the wilderness, the list of unmet national needs crying out for
attention, the time-consuming demands of moving into
a new position with a new
team and program—these
are the pressures, not workaholism or grandstanding
or misplaced priorities, that
drive the cruel White House
pace and schedule in the
first 100 and more days of a
new administration. Under
those conditions, youth can provide a valuable inoculation
against burnout.
In the early spring of 1961, no one burned out. The President was 43. His national-security adviser was 41. His press
secretary was 35. So was his attorney general (and brother). I
was 32. His cabinet was the youngest in the 20th century.
Yet few, if any, voiced the criticism now heard in some
circles about the Clinton team—that we were too young. On
the contrary, youthful energy and idealism were in the
saddle in Washington then, as now. The youngest man ever
elected President of the United States had succeeded the
oldest ever to hold that office. Citing Jefferson's work on
the Declaration of Independence and Madison's work on the
Constitution, John F. Kennedy had rejected attacks during
the campaign—some subtle, some not—on his maturity and
experience. The test, he said, is in the man, not his age, in the
breadth of his judgment, not the length of his years or
service. He applied those same tests to the rest of us.
Even that hard-bitten veteran of Washington intrigue,
the President's father, Joseph P. Kennedy, defended the
young team that his son had enlisted. Urged during the 1960
presidential race by Bronx boss Charlie Buckley, who was
disdainful of our callow campaign crew, to "get Jack to add
some experienced pols," the "Ambassador," as everyone
called him—mindful of the 12 years that had elapsed since
the last Democratic presidential victory—snorted: "Hell,
those 'experienced' guys are only experienced in losing!"
Only once did JFK fall briefly into the age trap in
Ted Sorensen, who now practices international law in New
constructing his administration. Mistakenly believing that York, served as counsel to President John F. Kennedy.
T
Gray matter,
not gray hair,
is what's
required in a
hew activist
presidency
10 NEWSWEEK : MAY 17, 1993
0
�PER
SPECTIVES
Overheard
V O R BILL,
OV
m m i BILL,
IWLWBILL,
P P M y BILL..
MA C
WA N X ?
HT E T
D
Doy. was the gulf war easy compared to this!
Gen. COLIN POWELL, chairman of the
Joint Chiefs of Staff, at a White House
strategy meeting on Bosnia
t is better to fight savages than live with them
in peace. Signing would be tantamount to
treason."
RAOOSLAV B R D J A N I N , amemberofthe
Bosnian Serb parliament, rejecting the United
Nations' peace proposal for Bosnia
,i
.
.
.
just try to remember that in Christian
tradition... it is rare that hell is described in
specific terms."
Russian Foreign Minister ANDREI
KOZYREV,
refusing to discuss his country's likely response if
the Bosnian Serbs reject U.N. peace proposals
ici 1993 STAHLEK—CINCINNATI POST
I have to negotiate with her every day and I usually lose."
United States Trade Representative
MICKEYKANTOR,
suggesting in jest that the Japanese government
hire his 10-year-old daughter
I hink like Jesus. Lead like Moses. Fight like David. Run
like Lincoln."
Motto used by the CHRISTIAN COALITION during
two-day, political-activism training sessions
held around the country
B
ecause she's a damn lesbian. I'm not going to put a
lesbian in a position like that. If you want to call me a
bigot, fine."
Sen. JESSE HELMS, on why he's trying to delay the
confirmation of openly gay Roberta Achtenberg, whom
President CUnton has named assistant secretary
of housing and urban development
1993 SMITH—LAS VEGAS SUN
hope it's the last time she takes him to the zoo."
LORRAINE
HERSHONIK,
a zookeeper at the Bronx zoo,
after a mentally ill man, brought to the zoo by his mother,
was wounded when he climbed over a fence and spent
10 minutes trying to play with two lionesses
"We sex and Nazism can do that."
r ell,
AnchiteriPHiLipJoHNSON, when told an upcoming biography,
which reveals his homosexuality and early fascist
sympathies, might attract a lot of attention
ii
T
I his is not a joke. It is important."
European Commission spokesman NICOLAAS
WEGTER,
denying a British press report that the group intends
to ban sales of curved cucumbers
1993 LUCKOV1CH—ATLANTA OONSnTUTlON
Quotations are compiled from press, TV and wire-servicereportsas well as from NEWSWEEK correspondents.
NEWSWEEK : MAY 17, 1993
23
�S P E C I A L
R E P O R T
And Now, 'Clinton
F
or the World War II generation, the
model of leadership was General of
the Army George S. Marshall, the
"Organizer of Victory." Marshall's
motto was "Don't fight the prob^"
lem. Decide it!" Steely and gruff, he was a
Big Picture man; his only advice to the
drafters of the Marshall Plan to rebuild
postwar Europe was, "Avoid trivia." " I
have no feelings," he liked to say, "except
those I reserve for Mrs. Marshall."
Bill Clinton's style is more in tune with
the sharing, sensitive '908. The president
respects feelings. He will listen and talk,
endlessly. A policy wonk, he wallows in the
details. And he will revisit a decision so
often that at times he seems like a gardener
who uproots his plants to see how well
they're growing.
The Balkan crisis might have tested even
General Marshall's capacity for decision.
For Clinton, who would make the whole
world hisfriend,the Balkans are a path to
pleasing no one. He has made clear that
he is going to do something in Bosnia. But
he has never defined his ultimate goal, and
there is precious little agreement on the
means to get there. U.S. allies are balky and
whiny. Congress and the president's own
advisers are deeply divided. The Amencan
people are confused and wary. The Bosnian
Serbs, meanwhile, are taking advantage of
the hand-wringing to kill while they talk.
Dropping in the polls, accused of lacking
focus, Clinton scarcely needs a foreign-policy crisis. The White House was particularly
28 NEWSWEEK : MAY 17, 1993
-1 "V
�Accused of lacking focus, he hardly
needs a foreign crisis. But after
threatening force in Bosnia, he can't
back down without looking weak.
's War'?
JOHN FICARA—NEWSWEEK
irked last week by Ross Perot's intimation
that Clinton "might get a little war going"
to divert attention from broken promises at
home. But the president is caught in a maze
of his own creation. Without meaning to, he
seems to be suggesting that America is willing to play the role of global policeman,
even at the risk of open-ended commitments, and casualties. After threatening to
enter the fight in Bosnia, he cannot back
down without looking weak andfickle.He
has earned the sobriquet that presi-
dents dread: Bosnia is now Clinton's war.
For a moment last week, it looked like the
mere threat of force would pay off. Serbian
leaders signed the Vance-Owen accord, dividing Bosnia into ethnic enclaves and ending the killing, or at least slowing it for a
time. But then the, unelected, self-proclaimed Bosnian Serb parliament refused
to ratify the signature, announcing that it
would hold a referendum on Vance-Owen
on May 15. Surprised and disappointed, the
White House publicly scoffed. The referen-
dum was just "another cynical ploy to accomplish delay while they are rolling up
additional territory in Bosnia," said Secretary of State Warren Christopher. Late Saturday the Serbs signed a cease-fire treaty
with the Bosnian government—but previous cease-fires have quickly fallen apart.
Christopher will confer with the permanent members of the U.N. Security Council
this week, seeking agreement on Clinton's
war plan for Bosnia. It's called the "fairfight option": arming Bosnia's Muslims and
NEWSWEEK : MAY 17, 1993 27
�ALBERTO P1ZZOL1—SYGMA
A 'fair-fight option'? An A-6 Intruder takes off from the USS Theodore Roosevelt
The Sky Above,
the Mud Below
Intervention in Bosnia could start with airstrikes,
but eventually the allies may get their feet dirty
T
here's a world of difference between peacekeeping and military
intervention. When the Bosnian
Serbs rejected the Vance-Owen accord, the Clinton administration
and its European allies had to shift their
military planning, at least temporarily,
into a peacemaking mode. Clinton's battle
plan, which one U.S. official called the
"fair-fight option," was to lift the arms embargo on the Bosnian Muslims and fend off
Serb attackers with airstrikes. The president promised a clear, workable strategy
that" would have a beginning, a middle and
an end." But the Europeans thought he had
his priorities backward. The allies didn't
want to lift the arms embargo, fearing a
threat to the 9,300 lightly armed peacekeeping troops they already have in Bosnia. They complained that the Americans
wanted to keep safely to the sky above,
while European soldiers faced death in the
mud below.
When Secretary of State Warren Chris30 NEWSWEEK : MAY 17, 1993
topher toured European capitals last week,
the allies expected him to produce a fairly
detailed plan of action. They thought it
would include air attacks against Serbian
military targets in Bosnia, perhaps combined with an effort to insert United Nations troops into besieged Muslim communities, securing them as "safe areas." The
Europeans assumed that Washington was
prepared to escalate, if necessary—all the
way to airstrikes against military targets
in Serbia itself—but that it would also offer
some sort of political "carrot" if the Serbs
accepted Vance-Owen. And the allies expected that Washington would urge the
United Nations to lift the arms embargo,
asking Britain and France to limit their
disapproval to abstentions in the Security
Council. " I f Christopher had arrived with
something like that, he'd probably have got
it," said a senior European official. Instead,
according to allied sources, Christopher
stunned his listeners by presenting a vague
plan that focused on lifting the arms em-
bargo, indicating that some airstrikes
might also be necessary.
The allies have ample force at hand for
an air war of almost any scope (map).
NATO has numerous bases in the region,
built during the cold war to oppose a potential Warsaw Pact thrust into Germany
through Austria. In addition, three aircraft carriers are on station in the Adriatic:
America's Theodore Roosevelt, Britain's
Ark Royal and France's Clemenceau, along
with a U.S. Marine amphibious assault
group, with 2,200 troops and a helicopter
carrier. U.S. military planners think it
would take about three days of airstrikes,
at a brisk sortie rate, to eliminate the Bosnian Serb army as an organized entity. But
they cannot guarantee that individual
Serb units would not fight on as well-armed
guerrillas, capable of inflicting a steady
stream of casualties on foreign troops.
Limits of power In testimony before the
Senate Armed Services Committee last
week, Marine Corps Maj. Gen. John Sheehan said U.S. reconnaissance can "clearly"
locate only about a quarter of the Serbs' 600
artillery pieces. To destroy even those guns
with some "degree of predictability," Sheehan said, "requires people on the ground"
to identify targets for the warplanes. Another Pentagon witness, Maj. Gen. Michael
Ryan of the air force, predicted that if the
allies use "airstrikes alone," the Serbs
" would just ride it out."
The French told Christopher that if
Washington is serious, it should contribute
ground troops to help protect the six besieged cities declared safe areas by the
Security Council last week: Sarajevo,
Tuzla, Zepa, Gorazde, Bihac and Srebrenica. Paris was willing to consider airstrikes
�to defend the enclaves, but it had no illusions about winning the war from the air.
"We hear a great deal from the Americans
about avoiding another Vietnam," said a
French official. "Why, then, does Washington think it can bomb the Serbs to
the conference table? It did not work in
Vietnam. It will not work in Bosnia."
For a year now, NATO planners, many
of them Americans, have been sketching
out the contingencies for intervention on
the ground in Bosnia. They plan an "inkblot strategy," in which forces would be
dropped into key cities and then fan out
into the countryside until eventually all
the blots merged into one. Among various
scenarios, the one that currently seems
most realistic calls for up to 300,000 troops
to impose peace on Bosnia. "You would
announce that number to make an effect,"
says a NATO source, "but you would probably send no more than 200,000." NATO
planners think the fighting would be over
in a few days, costing only a small number
of allied lives.
But then what? Serb guerrillas would
probablyfighton. There would be a steady
trickle of American and European casualties from sniper fire and land mines, and
some allied aircraft might be shot down
by shoulder-fired missiles. Most victims
of "ethnic cleansing" probably would not
ART Z A M U R - G A M M A LLAISON
Rejecting a plan for peace: Bosnian Serbfighterson the front line near Srebrenica
dare to return to the homes from which the
Serbs drove them, even if the allies wanted
them to. Bosnia could remain in a perpetual state of siege, with U.S. ground troops
stuck there for as long as Congress and the
American people were willing to tolerate
it. Last week Gen. Colin Powell, the chair-
Rhein-Main Air Base: C-130 transport planes could supply weapons
toMuslims via Italian bases.
Spanddahlem: U.S.
could be
used tor strikes on
forces
from Italian
French air bases are being used
for support missions to help
enforce no-fly zone; they could
also figure in bombing strikes.
U.S., British and French carriers
and U.S. amphibious assault group
ara heavily equipped with aircraft;
U.S. Marines could be the first
troops to Hy into SanUevo.
Bombers would fly to Italian air
bases before striking Serbs.
man of the Joint Chiefs of Staff, was quoted
as saying: "Boy, was the gulf war easy
compared to this!" If military intervention
reaches from the sky to the ground, the
clear-cut ending promised by Bill Clinton
could turn out to be nowhere in sight.
J O H N B A R R Y and
RUSSKLL
WATSON
Attacking the Serbs
At sea and on shore, the NATO allies have more
than adequate resources for an air war over
Bosnia—and no shortage of targets in areas
controlled by the army of the Bosnian Serbs.
Serbian arms depot
Muslims
Serbian air base
Air-defense radar
E J 5 Croats
Regional army
headquarters
l
B
BTr-v Other
Serbs
Supply route to Serbian,,
forces bii
Supply route to
Serbian forces
in southern and
central Bosnia
Serbian army headquartBTSHrisohoine
toanumberof antiaircraft batteries
Heavy bufldup of artfllery bi the MHs
around Sarajevo; there may be
antiaircraft batteries here as weO
Other Serbian forces and
artiUery around Qorazde,
Srebretrica and tela
NEWSWEEK: MAY 17. 1993
31
�S P E C I A L
R E P O R T
Air Power Just Won't Work
mored-vehicle and artillery killers, far
outperforming every air force tactical
aircraft except the A-10 Warthog.
The Warthog was a tough player
throughout the war. But even its deadly
effectiveness was limited, as the top air
open desert killed about 10,000 soldiers force brass put a ceiling of 8,000 feet on
BY D A V I D H. H A C K W O R T H and destroyed only 15 to 20 percent of how low it couldfly.At that altitude an
Saddam's tanks and artillery during the armored vehicle looks like an ant. makmerican air power will fail in the air campaign that preceded the ground ing target identification and iron-bomb
Balkans, just as it did during most attack. Victory came not because of deci- accuracy almost impossible. The Maverof World War II, the Korean War, sive air power, but because of hard-hit- ick missiles carried by the A-lOs did a
the Vietnam War—and, contrary to Air ting armor attacks against an Iraqi army good job, except they took out more clevForce propaganda, during Desert Storm. with no will to fight.
er dummy plywood decoys than the real
Air power is not the magic solution to the
Since the 1960s, U.S. Air Force brass thing. Since Desert Storm, except for a
Balkans' holocaust. It will only enlarge have not given a grunt's damn about its few active-duty squadrons, the A-10 has
the war, harden the aggressors and be ground-support mission. This form of air been relegated to the air guard and rethe first step into getting the United power is not sexy enough and doesn't pull placed by "fast burner" jets.
States stuck in a bottomless swamp.
in the big defense bucks that a $2 billion
The top brass say the fast burners can
The three major governing factors in
war are: the enemy, the terrain and the
weather. In the Balkans, all three work
against high-performance aircraft taking
out Serbian heavy artillery and armored
vehicles and closing down supply routes.
Bosnia's terrain is mainly tree covered
and mountainous. The cloud ceilings are
low, and the valleyfloorscovered by fog.
Similar ground and weather conditions
made Soviet and U.S. air power ineffective
in Afghanistan and Vietnam. Both superpowers lost hundreds of aircraft and helicopters to insurgent groundfire.
The Bosnian Serbs are also essentially
light-infantry guerrillas. If tactical air is
applied, the Serbs, like the Viet Cong and
Afghan guerrillas before them, will hide
their heavy stuff, go to ground and strike
like rattlesnakes from every hilltop, behind every tree and at every bend in the
ART ZAML'R—GAMMA-LIAISON
road. Allied aircraft, U.S. spotter teams
and U.N. peacekeepers on the ground The guerrillas will go to ground—and strike like rattlesnakes: Serbs in Srebrenica
will be their main targets.
Old bombs: U.S. tactical air power has bomber or acres of sleek missiles with do a better tactical-air-support job, but
seldom worked against a determined ene- nuclear-tipped warheads do. To get sawy pilots say this is not true. Contrary
my ground force. Hundreds of thousands around this during the Vietnam period, to hype, they go too fast, can't loiter long
of raids on the Ho Chi Minh Trail never the army developed its own tactical-air- enough to become familiar with the batput the Vietnamese out of business. Yes, support weapons—the attack helicopter tlefield and are so vulnerable that one
laserflash-bamweapons were devastat- gunship—to ensure its grunts would AK-47 assault-rifle slug will bring them
ing during Desert Storm. But more than have the right stuff in a fight. Now the down. Last January 110 aircraft were
94 percent of all ordnance used there was Pentagon has two tactical air forces: the massed to knock out missile and radar
the same old dumb, unguided iron bombs U.S. Army's, which works, and the U.S. sites in Iraq's southern no-fly zone. The
dropped over Tokyo in 1942, and which Air Force's, which is all show and no go results were disastrous: only 25 percent
later pummeled the mountains of Korea and is not trusted to do the job by the of the targeted sites were disabled.
and the jungles of Vietnam.
Warfare is like surgery. You should
grunts and their leaders.
During Operation Desert Storm, Gen- use exactly the right instrument. A chain
The smart stuff highlighted on General Schwarzkopfs show-and-tell TV pro- eral Schwarzkopf assigned the most criti- saw is no good for a brain tumor, and
grams represented about 6 percent of all cal air mission of the war to army attack high-performance aircraft will be a disordnance employed. It did the job on spe- helicopters: blast a hole in Iraq's air- aster in the Balkans. The bottom line is:
cific high-signature targets, but the price defense screen so high-performance air- we don't have the right stuff to do the job;
was mind-boggling. One cruise missile craft could streak through and batter and if we did, it wouldn't work against a
costs $2 million, and its payload is only Baghdad with total surprise. Fighters guerrilla fighting in favorable terrain.
1,000 pounds of TNT. Studies after the were not reliable enough. During the Many brave pilots will be put at great
gulf war show that more than 88,500 tons ground-attack phase, the Cobra and risk, and America will once again be
of bombs dropped on Iraqi troops in the Apache attack choppers were the top ar- stuck in another unwinnable war.
A former soldier critiques the Pentagon plan
A
32 NEWSWEEK : MAY 17. 1993
^
(.
�gitimate right to fight for Zvomik," says
Dragan Spasojevic, president of the local
government in the eastern Bosnian town,
where Serbian forces murdered and brutally expelled Muslim civilians last year. "If
we don't sign, we have the moral right, as
long as there is a single soldier here."
The Serbs' sense of victimization also
emboldens them. Right before it rejected
the peace plan, the Pale assembly proposed
a series of impossible "conditions." Sanctions against Belgrade, legislators argued,
would have to be lifted immediately. Half
of all future U.N. peacekeepers on Serbian
lands had to be from Eastern Orthodox
countries. Serbs in Muslim- and Croatdominated regions would have the right to
join nearby Serbian areas. "Regardless of
ART ZAM U R—GAMMA-LIAISON
what we decide," said Gen.
'Let them come': Bosnian Serb gunman near the siege line at Srebrenica
Ratko Mladic, the Bosnian
Serb commander, "the West
will continue its hellish
plan." That sort of fatalism
has engulfed many Bosnian
Serbs. It is rooted in the conviction that the vote was
moot because the West is
hellbent on bombing them
anyway. "I suppose I should
be getting awayfromroofs
like that," Mladic half-joked
JOSEF POLLEROSS-JB PICTURES
as he left the smoke-filled
meeting hall at the Heavencouple of nights before the Bosnian where Serbian forces withly Valley Hotel where the
Serb assembly met in Pale to vote on drew. This was their last
parliament had convened.
the Vance-Owen peace plan, local chance to duck the punch of
" They might attract Amerianchorman Risto Djogo delivered a report U.S.-led foreign intervencan missiles. But what the
about calls from all over the world demand- tion. So why did the Bosnian
hell. Let them come."
ing military intervention if the Serbs didn't Serbs choose defiance?
ratify the plan. Then Djogo, still on camera One answer lies in the
Dr. Frankenstein: Miloselive, took out a pen and a piece of paper, eastern Bosnian town of
vic, fearing the threat of
scribbled a quick note, pulled an automatic Nova Kasaba. In March,
Western missiles, didn't appistol from his pocket, put it to his temple Serbian forces sacked the
preciate the bravado. Afand squeezed the trigger. To the sound of a place and drove out thouter imploring the assembly
loud explosion, the screen went blank. Mo- sands of Muslims who'd
to pass Vance-Owen, he
LUC DELAHAYE—S1PA
ments later the picture returned, showing lived there for centuries. Toturned on it in rage. "Ina bloodied Djogo slumped over the table. day, the town is under con- At odds: Milosevic
stead of preserving what
(top), Radovan Karadzic you've gained, you're like a
Then he lifted his head, wiped the fake trol of Serb militiamen.
blood away and said, " Ladies and gentle- They see their assault on
drunken poker player putmen, it is not suicide to sign the peace Nova Kasaba not as an appalling case of ting everything on one card," he fumed. It
agreement. It is suicide not to sign it."
ethnic cleansing, but as a narrow escape was an extraordinary renunciation—
His compatriots disagreed. To the aston- from an Islamic fundamentalist takeover. Frankenstein disowning his own monster.
ishment of most everyone—including the " Would you want your wife to have to wear It was Milosevic, after all, who built his
parliament's last remainingfriends,Serbi- a veil?" demands a guard at a checkpoint. career as the protector of all Serbs, who
an President Slobodan Milosevic and Greek No matter that the veil is about as common stoked his Bosnian brothers with the paraPrime Minister Constantine Mitsotakis— a sight in Bosnia as a tank top in Teheran. noia that they faced extinction and who
the self-styled Bosnian Serb assembly re- Under the Vance-Owen plan, the town gave them the means to launch the most
jected the peace proposal by a vote of 51-2, would have reverted to Muslim control—a brutal war in Europe since the Nazi era.
and called for a referendum to ratify their prospect that enrages and terrifies local
Now he found himself in the role of
decision. It was the second occasion in a Serbs. Another guard, who only gives his "peacemaker"—making political hay out
month, and the third time since January, name as Ljubo, says, "Here, yesterday, of the No vote. Within hours, Belgrade
that the parliament had repudiated a deal someone killed our people, and today we announced it was cutting off all supplies,
that would have allowed it to control nearly have to live with them? Impossible."
except food and medicine, to Bosnia. If
half of Bosnia—much of it won through
The Bosnian Serb scenariofromhell is enforced, such sanctions could devastate
"ethnic cleansing"—with impunity. Lord retribution by those against whom they've Serb-held territory, which is already imOwen had stretched his own plan to be committed such grievous crimes—and that poverished after a year of war and comaccommodating, offering a demilitarized fear seemingly underlies the Bosnian pletely dependent on oil supplies from
corridor linking nonadjoining Serb-domi- Serbs' portrayal of themselves as victims. Serbia. Has Milosevic really changed his
nated areas and U.N. protection in regions "If we sign [Vance-Owen], we have no le- spots? While U.S. officials are deeply skep-
like a Drunken
Poker Player'
Why are Bosnia's Serbs proving so defiant?
A
34 NEWSWEEK : MAY 17, 1993
\4
�tical, a few diplomats are willing to suspend disbelief. " I believe he now thinks
it's in the best interests of thfe Bosnian
Serbs to sign the peace agreement," Lord
Owen told NEWSWEEK. "That conversion
took place in Belgrade—I can time it—on
Sunday April 25 at 3 o'clock in the afternoon . . . He stretched his hands behind
his back and said. 'Ah. I feel relaxed'."
That can scarcely bring much comfort to
Bosnian Serbs—or to the Muslims, whom
they continue to attack. The bombing of
two 16th-century mosques in the northern
Bosnian town of Banja Luka was a harmless show of audacity compared with the
besieging of Zepa, one of the last Muslim
holdouts along the Drina River. A week of
heavy bombardment there, according to
unconfirmed local radio reports by Bosnian Muslims, left more than 200 civilians
dead. The U.N. Security Council declared
Zepa andfiveother Muslim enclaves "safe
areas." But even as General Mladic signed
a cease-fire agreement with the Bosnian
government on Saturday, his forces
stepped up their bombardment of Sarajevo.
Bent on a course that even their own allies
in Belgrade consider suicidal, the Bosnian
Serbs still seemed determined to take
along everyone they could with them.
ROD
TOM POST with CHARLES
LANE in Hale.
NORDLAND
in Sarajevo.
LAURA
SILBER
in
Belgrade and DANIEL
PEDERSEN
in London
Waiting for Spring in Sarajevo
the 'wounded wounded'," he
says, not trying to be funny.
" We get a lot of children with
direct hits in the head from
snipers. At that range, it can't
be an accident." While he's
talking, two shells hit the center of town, not far away. Minutes later, a flock of ambulances arrives with the 15
victims,fiveof them children.
In the X-ray suite, a 5-yearold blond boy named Asim
Avdic is crying in agony, a
piece of shrapnel in his back.
His parents coo to him and
GARY KNIGHT—8ABA
kiss him, and alternately turn
sruper attack lies dead in the capital's streets
Human targets: The victim ofa
their backs when one of them
can't control their face for a
tardy spring has finally times smuggled peach bran- jevo: The roof ofa large hockey moment They already know
•.eomie.toSarajevo—and dy. The gardens are being stadium wherefigureskater -what the doctors are whisperwith it ;! the illusion of renew- planted to relieve the tedium Katarina Witt won her first ing about; that he's probably
al. The trees that once blan- of relief ftxxl, on which every- gold medal has collapsed.
paralyzed from the waist
keted the city are gone, cut one depends. And people are
It's been more than , a down. Passing nurses stroke
down forfirewood.But here slim because there's never month since thefirstanniver- Asim's hair and don't meet
and there areflashesof green, enough to eat. "Everyone sary of the war. Everyone the parents' eyes.
as Sarajevans begin plant- says, 'You look great now remembers the date, April 5,
Shell blast: Many Sarajeing tiny. gardens on their since you lost all your mon- and the name of thefirstvic- vans still hope for U.S. interterrace8.." ''Every morning I ey'," says Rishad Sokolovic, a tim, Suada Dilberovic, a beau- vention. They know the risk—
wake up at 5 a.m. and rush out businessman who lost 70 tyfromDubrovnik who was that U.S. airstrikes against
to see if there's any result," pounds in the past year. Much studying in the Bosnian capi- Serbian artillery positions in
says Senada Kreso, a govern- of the dty has been shelled tal. During a peace demon- the hills outside of town may
ment press director. Sidewalk into rubble, with moequea tak- stration, she strode alone provoke a massive retaliatory
cafes have opened up all over ing the brunt of Serb artillery across the bridge toward the barrage and huge civilian castown, usually on the shady fire. The National Library, Serb side and was shot dead. ualties. " I personally wouldn't
side of streets to confound a grand turn-of-the-centnry Now the bridge is called mind my apartment being
snipers, who themselves have Hapeburgbufldingwithatowr the Suada Most (Bridge), destroyed in thisfinalshelldecided to give civilians a ering atrium, is still stand- and people usually run when ing," says Gordona Knezevic,
break—claiming onlyfiveto ing—without floors, roof or they cross it Some of them deputy editor of Oslobodje10 victims a day in a recent windows. To the southwest, in end up in Kosevo hospital, nje, the Sarajevan newspaper
week. People look good, slim the Olympic Village that dur- probably the world's busiest that still comes out every
and often stylish; some blocks ing the winter of 1984 housed trauma center. Just now day. "As it is now, each of us
are- reminiscent of tranquil athletes from around the there are only 100 fresh vic- can be killed in his bedroom,
European avenues.
world, no building is intact; tims in emergency or critical his newsroom, his office, his
But the sorry truth of Sa- basements are crammed with care; usually there are 150. bathroom, at any time. You
rajevo is hard to conceal. Sarajevans trying to avoid the "Yes, they did some damage think, 'If I have an appointThe Bosnian capital, and its shelling. To the north, the yesterday, so they're quiet to- ment with a shell, it will find
380,000 people, have held out locker rooms of a small Olym- day," says Dr. Faruk Kuleno- me anyway'." Four hours latagainst Serbian besiegers for pic stadium have become vic, chief of the trauma unit, er, the windows in the office
more than a year. The crowd- makeshiftrefugeecamps for sitting at a table in his office next to hers are blown out by
ed cafes have no food, only Muslims from villages in piled with souvenir shell frag- a blast, killingfivepeople.
coffee and local beer, some- Serb-held areas around Sara- ments. "We call those cases
ROD NORDLAND
in Sarajevo
A
N E W S W E E K : M A Y 17. 1993
35
�NATIONAL
AFFAIRS
D w to Brass Tacks
on
Hillary's plan is delayed-but the elements are coming into focus
Her husband is preoccupied with Bosnia, and
Congress is struggling
with tricky issues like
the deficit and campaignfinance reform. But Hillary Rodham Clinton is
CARE
sticking to her mission,
which is to finish the administration's proposals to reform the
nation's S940 billion health-care system.
Make no mistake about it: health care, the
biggest piece of social legislation anyone in
Washington can remember, will be back on
the front burner again, probably sometime
in June. And when it is, Hillary Clinton
will be in the forefront of a political battle
that may define her husband's presidency—and establish her as the most powerful
First Lady in history, if not the most
controversial.
The blunt and somewhat embarrassing
fact is that the administration has fallen
well short of its hopes for unveiling a
health-care plan this spring. That is partly
because of the crush of pending business on
Capitol Hill, and partly because the president, by his own admission, has spread
himself too thin. "What I think we need to
do, frankly, is get the focus back on the
things I have been working on from the
beginning," Clinton conceded last week. To
do that, the president approved a realignment of his White House staff.
Among other changes, Roy
Neel, one of Vice President Al
Gore's aides and a veteran of
Beltway politics, was brought
in as a deputy to Clinton's softspoken and self-effacing chief
of staff, Thomas F. (Mack)
McLarty. The overall goal was
to keep the administration and
the president himself targeted
on mega-issues like the deficit
and health-care reform.
The delay may actually improve the health-care plan.
The small army of consultants,
bureaucrats and congressional
staffers has been disbanded,
and the president has joined
his wife, staff director Ira Magaziner and other top administration officials in the quest for a final
design. A White House official says the
number of key decisions has been nar-
HEALTH
NEWSWEEK : MAY 17. 1993
rowed from 1,100 to about 25. each of
which is tied to all the others, and all of
which have huge economic and political
implications. "You make three decisions,
then come to the fourth and have to go
back and look at the first three," an aide
explained. The whole process, of course, is
secret—which is why Washington is now
consumed by what one lobbyist calls the
"trial balloon du jour" syndrome and why
the news media cannot describe the plan
with real precision. Still, the broad outlines of the decisions Bill and Hillary must
make are becoming clear:
What's cowered: The heart of the Clinton
plan is what is known as a "core-benefit
package." This part of the plan is essentially comparable to any health-insurance policy because it will specify the kinds of medical services that will be covered by the
government or by private insurers—hospital care, doctors' bills, diagnostic tests and
so on. The Clinton plan will not prevent
Americans or their employers from buying
more expensive insurance, but it will establish a minimum standard for health coverage for everyone. Last week The New York
Times published a detailed account of the
administration's internal debate that suggested the core-benefit package would be
generous indeed.
As White House sources told it, the Clinton team is currently trying to decide
among three different levels of coverage—
an "austere" plan, a "medium" plan and a
"generous" plan. A l l three would cover
hospitalization, doctors' services, prescription drugs, surgery and at least some level
of mental-health benefits. The major differences were in the level of deductibles
The Plan: Who Will Gain, Who Will Lose
linton's health-reform plan will have a profound impact on many of the consumers and
providers of medical care. Though the details have yet to be unveiled, here's a likely
prognosis for some groups based on what is known so far:
C
WINNERS
Family doctors: Generalists will get a
boost under a new system that puts a
premium on primary care.
Uninsured, underinsured families: Those
who have relied on emergency rooms
and clinics for their care will see big
improvements—and pay relatively little.
People with AIDS, cancer or other preexisting illness: Under reform, insurance
plans will be required to accept all
who apply.
LOSERS
Medical specialists: These doctors will
see incomes fail as much fee-for-service
medicine is replaced by fixed contracts.
Well-insured families: Those with goldplated coverage will pay more to retain
their generous benefits.
Hospitals: Efficiently run hospitals will fill
beds by reducing fees, but the less
nimble will be forced out of business.
Trial lawyers: Limits on medical-practice
liability and litigation will hurt litigators.
MX D
IE
IRA WYMAN F<)K NEWSWEEK
Will hospitals do better? Emergency care
Businesses: Small businesses that don't
insure employees will be hardest hit:
those that do should see costs drop. Big
businesses score fairly well overall.
ILLLSTRATUIN HY I'KTKK HOF.Y
�real issue is timing—how soon
and how fast to expand these
tax-subsidized programs. Doing
it all right away could add as
much as S150 billion a year to
the nation's health-care spending. Stretching it out. over a
period of four to seven years,
should hold the initial cost increase to S50 billion or less. The
word last week, from administration sources, was that Clinton was leaning toward the
cheaper, stretched-out version.
How to pay for it: The big-bang
theory of health reform inevitably means big bucks. Are Americans ready to pay another S100
billion a year to improve health
care for all? Sure, the administration says—and if that sounds
bad, just remember that the nation's health costs are increasing by approximately S100 billion a year right now.
Nevertheless, thedebateover
health taxation is guaranteed
to be hellacious. An administration trial balloon for a federal
value-added tax, or VAT, was
shot down in April. Last week
the Clintonians tried again
with a leaked proposal for a payroll tax of 7 to 9 percent—but
that is hardly the bottom line.
The administration is also contemplating sharp increases in
"sin taxes" (on alcohol, cigarettes and, possibly, ammunition) that would raise about S10
billion a year. It might seek a
new tax on health providers
that would raise S35 billion a
year.Oritcouldadd 1 percentto
the current payroll tax for Medicare, which would raise about
S30billionayear.The"austere"
goal for new health taxes is
about S50 billion a year. But
this does not include S50 billion
in increased health costs for the
private sector—and, given the
Clinton team'sambitious hopes
n<.\ wsMAN KI>i: \K\\>\M:I:K
for expanding the system, it is
In focus: The president is putting Hillary's reform effort back on the front burner
probably only the beginning.
Against all that. Bill Clinton
Who's covered—and when: Universal is essentially betting his presidency on the
and copayments that would be charged to
patients and their families. Under the health coverage—expanding the system to possibility that reform will ultimately con"austere" variant, the maximum annual include the 37 million Americans who have trol the costs of health care for all Ameriout-of-pocket cost for any individual no health insurance and the roughly 35 mil- cans. Just how that would happen is a matwould be S3.000, while the "generous" lion with substandard insurance—remains ter of considerable dispute on Capitol Hill:
plan would cost the patient very little. But a primary goal for the Clinton team. The the administration plan, once it is revealed,
all three versions of the core-benefit pack- administration also wants to broaden Med- should begin to answer the question. But
age would provide health coverage whose icare to help pay for prescription drugs for the plan isfiendishlycomplicated—which
dollar value appears to be somewhat high- theelderly, provide some long-term nursing means thatonce it is finalized, Hillary Cliner than the current national average, care; expand the nation's public-health sys- ton will face the selling job of her life.
slightly under SI,500 a year, for private tem, and provide comprehensive insurance
TOM MOIU.ANTHAL
u-ilh MARY
HAGER.
benefits for the chronically mentally ill. The HICHTHOMAS
medical insurance.
and ELEANOR
CLI FT HI
Washington
N E W S W E E K : M A Y I T . 19;i3
r
37
�NATIONAL
AFFAIRS
IRA WYMANTORNEWSWEEK
A lid on costs through cooperation and rationed technology: An ambulance in front of St. Mary's Hospital in Rochester
Experimental States
A few local governments have their own ideas
on health-care reform—and some already work
tate and local governments have high
hopes for Bill Clinton's health-carereform package. Yet they're hardly
sitting on their hands waiting for the
White House to deliver. In fact, states
have long been their own laboratories of
reform for health policy. Massachusetts
and Oregon both passed programs for universal coverage in 1988, although legal
and political obstacles have prevented implementation. Earlier this year Minnesota lawmakers resolved to cut the growth
rate of health costs by 50 percent over the
next five years. Maryland recently approved new restrictions on providers who
charge out-of-line fees.
It's not clear how these fragmentary efforts will dovetail with the administration's plan. State officials will bear the
brunt of administering whatever system
eventually emerges from the White House
and Congress. But these officials say they
have no time to waste. Clinton wasn't the
S
38 NEWSWEEK : MAY 17, 1993
only politician to run for office last year
promising reform. Many of his former colleagues, the nation's governors, are under
enormous pressure to overhaul
the system. "The cost of Medicaid
is breaking our back. We have the
great unmet need of people who do
not have coverage," says Colorado
Gov. Roy Romer, chairman of the
National Governors' Association.
" We are at a crisis point." Here's a
closer look at how three communities are holding the line on costs:
Teamwork
in Rochester, N.Y.
Clinton called the city a model for healthcare reform. Per capita insurance costs are
one-third lower than the national average.
Just 6 percent of the metropolitan area's
1 million residents are uninsured—compared with about 15 percent nationwide.
Rochester's system, which began to take
shape in the 1930s, works in part because
one major insurer, Blue Cross-Blue Shield,
dominates the local market and keeps costs
down. The city's two leading corporate
citizens—Eastman Kodak and Xerox—put
their employees in community insurance
pools. But the real secret to Rochester's success may be cooperation among its hospitals.
Community planning boards tightly control
capacity: no new beds have been added since
the 1960s. As a result, the area's seven nonprofit hospitals are more than 90 percent
full (compared with the 67 percent
national average). They've kept a
lid on costs by avoiding duplication
of expensive services. Only two institutions perform open-heart surgery; one handles all neonatal intensive care. State law requires
rationing of high technology only
two Rochester hospitals have
MRIs. The scarcity of resources
forces hospitals to share patients with their
would-be competitors.
The system isn't working perfectly.
Some doctors complain that HMOs aren't
giving patients enough access to necessary
tests and specialty care. Capacity has become so tight that some hospitals have occasionally been forced to close emergency
rooms. Moet worrisome, though, is that all
the belt-tightening hasn't put a choke hold
�searching for an information system to
provide answers.
The winner was MediQual. a Worcester,
Mass., firm founded by an enterprising
internist and a lawyer. Its computer
program, called Atlas Ledger, uses information culled from patients' charts to assemble a detailed analysis of cost and quality. Its database, derived from 550 hospitals
where the program is used, allows it to
identify institutions that deliver sen-ices
efficiently. For example, MediQual found that the cost of a
coronary bypass varies from
$21,160 to 880,000.
Officials of MediQual insist
Universal Coverage
that cumbersome hospital rouin Hawaii
tines—not greed or incompetence—are the main reasons
The Waikiki sunsets and
prices go up and quality goes
pristine beaches are not all that
down. Senior vice president
make Hawaii a paradise. An esKevin Blank uses the hypotimated 98 percent of the state's
thetical example of a patient
1.1 million residenU have access to some form of medical
who arrives at an emergency
insurance. In 1974 the state
room with pneumonia. The docrequired all employers to oftor orders a sputum test to defer coverage to workers—even
termine whether the pneumopart-timers putting in as few
nia is viral or bacterial. A nurse
as 20 hours a week. The Prehands the patient a cup and
paid Health Care program
asks for sputum. The patient,
mandates a generous set of
probably disoriented, doesn't
benefits, from routine checkknow or can't remember the
MATTHEW THAYER
ups to in vitro fertilization. The
difference between spit and
other natural wonder is that Health-care paradise? Preparing for surgery in a Maui hospital
sputum, and provides spit.
Hawaiian health care also costs
Because the lab test is not
less. Since nearly everyone is paying in, ly since 1988. Even health director Lewin definitive, the physician prescribes a wideinsurance rates are spread more evenly, agrees: "We're still part of the American spectrum antibiotic. But if the patient
lowering premiums. " Nobody's out, every- health-care system," which often serves up has, say, Legionnaire's disease, which rebody's in," says Dr. John Lewin, director of pricey care. It's a lesson Lewin recently quires a specific antibiotic, the patient
the state's Health Department. "It's abso- learned firsthand. His son needed a cyst could get worse or even die." Whose fault is
lutely crucial." Total health-care spending removed—a simple procedure he used to that?" Blank asks. "The physician for orlast year, 14.4 percent of GDP nationally, perform for about $200. The bill was dering the test? The hospital board? Or the
was 8.1 percent in Hawaii.
$2,000. "Even in Hawaii," says Lewin, "we nurse? . . . Quality in any industry is a
How does Hawaii cover more with less? need national health care."
system problem, not an individual one."
One reason for the success is that state
The Orlando coalition required hospitals
legislators acted 20 years ago, when there Controlling Costs
to install MediQual as a condition of doing
were fewer legal barriers to reform. The in Orlando, Fla.
business. The results are startling. Orlansame year Hawaii overhauled its system,
do Regional Medical Center, the area's bigCongress passed the Employee Retirement
In the mid-19808 Walt Disney Co., Gener- gest, saved $4 million last year and was
Income Security Act of 1974 (ERISA). The al Mills Restaurants and Orlando's other able to reduce obstetrics costs by 10 permeasure was designed to protect workers' major employers were struggling to con- cent. The coalition has joined forces with
pensions, but it had the unintended effect tain mushrooming health-care expenses. consumer cooperatives in Sarasota. Tampa
of making state-level health reform more Because most were self-insured, they had and Miami to form a 780,000-member allidifficult. It opened the way for big compa- few middlemen to blame. So together they ance that may drive costs down even more.
nies to establish self-insured health plans, formed the Central Florida Health Care The strength-in-numbers approach has
exempting them from state insurance reg- Coalition, a consumer cooperative. Its col- also found its way into Florida's new
ulations. About 65 percent of the nation's lective purchasing power (it now includes Health Care and Insurance Reform Act,
employers are now self-insured.
120,000 employees) forced local hospitals signed by Gov. Lawton Chiles on April 29.
As in Rochester, another major factor in to get serious about cutting costs. As coali- It sets up 11 "community alliances" across
Hawaii's success is the dominance of two tion officials began studying financial the state to negotiate costs with healthbig insurers. With 623,000 patiente, Ha- data provided by hospitals, they were care providers. "We based it on what is
waii Medical Service Association (HMSA, struck by how little insight the numbers happening in Orlando," says Lisa Hutchethe local Blue Cross-Blue Shield) controls offered into the actual quality of the medi- son of the newly formed Agency for Health
the field of private, fee-for-service medi- cal service. There seemed to be no way to Care Administration. "They were our
cine. Its negotiating clout helps keep phy- determine how patients fared at one insti- proof that this really can work."
sician income at 80 percent of the nation- tution versus another. Billing data showed
BILLTURQUK
with ANDREW
MURR in Hauau.
al average. Kaiser Permanente, an HMO a patient's diagnosis, length of stay and
DEBRA ROSINBIRG
in Rochester, PETER
KATEL
with its own doctors, also exerts rigorous the cost but little else. The coalition began
in Miami and MARY HAGIR in Wathinfion
on costs. Blue Cross premiums have still
increased an average of 11 percent a year
over the last five years, not much lower
than the 14 percent endured by the rest of
the nation. Organ transplants, AIDS and
expensive new drugs add to the tab. Planners blame the proliferation of outpatient
treatment. Current laws regulate hospitals
but not doctors' offices. There are now seven additional MRIs in private practices.
"It's like a balloon," says Tim McCormick,
president of Park Ridge Hospital. "You push in on one side
and it comes out on another."
cost control. Most important, the twin giants set insurance premiums by lumping
workers into "community rating" pools.
The risk-sharing system protects small employers from ruinous cost increases.
Still, paradise isn't perfect. New immigrants and some indigent Hawaiians fall
through gaps in coverage. Medicaid costs
have doubled in the past two years, and
premiums at Kaiser and HMSA have increased an average of 12.6 percent annual-
NEWSWEEK . MAY IT. 1993 39
�NATIONAL
AFFAIRS
PUBLIC LIVES
Bv
Joe
Klein
Time to Step Back
The com pound is fortified and surrounded, would be well advised to low-key the task force before it
with access controlled by federal agents. announces anything embarrassing, then propose a legislaNo one is sure what is going on inside, but tive agenda to address some of the worst excesses of the
there are dreadful rumors. A mutually current system. At the top of the list wouid be insurance
reinforcing, cultlike atmosphere prevails: reform—eliminating the tons of paperwork by developing a
endless, elaborate, ever more complicated single claim form and limiting the industry 's ability to pick
fantasy scenarios are spun by addled, and choose whom it insures—as well as malpractice reform.
CARE
sleep-deprived true believers. There is His agenda should also guarantee rudimentary coverage for
exhilaration. The Lord's work is being every uninsured child in the country and pay for it by
done. But the end result may well be self-immolation. The progressively taxing some of the medical benefits received
president must step in. He simply must get control of the by those lucky enough to have plush corporate plans (as
Bush budget director Richard Darman proposed, but never
health-care policy-planning process.
Actually, it wouldn't be such a bad idea if Bill Clinton pursued). And, finally, it might allow hospitals to reduce
went back to his own personal Square One on this issue. Way j duplication of services by sharing some high-tech equipback in 1991. at the dawn of the presidential campaign, he i ment and processes (currently an antitrust violation).
was confronted with one opponent (Bob Kerrey) who was I Big bang: Having addressed the most obvious problems,
absolutely convinced that a Canadian-style single-payer sys- Clinton could then encourage the states to experiment with
tem was the way to go and another (Paul Tsongas) who saw various universal-care schemes. He could set up a system
like the very innovative entermanaged competition as the
prise-zone "challenge grant"
one true path. Clinton agreed
legislation he proposed last
that something had to be done,
week—the states would be
but there were a lot of interestasked to compete against each
ing ideas out there, and maybe
other for federal funding. They
some experimentation should
could propose any sort of sysbe encouraged on the state levtem: managed competition.sinel to see what worked. This
gle-payer, the progressive tax
was condemned—inevitably,
credits suggested several years
and unfairly—as wishy-washy.
ago by the Heritage FoundaClinton responded with a more
tion or some entirely new idea.
specifically wishy-washy plan.
The best five plans would be
It's been downhill eversince.
funded and monitored; those
Access to health care is
that showed promise would bea terrible problem for some
come the basis for a national
Americans, but not for most—
K J H N KU'AKA-NKWSWEKh
system. (A similar competition
although polls showalmost evHealth-care hostage: Clinton mulls his options could be organized for longeryone is concerned about
term health care.)
"health security," a larval
None of these ideas are new. In fact, the Advisory Council
White House buzzterm. Soaring health-care costs are also a
problem, but different from "access" and with potentially on Social Security—a bipartisan commission required by
contradictory solutions (it's rather amazing, by the way, j law to report to the president quadrennially on the status of
that Clinton has exempted Medicare, where costs are rising \ national entitlement systems—came to similar conclusions
fastest, from consideration by his task force). The question of i in December 1991. The Bush administration, ever averse to
how to provide more health care for less money is, obviously, jcreative governance, ignored it." I was supposed to brief the
a worthy one. But it's probably too multifarious, too enor- j president," says Deborah Steelman, the council chair, "but
mous to be "solved" all at once. It may require careful it was canceled." With Bill Clinton, the problem seems the
experimentation rather than a massive, Manhattan Proj- j exact opposite: the too-intense desire to find an immediate,
ect-style effort that will mandate universal coverage and a big-bang solution to a problem that might not have one. It is
national benefits package and a national health-care budg- i possible that Clinton will see the threat to his presidency in
et, cost about half as much as the Pentagon and force other so mammoth a roll of the dice and scale back, but not very
worthwhile initiatives onto back burners (or off the stove). >likely: the need for total health-care overhaul is. according
The Waco metaphor is fanciful, of course, but this presiden- i to one top adviser, "dominant in his thinking about everycy increasingly does seem a hostage of one extremely com- ! thing." But, the same adviser insists, no final decisions have
plicated issue.
] been made. Good. Then it may not be too late to step back,
The president's first, incremental impulse was sounder: regain some perspective. A dose of the creative, wishymake some basic reforms, then try a lot of things and see washy pragmatism that marked his early candidacy might
what works before moving to a universal system. Clinton soothe the late-night fevers, burning bright.
HEALTH
40 NEWSWEEK : MAY 17. 1993
�NATIONAL
AFFAIRS
The Reluctant Star
Attorney General Janet Reno talks about her first
crisis, her vision and her sudden celebrity
anet Reno arrived in Washington just on political approval. You push through
two months ago, but already she is the things by [saying]: this is the cost involved,
most talked-about cabinet member in this is the benefit I hope to achieve and
town. The attorney general walks to work, these are the reasons I feel that way.
rides the subway and types memos into her
computer herself. Reno still hasn't found
But doesn't personal popularity help make
time to properly decorate her Washington you more effective politically?
apartment, but her offices on thefifthfloor
Sure, it's important. But it's very imof the Justice Department are adorned portant that, in the old-fashioned sense
withflowersshe has received
from people who admire her
stand-up handling of the Waco
affair. Last week Reno spoke
with NEWSWEEK'S Melinda Liu
and Bob Cohn. Excerpts:
J
NEWSWEEK: After the Waco
tragedy you cited concerns about
the children's welfare as a primary reason for using tear gas.
Then there was disagreement
over the evidence of abuse. Do
you feel vindicated by this week's
new reports suggesting children
were routinely beaten at the
Branch Davidian compound?
R N : I don't think the issue
EO
is vindication. My whole approach is not to pass judgment.
If there's anything we could've
done better, I'd like to know
that. If not, I'd like to make
sure we develop guidelines we
can follow in the future.
We have to address some outstanding
cases and report to the people and answer
as many questions as we possibly can. Then
put that behind us and try to establish a
principle that we are accountable to the
American people. I can't comment on the
past, but I'm impressed with the lawyers in
the department: [by] their writing ability,
their advocacy ability, their judgment,
their powers of analysis [and] most of all
by their dedication to their country—it
sounds corny, but they just simply care.
One issue you face is prison overcrowding.
You've talked about rethinking the mandatory
sentencing for low-level drug offenders. But
can you overcome the get-tough-on-drugs
mentality In this city?
I'm trying to do what I think is right.
Dangerous offenders should be
put away. I want to focus on
white-collar thugs, who steal
people blind through major
scams and fraud. I want to make
sure we have enough prison
cells to house these offenders.
If [convicts] have a drug problem, offer them the carrotand-stick approach: treatment
or punishment. I think that
approach best achieves my
No. 1 goal, which is to prevent crime.
You used to keep a little black
book to track cases that interested you and to ensure that they
progressed. Do you still keep one?
.1
The little black book got
too small. I've got a big notebook now.
One personnel issue you inherited is the report alleging ethical
lapses by FBI Director William
THEO WESTENBERGER FOR NEWSWEEK
Sessions. Have you had a chance
The night after the fire, you
to speak with Judge Sessions yet
said you'd never felt lonelier. Talk of the town: Tm trying to do what I think is right
about his future?
Does the tragedy still haunt you?
No, I haven't. We're trying to schedThat will be part of my life for all of of the phrase, I don't let it go to my head.
ule that.
my life.
Recent press accounts suggest you spent
You've become a celebrity in the last few most of your time in south Florida wrestling
You've got 120 lower-level federal court
ts. Are you surprised at how Washington alligators and paddling the Everglades. Have judgeships to fill and 94 U.S. attorneys. Can
confers stardom on officials who simply stand the media mythologized your past?
you use those slots to fulfill your agenda at the
up and take responsibility?
I was never accused of wrestling department?
I don't know. I think people just like
people to be accountable. For the 15 years
that I was state attorney in Dade County,
sometimes I was popular, other times I
wasn't. You can be praised and you can be
damned. The important thing is to remember you've got to be accountable to the
people. The issue is your knowledge that
you tried to do the right thing.
alligators.
The president has indicated he'll take
the suggestions of the senators of his party.
Actually, that was your mother.
What I've tried to do is review the senators'
I'm going to write a revisionist history of suggestions and talk to the candidates. I've
Janet Reno... Most of the stories are true, been impressed. I know the president and I
but I never swam in the Tamiami Canal share his deep concern to achieve excelwith water moccasins and alligators. I lence and diversity. What I hope to build is
swam in the same water with alligators, a real team, where U.S. attorneys don't go
but not right in the canal.
do their own thing and Justice doesn't tell
them what to do, but that we work together.
Can you trade on your high-profile status to
One problem you Inherited at the Justice
After the Waco tragedy, some hours passed
through difficult items on your agenda? Department Is low morale In the wake of past
before you spoke with the president You said
You don't push through things based scandals. How will you reverse the trend?
42 NEWSWEEK : MAY 17, 1993
�NATIONAL
AFFAIRS
you were "still learning" who's supposed to
call whom. Who does call whom?
[That day] I knew the president had been
informed and I felt he would want me to be
accountable to the people [to] explain why
I'd done it. Perhaps I should say now I know
what the press thinks I should do [laughs].
But I feel very comfortable with the president. In this experience, I have an even
greater admiration for him.
Vou've always been known as a children's
advocate.
Every way you look at it, an investment
in children is going to pay off. For every
dollar we invest in prenatal care we save
three dollars in health-care costs in two to
three years for treatment related to low
birth weight. Working with dropouts at 12
and 13 is too late—they'd already formed
inferiority complexes, they didn't have
self-respect. I became convinced that we
have to approach crime the way you approach parenting; you've got to have punishment that's fair, objective, that's carried
out when it's threatened. You've got to let
kids know that poverty, social ills of the
world, are no excuse for putting a gun up
against somebody's head.
What's your reaction to the crayon drawings by the surviving children of the Branch
Davidians—the rainbow, the house with bullet
holes in the roof.
".4
i
It makes me want to understand what we
can do to address the issues of cults and a
whole range of issues that go beyond cults.
One of the most touching things I saw was
in a school in Dade County once. One class
built a model of their community, [where]
there were abandoned cars and shabby
lawns and unpainted houses, and people
sleeping on the streets. But if you looked at
how they envisioned it, the lawns were
clean, there were trees, the houses were
painted. [They wrote]: I want my neighborhood to be a place where there are no more
guns, no more shouting, no morefights,and
people don't hurt each other anymore.
You had a listed phone number when you
were a prosecutor in Florida. Will you ever be
able to do that in Washington?
At the rate I'm going I probably should
just give it out to everyone because I'm
never at home.
We're told you have more than 100 Interview requests. How do you deal with all the
attention?
I'm a person just like anyone else. I can't
let it go to my head. I just try tofigureout
what the right thing is, then try to do it.
We hear you Just laugh out loud when told
of these requests.
I can't imagine why anybodyfindsJanet
Reno all that interesting.
More Gold in Them Thar Hills?
Yes, but don't load up the station wagon yet
hese days, Frank Cox, 60, rises with
the sun in the Sierra Nevada foothills.
He downs two or three cups of coffee at
his campsite by the Stanislaus River, then
gets to work—^digging for gold. Cox, a retired construction worker from Petaluma,
Calif., is a ninety-three'er: one of a new
group of heirs to the 1849 gold rush. Cox is
mining in a canyon where 3,000 prospectors amassed large fortunes in gold more
than a century ago. He wants
to get enough of the precious
metal to buy an acre or two in
Arizona. So far he hasn't seen
much "color," but he's not giving up. "It's a great feeling,"
he says about striking gold.
For most Califomians, the recent end of a six-year drought
means guilt-free baths; but
prospectors see more at the end
of the rainbow. Drawn by the
lingering appeal of the Mother
Lode, thousands of gold diggers
have poured into old mining regions with hopes in their hearts
and metal detectors in their
hands. Some are retired folks;
others are unemployed plumbers and builders fleeing
the recession. The ninetythree'ers believe the runoff from heavy winter
snows will wash down
more gold from the Sierra
Nevada mountains than usual. Even so, there's little reason to expect pay dirt. Generations of gold diggers have picked
over the same riverbeds since
1849; any new bullion is likely to
be a sprinkling of dusty "flour gold.
Still, there are enough stories to keep
the prospectors coming. Ralph Shock, ~
who conducts gold-mining tours out of
Jamestown, insists that just the other day
somebody brought in a nugget worth
$5,800. On Christmas Day last year, workers at the Sonora Mining Corp. discovered a
60-pound hunk of gold appraised, in its
rocky matrix, at $3.5 million. Since then,
prospectors have descended on nearby
Woods Creek to pan for gold. Sonora officials have tried to dampen gold fever by
patiently explaining the difference between river gold and their multimilliondollar crystalline gold piece, a product of
hard-rock mining. Using earthmovers, Sonora dislodged 57 million tons of rock beforefindingits bonanza.
Most prospectors have more modest
T
means. Nicholas Skuce Sr. of Jamestown's
Columbia Mining & Equipment recommends novices start out with a book and
perhaps a shovel and pan. "No sense going
out and spending money foolishly," says
Skuce. Most amateurs use plastic pans, not
the traditional metal—they're lighter and
the gold shows up better against the green
or black plastic. Others use dredging equipment to vacuum river bottoms.
JAMES D. WILSON-NEWSWEEK
Panning out: Prospector
Robert L. McDaniel
Area of
Gold Rush
This being California, some
of tl prospectors view
Of the
gold digging as a matter
of lifestyle. Standing in rubber boots
CALIFORNIA
in a gold-outfitting
shop in Jamestown,
Bay Area electrician John Wilcoxson knows that half of what
he hears is hype. But, he says, gold digging is
"relaxing"—an optimistic description of
an activity involvingfreezingwater, bouts
with rattlesnakes and the threat of carpal
tunnel syndromefromall the pan swirling.
Of course he'd love to find a big nugget, but
his other goal is to "slow down and switch
gears," says Wilcoxson. But gold country
has changed since the old days. Upscale
eateries like Michelangelo Ristorante Italiano and the Jamestown Coffee Emporium have moved into the area. How about a
cappuccino, darling Clementine?
.
PATRICIA
KING
in
Jamestown
NEWSWEEK : MAY 17. 1993 43
�Cashing In on Reform
A health-care stock expert picks places to profit
ou think you have a big stake in ceuticals have been the most profitable inthe health-care revolution? Consider dustry in the world. [Now] I think it's finalWall Street, where billions of dollars ly hitting the thick heads of the industry
are riding on the reforms under discussion executives . . . that me-too drugs are not
in Washington. Larry Feinberg thinks he the '90s; the future is naturally occurring
knows where some of that money will end biologicals [developed from substances
up; he named his new medical-industry found in the human body]. During the next
investment firm Oracle Health Asso- 12 months [well] see a dramatic acceleraciates. And Feinberg does know the busi- tion in buyouts or linkages between the
ness from the ground up. He started as a drug companies and the biotech compastock boy in his father's Vermont drug- nies. American Cyanamid's pending mergstore at 13 and opened his own store at er with Immunex is really a case study.
19. Over the last four years he racked Here's a company spending hundreds of
up annual returns averaging
43 percent. NEWSWEEK'S Jolie
Solomon asked Feinberg for
some tips:
Y
erage of $15,000 a year on hospital costs.
People that have the disease—300,000 in
the United States alone—are clamoring
for [it]. We are talking about potentially a
billion-dollar drug—and there's a whole
line of breakthrough products in biotech.
Also, I think we've seen the bottom [in
stock prices].
Isn't biotech a scary market?
Probably three quarters of these companies are speculative and scary. I'm getting an incredible number of phone calls
from physicians who are . . . disgusted
with their difficulty in successfully investing in the industry. They used to
be able to treat someone with a new product, realize it was exciting and go out
and buy [the stock]; they were on the front
lines. Now Wall Street is a couple of steps
ahead [or] has huge pools of capital that
can pummel their stock.
Some HMO stocks have been hit
hard lately. But aren't they the
wave of future?
The HMOs have been the
leading edge of managed care.
But the major function of an
HMO is organizing health-care
providers and payers. I think
FEINBERG: Make no mistake,
that's going to be done by rethe goal is to squeeze some of
gional networks and hospitals.
the profits out of the industry
HMOs are either going to be
and redistribute it to the public.
folded into these networks,
And there is tremendous overor they themselves will have
capacity in the health-care into be buying hard assets.
dustry that has to get squeezed
Also, [many] HMOs focus on
out. But whenever there is a
commercial enrollment, Forradical restructuring of any intune 500 companies, younger,
dustry, there are going to be
healthier people. They're going
winners and there are going to
to [have to] start taking in sicker
be losers. I think we're at the
people. Wall Street isfixatedon
point where we're beginning to
potential enrollment growth,
[identify] them.
but I don't know if it's going to
Name a winner.
be good enrollment growth.
Some HMOs are structured
I've owned Medco Containdifferently. Companies like
ment for many years. Medco
FHP and Coventry already own
was started by a man named
SHONNA VALESKA
the assets: hospitals, doctors,
Marty Wygod, who is really one
they have the network. But all
of the fathers of the competi- Betting on biotech and an aging population: Feinberg
HMOs, even the most leading
tive environment in health
care. His mail-order prescription-drug millions of dollars a year on R&D with very edge, are going to experience some deteriocompany did about S25 million in about little to show [for it]. And here is Immunex, ration in profit margins.
1983; current sales are running at $2.5 bil- spending a fraction of that, with a whole
lion. Medco negotiates with drug compa- pipeline of potentially blockbuster drugs.
Does all this mean that spending on health
nies, buys in bulk and passes the savings
care will be cut overall?
on to clients like HMOs or Fortune 500
Health-care spending in the United
Who else is hot?
companies. Medco decides, say, to buy
Well, I took a very large position in States was$838billionlastyear.It'sgoingto
Tagamet, not Zantac [for ulcers]. The cor- Chiron, which [makes] beta-interferon. be over $900 billion this year. Clinton's plan
poration will say, "We pay only for Taga- That's a naturally occurring drug that, in for the uninsured [will add to that]. Meanmet." Medco takes advantage of the fact studies, [has shown] dramatic reduction of while, the population in the world is aging,
that there is incredible overcapacity in symptoms of multiple sclerosis... and an and elderly people consume a disproporthe industry—lots of me-too products.
actual reduction of the progression of the tionate amount of health care, which just
disease. This is one of those drugs where makes sense. A lot of people are projecting
Why hasn't that sent a message to drug there is no therapeutic alternative. The that health-care spending will decline to 10
drug would be priced at $5,000 to $7,000 a percentofGNP[from 14 percent] within the
companies?
•
Well, you have to understand, pharma- year, but these patients now spend an av- next few years. I just don't see it.
SOLOMON: The shape of refonn
is stilt vague, so there's lots of
trembling in the industry. Is it a
good time to invest?
NEWSWEEK : MAY 17. 1993 47
�N E W S M AK
The Players Come
to Washington
MARK REINSTEIN-PHOTOREPORTERS
Humoring Hollywood: Ciinton
H
lere's today's " Hoi lywood on
the Potomac" quiz. Guess who
attended all of these recent
Washington events: a Senate
hearing on gays in the military,
the White House correspondents' dinner, a one-on-one supper with Janet Reno, the Democratic Congressional Dinner, a
Georgetown dinner party with
three senators. A free tour of
the C-Span studios if you correctly picked... Barbra Streisand, First Kibitzer of the Clinton administration.
No merger has been announced, but there's clearly a
joint-venture deal in the works
between America's dream factories—the one that sells entertainment and the one that sells
government. Washington comedy movie "Dave," in which
Kevin Kline plays a presidential doppelganger, is hot—even
if the real-life drama "BiU" is
getting so-so reviews. Washington journalists, who vaunt
their skepticism even as they
vie with stars and pols for air
time, are eager to see this new
deal up close. Nostra culpa:
NEWSWEEK'S guests at the correspondents' dinner included
Michael Douglas, "Dave"director Ivan Reitman and—you
guessed it—Streisand.
The White House Mess isn't
Mortons, but it's become a chic
watering hole for a new generation of Hollywood liberals who
haven't had a president to hang
around with since they made
Serious Money. Among them:
Barry Diller (QVC home-shop-
New Deal: (Clockwise
from top) Streisand, Colin
Powell; Diller, Diane von
Furstenberg; model Vendela,
Vanity Fair's Michael
Caruso; Sigourney Weaver,
Sen. Paul Simon
�N E W S M A K E
R S
ROBERT TRIPPETT-SIPA
Cozying up: The
president at a fund-raiser
last year with Women
Beatty, Annette Bening
(front); Rhea Perlman,
Danny DeVito, Jack
Nicholson, Michelle
Pfeiffer, Geffen; Hillary at
correspondents' dinner
e i
BOB McNEELY—JB PICTURES (ABOVE). ROBERT TRIPPETT-SIPA (INSET)
ping channel), Mike Medavoy
(TriStar Pictures), Gary David
Goldberg ("Brooklyn Bridge")
and, of course, longtime Clinton friends from Arkansas, the
Bloodworth-Thomasons (" Evening Shade"). Billionaire mogul David Geffen, who says he's
looking for a home in the capital and perhaps a job in the administration, is already phone
pals with White House chief of
staff Mack McLarty.
Every president listens to—
or at least humors—the Hollywood crowd. Reagan had his
Charlton Heston, Bush his Arnold Schwarzenegger. But the
Clintons seem more systematic
about it. Entertainment-industry money and influence
helped get Clinton elected and
can help secure his left flank
inside the Democratic Party.
And he can use Hollywood's
sales skills to peddle his economic and health-care plans.
Clinton's handlers have re-
74 NEWSWEEK : MAY 17. 1993
sponded to Hollywood's lobbying on
some issues: abortion rights, gays in
the military, AIDS
research funding.
But the Clintons
have become wary
of appearing too
cozy. White House
aides canceled the
Party chic:
'Ragin Cajun' Carville with Mary
president's apMataUn, Michael Douglas (left)
pearance at the recent Washington
JEFFREY MARKOWITZ—SYGMA
premiere of
spondents' dinner. And, ironiClinton Story. Invited to the
"Dave." Aides vow to cut out
celeb photo ops and stay-overs White House to give advice on cally, Carville is part of the phenomenon he's dissing. Docuselling health-care reform,
at the White House—though
mentary-film maker D. A.
some heavies—notably GoldHillary has invited Liza Minnelli to be a guest next month. berg—were outraged by the dis- Pennebaker will soon release
missive attitude of Clinton's al- " The War Room," & cinema veri(Streisand, Judy Collins and
te look at the handlers who ran
ways-pungent political guru,
the Bloodworth-Thomasons
Clinton's 1992 campaign. The
James Carville. " I would rate
have already stayed there.)
their egos and their wallets and star of the show? James CarStars and moguls can be a
ville, who agreed to wear a
their ideas in descending orpain. Some don't want input,
wireless mike for the film.
der," says Carville.
just publicity. Others want
But even the "Ragin' Cajun"
more than input: they want to
HOWARD FINRMAN
and
oozed over Douglas at the correMARK MILLER in WathingUm
write, produce and direct The
V\
d,
w
Ji
le
Sf
fo
tw
on
er
th
ed
to
�BOSNI A: TOO LITTLE, TOO LATE?
• • ^% A • & W RD R P R
O L EO T
UNwAN
STHIS s
.. e M
WHY IS
MAY 17.1993
SMILING?
Ross Perot may be the most important force in American politics
�O TO K
UL O
Marching (or tripping)
to history's beat
T
here is nothing like a strong drink or. failing that, a good dose of history
to obliterate pain, fear and doubt. Maybe it's because there's still a vodka
shortage that everyone in Eastern Europe is a histonan these days. National woes and self-doubts are swept aside by recollections, real or more often
imagined, of a heroic past, a nasty habit picked up from the Nazis and their
epic myths of Teutonic knights. The uglier Nazi habit of rationalizing and justifying hatred and butchery with carefully nurtured tales of past wrongs has also
found a new life today, from Bosnia to Armenia.
Journalists and the experts
. .
they trot out to hold forth on
v
the latest catastrophe love history, too. History gives the comforting illusion of
explaining the inexplicable: it smoothly covers over
the utter failure of the selfsame experts to anticipate the upheaval and suffering that they now
portray as the mere march of inevitability.
In the debate over what to do in the Balkans,
history is the all-purpose fortifying agent, guaranteed to rejuvenate uncertain opinions, prejudices
and crotchets with pure essence of truth. Thus do
advocates of intervention invoke the appeasement
of Hitler. Thus do opponents invoke Vietnam.
Quack elixirs generally bear scientific-looking labels, but their active ingredient, upon analysis, of^
ten turns out to be 40 percent alcohol. The his- -tory-besotted belligerents in the Balkans should serve as an example of what
happens to those addicted to the past. It was an inability to shake the memories
of World War I that led to Munich and World War II. It was an inability to forget Munich that led to Vietnam-the link was made explicit when Lyndon Johnson declared he was sending troops to South Vietnam "because we learned from
Hitler at Munich that success only feeds the appetite of aggression." Sometimes,
it is those who cannot forget the past who are condemned to repeat it.
What history does teach us about America's decisions to go to war is a fact
that's both cautionary and instructive: We nearly always send troops abroad
more from emotion and idealism than from realpolitik or a coldblooded assessment of vital interest. Indeed, our "vital interests" usually emerge only in retrospect. It was tales of human torment inflicted upon the anti-Spanish rebels in
19th-century Cuba, so strikingly similar to the atrocities in Bosnia today, that
stampeded America into the Spanish-American War. so unnecessary, as Spain
had already acceded to American demands. It was anger at the loss of American
life aboard ships in the Atlantic that led to the American entry in World War I .
so necessary in retrospect for America's place in the world. And it was empathy
with the starvation and anguish in Somalia that carried American troops so successfully to a place where American interests were, and remain, nil.
"It is difficult for people to think logically when their sympathies are aroused,"
Woodrow Wilson, still hoping for neutrality, lamented in 1915. It also is difficult
when what is aroused is their sense of history. • BY STEPHEN BUDIANSKY
'The Balkans'
history-besotted
belligerents are
an example of
what happens
to those who
^are addicted to
" the past'
:
humanitarian mission in Somalia.
U.S.NEWS & WORLD REPORT, MAY 1 , 9 3
71 9
1
�I O TO K
UL O
CALENDAR
U. S. NEWS
Uneasy vote. On May 23-27. Cambodians elect a new president and parliament. But the Khmer Rouge, refusing to comply with a peace accord,
is trying to disrupt the election.
BCCI leftovers. On May 27. creditors
of the failed Bank of Credit and
Commerce International meet in
London to discuss liquidation of the
bank's assets. With luck, creditors
may get 30 cents of each $1 due them.
Westward Ho. On May 19. a wagon
train leaves Lanham. Neb., on a trip
marking the 150th anniversary of the
great migration of 1843. the first
major movement of pioneers along
the Oregon Trail.
THE GRANGER COUf CTION
DATABASE
Length of Oregon Trail: 2,170
miles: average time to travel it:
months; people who went west on it
in 1843: nearly 1,000: between 1843
and 1866: nearly 350,000
Why wagons moved in long
columns: to stir less dust; why
pioneers circled their wagons at
night: to corral livestock
Length of a typical wagon: 10 feet;
width: 4 feet; speed: 1 mph; miles
traveled on a good day: 16
Frequency of pioneer graves along
the Oregon Trail: 1 for every 500 feet
Times the pioneer family of Laura
Ingalls Wilder moved before settling
in De Smet, S.D.: 6
Advice Horace Greeley gave in the
1850s: "Go west, young man and grow
up with the country": what he called
the westward migration in 1843:
U.S.NEWS & WORLD REPOCT. M-AY17.1993
MAYBE WE SHOULDN'T THROW AWAY THE KEY
It was 19-year-old Keith Edwards's first offense, but the law was plain: Possessing 50
grams of crack cocaine means an automatic 10-year prison term. The judge, a
Connecticut Republican and former prosecutor, complained that Congress had
forced him "to send a young man like you to
jail for 10 years for a crime that doesn't deserve
more than three or four."
Such cases —small players in narcotics deals
getting big penalties — are causing politicians to
rethink the rigid sentencing laws created in the
1980s. Attorney General Janet Reno said last
week that some mandatory sentences may imprison people who could be safely released.
Congressional crime experts, from liberal Democrat Rep. Charles Schumer of New York to
conservative Republican Sen. Orrin Hatch of
Utah, agree the issue should be reviewed.
The most likely compromise would exclude
NATIONAL
from minimum terms first offenders in nonviolent crimes. That would affect many of the 9.000
federal drug defendants sentenced to manda- Reno. Rethinking an '80s policy
tory terms each year, a trend that this week
pushed the federal prison population over 85,000. But even if laws are eased, no one
expects a reversal of the get-tough-on-crime movement. Warns Paul McNulty of the
First Freedom Coalition, a conservative anticrime group: "Now is not the time for
judges, prosecutors or politicians to back off on the war on drugs."
JEFTRE> MacMILLAN - USNaiW
TIIK m\
isnnirr O
N
iron; mi irv
CLINTON BACKERS, THE CAMPAIGN RARITIES
Bill Clinton's coattails, if he had any, vanished in those first 100 days. While the
president hobnobbed with Barbra Streisand and Michael Douglas at a black-tie
Washington dinner, Texans handed his party a stinging rebuke in the race for
Treasury Secretary Lloyd Bentsen's Senate seat. Bob Krueger, the Democrat
appointed to fill the job temporarily,finishedsecond with only 29 percent of the vote
and will be the clear underdog in a June runoff against the GOP front-runner. State
Treasurer Kay Bailey Hutchison. Overall. Republicans won 57 percent of the vote
and Democrats 40 percent. The only candidate who defended the president's
economic programs, Jose Angel Gutierrez, got 3 percent of the vote.
In Wisconsin, Democrat
Peter Barca won a race to
fill Defense Secretary Les
Aspin's House seat but
only by a 1 percent margin
that may be subject to recount. Like Texas's Krueger, Barca refused to support the Clinton economic
program. In a heavily GOP
district in Ohio, Republican Rob Portman routed
his Democratic foe with
this pitch: "When I think
about the big issues, I try
to think about them the
way George Bush would."
Front-runner. Texas Treasurer Hutchison
�O S CE Y •
N O IT
BY JOHN LEO
A controversial choice at Justice
ani Guinier. the law professor named to head the
Justice Department's civil-rights division, is President Clinton's most startling appointment to date.
Early noises in the press say that the Republicans are
thinking of making hay with the nomination. But there is
more at stake here than a chance to do some partisan
Borking. Both parties should take a close look at this one.
Guinier, 43, is not the mainstream activist Democrat
we might have expected to get after 12 years of Republican control. For one thing, she does not share the goal of
a colorblind society. She is not an integrationist. She is
not much interested in individual rights
but rather in "an empowerment agenda" of group rights, group entitlements and group consciousness.
She is dubious about black politicians who get elected with white
votes. "Authentic [black] leaders
are those elected by black voters,"
she says, whereas other leaders
(presumably inauthentic) have to
appeal to whites or are handpicked by the establishment.
In two long legal articles published in 1991, one in the Michigan
Law Review, the other in the Virginia Law Review, Guinier strongly implies that whites are basically
a racist political monolith.
She says —no implication here,
just a flat statement —that America's electoral system of majority
rule is illegitimate because it is
founded on the prejudice of intransigent whites (a "permanent
majority hegemony"). So she
wants to limit majority rule. She favors "proportionate interest representation for self-identified communities of interest."
Does this mean converting America into something resembling a European-style electoral system? It seems so.
Guinier acknowledges that her plan "arguably weakens
the two-party system." Elsewhere, she says that coalitions
formed by the new electoral splinter groups "might ultimately promote minority political parties." What she
doesn't say is that the political party that just appointed
her might then break up rather quickly.
Tribal rights. These are very strange views for a civilrights chief to have. Civil-rights strategy has changed many
times over the years, but it is safe to say that the Justice
Department's division has not yet come under the sway of
anyone who wants to toss out America's electoral system,
replace it with race-based proportional representation and
then, perhaps, settle down to splinter-group politics in
which each tribe has its own political party.
But blacks are only 12 percent of the population. How
could blacks, or a black party, hope to succeed by going it
alone? Simple. Guinier wants a minority veto over some
L
US^EWS & WORLD REPORT. MAY 17.1993
majority decisions, and she talks of using the Voting
Rights Act to ensure equal prospects of political satisfaction. Disadvantaged minorities should have "a voice that
dependably produces policy satisfaction through the political process." At one point she says that "democracy as
majority rule is not self-defining. It could mean control of
issue outcomes."
Vetoes? Guaranteed satisfaction? Controlled outcomes? These are certainly strong views. Let's just say
that Guinier does not seem to get the hang of democracy.
And her plan for rearranging American democracy opens
many cans of worms. Who gets to define which
minority groups deserve government' :
protected chances of satisfaction?
Abigail Thernstrom. author of
"Whose Votes Count?" asks. "Why
aren't David Duke supporters a 'minority' group? Or vegetarians or
flat-earth types, or Nazis? . . . Why
is race the characteristic that really
counts?" In answer to this sort of
objection. Guinier writes: "Fringe
groups with illegitimate preferences would be represented, but if
their preferences prevailed, the
resulting legislation would be vulnerable under existing constitutional analysis." Good grief.
It's a dangerous roll of the dice
to tum the civil-rights division
over to Guinier. Existing law
and court decisions give the Justice Department enormous latitude to define whose votes are
"meaningful" and whose votes
"fully" count. By pressure and
litigation, far-out views can be
turned into policy much more
quickly and easily than in the legislative arena.
Katharine Butler, professor of law at the University of
South Carolina, says that the head of the civil-rights division "has very extensive control of policies, largely beyond the review of courts and the scrutiny of the public.
She would be in a very good position to redefine what
democracy is." Even substantial change in the electoral
system might be possible. Proportional representation of
designated minorities might seem like a pie-in-the-sky
scheme, but in fact it is a live issue in some civil-rights
circles. As head of the civil-rights division, wouldn't Guinier try to tum it into policy?
Even more disturbing is what this nomination says about
the president and where he's going. Why name a civil-rights
chief who seems so far outside the mainstream? Unlike
Guinier, the civil-rights mainstream is integrationist, wants
a colorblind society and rejects a world where fixed, racially
defined groups get a fixed share of the pie in proportion to
their numbers. Her vision of America is something that
confirmation hearings had better explore.
•
:
UJUSTRATOft BY BONNtt
19
�W S I GO W IP R
AH T N HS E S
N
U.S. COURT may try Iraqis sent to kill Bush in Kuwait
NORTH KOREA dispatched three divisions to Chinese border
WHY CUOMO ruled himself out for the Supreme Court
TAYIOH JONES FOB USft*WW
• Kamikaze killer. Members of the 17member Iraqi death squad assigned to
kill George and Barbara Bush during
their visit to Kuwait last month may be
tried in this country. If an FBI investigation confirms the plot, the United States
could request-and Kuwait would almost certainly agree to-the extradition
of the suspects. Well-placed sources
have told U.S. News that members of the
assassination team, which was trained in
a camp outside Baghdad, were not freelance terrorists but were acting on Saddam Hussein's direct orders. The
sources say the Kuwaitis uncovered the
plot after an anonymous tip led them to
a car booby-trapped with explosives. It
was supposed to go off and kill the
Bushes during the ceremony celebrating
the country's liberation. The bomb was
so well concealed that Kuwaiti intelligence agents had to ask the would-be
assassins where in the car they had hidden it. The Iraqis also had a fallback
Texas Sen. Bob Knieger
plan: A kamikaze killer wearing a hidThanks but no thanks
den belt loaded with small bombs would
have maneuvered as close as possible to
Bush, then triggered an explosion. U.S.
authorities are annoyed that the Ku- • Forward march. U.S. intelligence anawaitis did not inform Washington about lysts were stunned last week when they
discovered that North Korea, which had
the plot until after the Bushes left.
recently moved troops back and forth
from its border with South Korea, had
dispatched three divisions and 1,700 ar• No help wanted. Although trailing in mored vehicles to its border with its
the polls, interim Texas Sen. Bob Krueger longtime ally China. The Americans bestill refuses most offers of help from the lieve that the extraordinary maneuver,
White House. Krueger, battling tofillout the largest troop movement on the penthe Senate term of Treasury Secretary insula since the Korean War ended 40
Lloyd Bentsen. is said to feel that an ap- years ago, may have been a show of
pearance by the president, increasingly strength by Kim Jong II, heir presumpunpopular in Texas, would do more harm tive to the almost half-century dictatorthan good. So far, the only Democratic ship of his father, Kim II Sung. The anheavyweights to campaign on Krueger's alysts also speculate that the Pyongyang
behalf have been Vice President Al Gore, government was signaling the Chinese
his wife, Tipper, and Housing Secretary to stop pressuring for a reversal of its
Henry Cisneros, a former San Antonio withdrawal from the Nuclear Nonprolifmayor and folk hero to Hispanics in Tex- eration Treaty.
as. On the other hand. Bob Dole, Jack
Kemp and Barbara Bush are campaigning for the GOP standard-bearer, Kay • No sure thing. Legislation that would
Bailey Hutchison, the state treasurer.
raise the Environmental Protection Agen20
rv to cabinet status, once considered a
sure thing, has nm into serious trouble on
Capitol Hill. The major reason: nvo provisions considered unacceptable by environmentalists. One is an amendment, attached during the measure's passage
through the Senate, that would require
time-consuming cost-benefit analyses before the EPA could issue any new regulations. The other, suggested by the Clinton
administration, would reduce the authority of a proposed White House office that
would oversee the environmental policies
of the federal government. Instead, such
powers would now go to the EPA. Many
greens believe that moving the oversight
powers out of the White House would
weaken supervision of environmental policy. If the House does not kill the provisions, the environmentalists are expected
to oppose the green-seat measure when it
goes to a conference with the Senate.
• First choice. A misunderstanding
probably scuttled Mario Cuomo's
chances of becoming a Supreme Court
justice. Sources close to Cuomo say that
shortly after Justice Byron White announced his retirement in March, President Bill Clinton asked the New York
governor whether the FBI and the
White House could begin the necessary
background checks. But, the sources
say, Cuomo felt the president never
made it clear whether it was simply a
courtesy gesture to the man that candidate Clinton promised would be his first
choice for the high court, or whether it
was stage one in a serious nomination
process. Frustrated by that uncertainty
and anxious to shut off widespread speculation that he was headed for the
court, Cuomo sent Clinton a letter removing himself from consideration.
• Star* reality. In a meeting with Hillary
Rodham Clinton's health care reformers.
Democratic Rep. Pete Stark haughtily
asked Ira Magaziner, the day-to-day boss
of the task force and a highly regarded
business consultant, what were his qualifications for the job. Ways and Means
Chairman Dan Rostenkowski was so appalled that he called Magaziner to apologize. Stark later met with Magaziner in an
effort to ease tensions. Nevertheless, the
lawmaker may have the last word: When
the Clinton health plan gets to the House,
it must first pass through a Ways and
Means subcommittee headed by Stark.
EDTTED BY CHARLES FENYVESI
U.SJJEWS & WORLD REPORT. MAY 17.1993
�T O LATE?
O
The United States and its allies contemplate
tougher measures against Bosnia's Serbs, but it
may be too late for the West to make a difference
4
T
i
he world was stunned when, in the
face of intense international military
and diplomatic pressure, the Bosnian
Serbs rejected a United Nations peace
plan at the eleventh hour. But to the Serbs
it is all extremely simple. The war in Bosnia is as good as over, and they have won.
End of story.
Even as President Bill Clinton vowed to
pursue "tougher measures," Bosnian Serbs,
following a formula that has served them
well throughout Bosnia's 14-month civil war,
continued to pound, conquer and terrorize
Muslim towns and cities in their quest to
carve a Greater Serbia from the carcass of
the state they once shared with Muslims and
Croats. The Serbs already control some 70
percent of Bosnia. Last week, while their
self-appointed "parliament" was rejecting
the U.N. plan to partition Bosnia. Serbian
forces launched new assaults on the key
Muslim enclave of Zepa in eastern Bosnia.
Their next goal, according to intelligence
reports from neighboring Slovenia, is to cut
a second east-west corridor across Bosnia,
linking Serb-held territory in the east and
the west, and splitting what remains of Bosnian-held territory in half-potentially a fatal blow to further Bosnian resistance.
Secretary of State Warren Christopher
called the parliament's decision last week
to hold a May 15-16 referendum on the
U.N. peace plan "another cynical ploy to
accomplish delay while they are rolling up
additional territory in Bosnia." What he
did not say was that for all practical purposes, the Serbs may well have rendered
moot his efforts to line up support for military action against the Bosnian Serbs dur-
»
The winners. Serbian soldiers take a break
from carving out "Greater Serbia. "
U.S.NEWS & WORLD REPORT. MAI' 17.1993
ing a weeklong tour of European capitals.
Sources in Bosnia and Western military experts agree that even if the United States
and its allies finally agree to lift the
arms embargo against the Bosnian Muslim
forces or bomb Serbian targets in Bosnia,
it is too late to make much difference.
Last week, Clinton declared that there is
"a lot more agreement than you think"
among the allies and vowed that "a common approach" would soon emerge. Administration officials suggested that their
preferred strategy now is to allow the Muslims to begin arming themselves and to use
selective air strikes to "fend o f f any Serb
attempts to overrun the remaining Muslim
enclaves in Bosnia in the meantime.
Neither course holds much promise at
this late hour in the Bosnian conflict. What
the Muslims need most is heavy weapons
and the training to use them —a process
that would take months even if it were possible. And Pentagon sources say Gen. Colin Powell, the chairman of the Joint Chiefs
of Staff, has advised Clinton that he cannot guarantee any success from the use of
force in Bosnia —in sharp contrast to the
assurance he gave President Bush that victory over Iraq was "a lock."
The Serbs have taken advantage of
Western procrastination not only to press
their assault but also to hide the artillery
pieces that are likely targets of any allied
air attack. Of the 600 to 1.000 guns they are
believed to have, only 100 are now considered "targetable" by U.S. planners. "Hitting artillery, that's a pipe dream," says
one officer. "It does not in any way alter
the outcome or the fact that the Muslims
are outgunned." Adds Lewis MacKenzie.
the retired Canadian major general who
spent most of last year commanding the
-
\
23- J
�• W RD R P R
OL EO T
U.N. forces keeping Sarajevo
airport open: "Air stnkes would
only prove that air strikes won't
have much impact."
Lasl week's rush of diplomatic
activity may only have emboldened the Bosnian Serbs by convincing them the West is paralyzed. The administration
publicly tied its own hands by
vowing not to take unilateral military action, then advertising its
decision to use force and lift the
arms embargo against Bosnia
without obtaining approval from
America's reluctant European allies or a deeply divided Congress.
"As long as there's some air of
mystery, you can bluff." said one
defense planner frustrated at how
European hesitation revealed the
administration's poorly played
hand. "I'd love to play these guys
in poker." he added sardonically.
But while Clinton's soulsearching, consultation and consensus building have given the
Serbs time to brace themselves
and fueled doubts about allied
resolve, the sudden and very
public focus on Bosnia has created a sense of crisis and a momentum for military action that
may be impossible to stop.
Even before a single soldier has been
committed, the pressure for escalation is
becoming apparent as the White House
keeps raising the stakes. Last week.
Clinton announced three principles that
he said are at stake in Bosnia: the sanctity of internationally recognized borders,
the danger of the conflict's spreading
and the offensiveness to the world's conscience of Serbian ethnic cleansing. His
aides, meanwhile, suggested that the
Bosnian Serbs' refusal to compromise in
the face of American threats already has
upped the ante. "We don't want to be
diddled." said a senior White House adviser. "The notion of continuing to allow
them to create facts on the ground is no
longer acceptable."
Philosophy seminar. But the administration's indecisiveness and public agonizing over what to do have only stoked
growing uneasiness in the Pentagon and
in Congress (box. Page 27). White
House aides have spent weeks debating
whether the use of force is justified; discussions with Clinton have delved into
such philosophical topics as the "just
war" doctrine and the military philosophies of Thomas Aquinas, Marcus Aurelius and Sun-tzu. Congressional leaders of both parties insist that Congress
24
Time to act? Refugees fleeing Srebrenica;
Clinton vows "tougher measures. "
must approve any major U.S. military
involvement; at a minimum, that means
a further delay of days or weeks.
Policy paralysis. Whether from shrewd
calculation or peasant pigheadedness—
both explanations are offered by outside
analysts and by the Serbs themselves the Bosnian Serb parliament has effectively exploited the all-too-visible cracks
in the allied stance. Seizing on the promised May 15-16 referendum. Western European and Russian diplomats insisted
that the allies should refrain from
launching air strikes or lifting the arms embargo
against Bosnia's Muslims
as long as there was a possibility that the Serbs
might accept the U.N.
peace plan.
At the United Nations,
meanwhile, a Security
Council decision to declare "safe areas" around
Sarajevo and five other
Muslim enclaves was immediately undercut by the
council's own timidity in
refusing to back the declaration with military measures. Instead, it voted only
to send an additional 50
military observers to monitor the safe areas.
Serb militiamen were
less timid, blocking efforts
OtNMS COOII -tP
U.SNEWS & WORLD REPORT. MAY 17.1993
�25.000 or more peacekeeping troops to
Bosnia have been reduced. But Pentagon officials fear that lifting the arms
embargo or launching limited air attacks
also could lead to the deployment of U.S.
ground troops in the Balkans, either to
defend the existing U.N. peacekeeping
troops from Serbian reprisals or to safeguard Muslim safe areas that air power
alone cannot protect. "The further they
get in. the further they get boxed in,"
says one senior military planner.
Given the restrictions that forbid
U.N. troops from carrying heavy weapons, MacKenzie warns. Serbian forces
could slaughter them within 12 hours in
retaliation for allied air bombardment
or an effort to arm the Bosnian Muslims. The U.N. forces could hold out for
as long as that, MacKenzie says, only
because many peacekeepers smuggled
in forbidden antitank weapons when
they were deployed.
Men and money. If ground troops
were dispatched to defend U.N. peacekeepers or Muslim towns or to enforce
a peace agreement. Pentagon officials
estimate that as many as 300.000 soldiers eventually might be required-far
more than the 75.000 that U.N. officials
are contemplating to monitor a peace
treaty. "The terrain is forbidding," explains a senior defense official. "There's
nothing to prevent you from being
sniped at or from the population protecting snipers." Adds Gen. John Galby U.N. observers to reach the besieged vin. a former NATO commander: "A
town of Zepa —already swollen to sbe super-high-tech country such as the
times its normal size with 30,000 Muslim United States can deal with a high-tech
refugees who had fled fighting elsewhere enemy like Iraq with eminent success.
in Bosnia. And in the northern Bosnian But once a war becomes low tech. the
town of Banja Luka. two 16th-century advantages of high technology and superb orchestration of combat power bemosques were leveled by explosions.
come dissipated and the fight becomes
" I don't understand how such a tragic
mistake could be repeated in 50 years' elemental, eyeball to eyeball down in
time." a plainly demoralized Bosnian the mud."
Foreign Minister Haris Siladzic told
Worse, NATO does not have the
U.S. News. "Now we have a chain of troops to man such a force. "It would
Chamberlains coming to Belgrade, one take a miracle to squeeze 50.000 peaceafter the other, appeasing the dictator." keeping troops out of NATO [to join
The logic of force. Pentagon officials 25.000 Americans]," says a senior miliworry that if limited air strikes fail to tary official. The British, this official
stop Serbian aggression, Clinton may says, might send a battalion, but there
feel obliged to send in ground forces de- would be no Germans, the Italians
spite his vows to the contrary. "If you are might balk, the Canadians don't have
going to make a threat, make it credi- anyone to send, no one wants any Turks
ble." MacKenzie says. "And I don't or Greeks, and Iceland. Denmark. Northink air strikes are credible by them- way and Portugal don't have the manselves: it has to be in concert with power. As a result, the alliance might
ground intervention." Or. as one French have to tum to outsiders, for example
official puts it: "You bomb on Monday, Russia, Poland or Ukraine, and its inability to deliver would not go unnobut what do you do on Tuesday?"
General Powell is said to have been ticed in Asia, the Muslim world or Eastrelieved that the Bosnian Serbs rejected ern Europe. The official adds: " I f
the U.N. peace plan, because that at there's any way not to fight this war. we
least means the chances that the United ought not fight it."
States will be called upon to dispatch
Another hurdle is cost: Defense SecU.S.NEWS & WORLD REPORT, MAY V. im
ABOUT-FACE IN SERBIA
The men in
the middle
V
ilified for two years as the
chief architect of Serb expansionism, Serbian leader Slobodan
Milosevic is now being touted by
many in the West as the key to a
settlement in Bosnia—just as his
grip on power is slipping.
Milosevic now seeks to prevent
United Nations sanctions from
crushing Serbia's battered econo-
readers. Karadzic (left); Milosevic
my and to avoid getting dragged
into the war in Bosnia. Both goals
require cooperation with the outside world—hence his decision to
back the U.N. peace plan (after
attacking it for months), to pressure the Bosnian Serbs to accept it
and, when they balked, to cut off
supplies of money, fuel, raw materials and probably ammunition
from Serbia to the Bosnian Serbs.
But Milosevic must be careful.
Already, his about-face on the
U.N. plan is stirring charges of betrayal in Serbia and weakening his
support in parliament. Much will
hinge on his ability to undermine
the Bosnian Serb leadership. That
won't be easy: Radovan Karadzic,
the Sarajevo psychiatrist and nominal Bosnian Serb president, has
surrounded himself with nationalist hard-liners who mistrust Milosevic's communist background and
motives. But now, with Milosevic
squeezing supply lines, Ratko Mladic, the general who commands
Bosnian Serb forces—and who was
once a Milosevic loyalist—might
be persuaded to tum on Karadzic.
BY ROBIN KNIGHT IN BELGRADE
PATftlCHROBERT-SYGMA. ART UMUR-GAMMMJAISON
/
25
4j—
�_. .
^latTv^-^s
•
•
? | B ( 6 ^ ^ S ^ t o r i ^ G o r t ^ about 70 percent of the temtory of Bosnia-Herzegovina.
" ^ "
"
from
SertMa.cotid slow their drive to create "Greater
»ttet the Bosnian Serbs willretumtothe peace table.
* . n . • •.
retary Les Aspin told members of Congress last week that sending 25,000
troops would cost $1 billion to $3 billion per year.
Still, the threat of military action may
yet have some impact on the Bosnian
Serbs. " I don't know if we could maintain a unified command [if attacked],"
admitted Radovan Karadzic, the nominal president of Bosnia's Serbs. "We
went through the first 45 days of the
26
war without a unified command and
that was hell."
Neither do the Serbs discount the apparent change of heart by Slobodan
Milosevic, the president of Serbia proper. Increasingly pinched by economic
sanctions and apparently convinced that
Russian and Western patience is exhausted, Milosevic made a personal and
passionate appeal to the Bosnian Serb
parliament to approve the peace plan.
angrily comparing its action to that of
"a drunken poker player" who throws
away all his winnings on one last foolish
bet. Rebuffed, Milosevic then cut off
aid to the Bosnian Serbs.
Western diplomats do not dismiss all
of this as playacting-even though Milosevic has in the past baldly denied that
Serbia was supplying any military aid to
its fellow Serbs in Bosnia. Milosevic is
hoping the West will reward him by liftU.SJMEWS & WORLD REPORT,
19
93
Jr 'T
�ing sanctions against Serbia, but that is
a remote possibility for now. ,
But many Western officials regard
Milosevic as an uncertain ally at best,
and more likely as a duplicitous one. In
private, aides such as Zeljko Simic. a
senior figure in Milosevic's entourage,
continue to denounce the U.N. peace
plan and deny that Serbia has played any
direct military role in the war in Bosnia.
They insist that the Bosnian Serbs really
want a cease-fire, and they blame the
West for igniting the war in Bosnia and
then penalizing the Serbs unfairly.
Making do. Even if Serbia is serious
about enforcing it, the cutoff of supplies
cannot be airtight. Exemptions for food
and medicine open up the prospect of
widescale smuggling. The rugged Bosnian border with Serbia and Montenegro is
330 miles long; a Western intelligence
estimate says it has at least 120 crossing
points. Even if observers were placed in
Serbia, as U.N. peace negotiator David
Owen has suggested, the best guess is
that "several thousand" such monitors
would be needed to enforce the ban.
Moreover, the Bosnian Serbs are used
to hardship. Most live off the land. Winter is over. And their willingness to sacrifice seems, if anything, to have stiffened.
The day after the Bosnian Serb parliament in Pale rejected the peace plan, a
young woman told Radio Pale: " I am the
mother of two young children and I am
afraid for their lives. But I still think it is
better to fight for what is ours even at the
cost of our children's lives than to allow
someone to tell us what to do."
Although much of their economy has
been destroyed and not a single factory
on their territory is functioning, the
Bosnian Serbs are accustomed to a
hand-to-mouth existence. The Bosnian
Serbs are believed to be running short
of tank and artillery ammunition. But
vast quantities of military materiel were
cached in Bosnia as part of Communist
leader Marshal Tito's plan for Yugoslavia to hold out against any invader,
which envisioned waging a guerrilla war
in Bosnia's rugged terrain. And the tactics of the Serbian militia, which relies
heavily on random shelling to terrorize
"civilian populations rather than concentrated bombardment of military formations or fortifications, suggest that the
war —or at least ethnic cleansingcould continue even in the face of
shortages. Seventy percent of the victims of the war in Bosnia and elsewhere
in the former Yugoslavia-from 20,000
to 200,000 have been killed in less than
two years'fighting—have been civilians.
The key to the situation, though,
probably lies with the Yugoslav federal
Army. Gen. Ratko Mladic, the Bosnian
U.S.NEWS & WORLD REPORT. MAY 17,1993
HERDS ON THE HILL
How Congress reads history
to get out. Spearheading this faction
osnia presents Congress with
are pro-military lawmakers like Sen.
the most confusing issue many
members have ever seen. Hawks vs. John McCain, an Arizona Republican who spent more than five years
doves, liberals vs. conservatives, Republicans vs. Democrats —few of the in a North Vietnamese prison camp.
He derides Clinton's approach as a
traditional political divisions apply
"feel-good policy" that satisfies
this time. As Sen. John Breaux, a
emotional impulses to "do someLouisiana Democrat, sums up the
thing" but doesn't heed the military
mood: "There's a lot of confusion
obstacles on the ground. While he
and uncertainty. If there was an
agrees with Lugar that the United
easy answer, the president would
have announced it a long time ago." States must assume world leadership, he draws an oppoMuch depends on
p»i»m.LHO<rs-uyi»w
site conclusion: Since
what the president deClinton "cannot afford
cides to do and how he
to fail" in the Balkans,
explains himself, but two
the risks are too high
broad camps are starting
to go in.
to coalesce. Both draw
lessons from history and
Most lawmakers fall
borrow a phrase with
somewhere in the midhistorical resonance:
dle. But consensus is
"Never again." But their
starting to emerge on
conclusions drive them
two points: Clinton must
in opposite directions:
seek approval from Congress for any U.S. inter• Tbe brtenrentionists.
vention, and he must exLed by Sen. Joseph BiPro. Biden
plain—much more
den, senior Democrat
clearly than he has so
on the Foreign Rela"far—why the stakes are
tions Committee, this
worth American lives. " I
group sees an analogy
don't think it's enough
between Bosnia and
to say, 'We abhor the
Nazi Germany and arkilling,'" says Sen. John
gues that America has a
Chafee, a RJiode Island
moral obligation to stop
Republican and former
the savage violence disecretary of the Navy.
rected against a vulnera"We've just got to have
ble minority: This faca clear-cut explanation.
tion is bolstered by
Absent that, it's very
lawmakers who see a
hard to explain to a
more practical reason
Con. McCain
mother in Pawtucket
for intervention: If
America does not use its leverage as why her son should be there."
the world's only superpower, it will
There is not much doubt that if
lose global respect and influence.
the president seeks authorization
"Americans have to understand that from Congress for military intervenwhen it comes to world leadership,
tion short of a ground assault, he
we are it," says Republican Sen.
will eventually get it — after a sharp
Richard Lugar of Indiana. Lugar, just and painful debate. But that means
back from the region, offers another Clinton will have to take responsireason: If the conflict spreads beyond bility for his policy, and there is litBosnia, European economies could
tle dissent from Sen. Bob Dole's
suffer, devastating export-oriented
view that any intervention would be
industries in the United States.
"fraught with danger." Says the Re• The nonfartemntionists. They draw publican leader: "We might be geta parallel with Vietnam, not the Ho- ting drawn into something that we
can't get out of. This could be Clinlocaust, and say that the United
ton's Waterloo."
States should "never again" be
drawn into a military conflict without a solid objective and a clear way
BY STEVEN V. ROBERTS
B
1
27
�Serb commander, uus a member ol the
federal force and has many sympathizers in its upper ranks. If they back him
with weapons, ammunition and fuel as
they did last year, the Bosnian Serbs
could fight on tor months.
From bad to worse. Even the most optimistic scenario has a dark lining. General
Powell is believed to have concluded that
no political settlement is possible at this
pomt in Bosnia given the hatreds the war
has generated. "There is no longer any
side . . . which is unambiguously committed to a multinational future for the
emerging states of the region." Misha
Glenny. author of "The Fall of Yugoslavia: The Third Balkan War." recently
said. Even if continued diplomatic and
military pressure persuades the Serbs to
reverse themselves and accept the U.N.
peace plan, it is anyone's guess how long
the agreement would last. The Serbs are
unlikely to abandon their temtorial ambitions; the Muslims, who get the short
end of the stick under the U.N. plan, are
unlikely to be content for long, either.
" I guess I'm paranoid because I lived
with it for six months," says General
MacKenzie. "but as soon as American
troops arrived in there, in any context,
it would be in the interest of the Muslim faction, which has come up with less
in the [U.N.] plan than anyone else, to
take on the Americans and make it look
like someone else is doing it. And all
three sides are masters at that."
As if all of these factors were not
enough. Bosnia might be only the first
step. Barely noticed last week. Croatian
forces in the Krajina region of southeastern Croatia chose the moment of maximum Serbian disarray to launch an attack on Serbian positions through lines
protected by U.N. peacekeepers. It was
the second such assault this year and a
sharp reminder to Slobodan Milosevic of
the dangers he faces regardless of events
in Bosnia-Herzegovina. Paranoia about
Croatian intentions is as high as ever in
Belgrade, as is the sense of unfairness
that Serbia is being punished with sanctions while the Croats break U.N. ceasefires with impunity, flout the U.N. arms
embargo, allegedly station regular Croatian Army troops in western Herzegovina and do their own ethnic cleansing in
central Bosnia. "The situation with the
Croats is getting worse and worse," says a
close aide to Milosevic. "But the West is
ignoring it." At this late hour, however,
the only alternative to ignoring the Balkans may be plunging into the thicket. •
BY STEPHEN BUDIANSKY wm R BN KMCHTIN
OI
BELGRADE. NATELA Curroi IN PALE. FRED COLEMAN IN
PAHS. BRUCE a AUSTER. TIM ZIMMERMANN. KENNETH T.
WALSH. STEVEN v. ROBERTS AND FOREIGN BUREAU REPORTS
30
I W RD R P R
O L EO T
Always on the run. Muslim refugeesfromnortheast Bosnia arrive in Travnik.
Survivors in the
wreck of a nation
Daily life in the former Yugoslavia is
punctuated by reminders of sudden death
F
lims and Croats are killing one
atima Maslic walks with
another, but in Turbe, Croats
her family down the
provide guns to Muslims and
main street of Travnik
officers plan strategy together.
toward Club Vagabundo. The
Kozar has even talked over
early evening crowd, wearing
field radios with Serbian soldenim or jungle camouflage
diers who once lived in Turbe.
fatigues, shambles along the
CRISIS IN
"We exchange information
narrow road. Maslic stops and
BOSNIA
about relatives," he says.
points up at the rocky, treeIn Bosnia, an activity as
covered hills surrounding the
central Bosnian town. "There," she commonplace as strolling to supper is
nonchalantly punctuated by a reminder
says, "there is the sniper place."
In the nearby village of Turbe, Azmir of sudden death. In Bosnia, yesterday's
Kozar, a 22-year-old Bosnian Muslim allies are today's enemies, and vice
soldier, nurses a bandaged wrist, cut by versa. In Bosnia, the surreal has bethe recoil of a rocket-propelled grenade come ordinary. And in Bosnia, memohe fired a week earlier. Turbe, Kozar's ries of the horrors Serbs and Croats vishometown, sits on the front line be- ited upon one another during World
tween besieging Serbs and local defend- War I I are fueling today's brutality, and
ers, a joint force of Muslims and Croats. memories of today's atrocities will proIn Vites, only 12 miles to the east, Mus- vide the fuel for another round of killU.SJJEWS & WORLD REPORT. MAY 17.1993
L>t\
��PR T KES
EO EP
G N AD G I G
OG N O .
I
N
Bill Clinton is struggling. Republicans are adrift. The
legions of those who hate politics as usual are swelling. And
Ross Perot and his revolutionary brigade have big plans
ince everybody is into Thomas
I Jefferson these days," Ross Perot announces. " I figured I better find out what he said." The slim volume of Jefferson's quotes is dogeared, as
if studied in Talmudic detail. Why Jefferson? "I'm sure you can figure that out," he
says of one of William Jefferson Clinton's
favorite presidents. Reaching for wisdom
in the words of a Founding Father, Perot
pulls index cards from his outsize briefcase, rattling off one sample after another
of Jefferson Lite. "This is a great one," he
proclaims. " 'Government should be small,
taxes invisible and the public debt paid.' "
Hardly a Jeffersonian aphorism goes
unexamined in Perot's search to explain
his movement's underpinnings —even
when the connection to current events is a
tad obscure: "Give up money, give up
fame, give up science, give [up] Earth itself and all it contains rather than do an
immoral act." This one is more clearly appropriate: "Whenever the people are well
informed, they can be trusted with their
own government: that whenever things get
so far wrong as to attract their notice, they
may be relied on to set them to rights."
Finally, Perot feels he can interject himself: "Maybe that kind of sums it up in
terms of what we're trying to do."
Truth is. after 19.7 million votes in the last
election and with a revolutionary brigade
"S
U.S.NEWS & WORLD REPORT. MAY 17.1993
forming once again, Ross Perot has little
need to pad his chatter to make himself
understood. By now, everything about his
North Dallas office at the inspirational corner of Merit Drive and Churchill Way is
famous-the Rockwells and Remingtons,
the family pictures, the mementos from
grateful legions. But it is Perot himself who
has become the most compelling exhibit in
his own collection of Americana: a national
sentinel whose political movement is poised
to seize the balance of power in U.S. politics, or, at the very least, to drive both Bill
Clinton and the Republicans crazy. After
the first 100 days of his
once-and-perhaps-futurerival'spresidency,
Perot and his United
We Stand America
have emerged triumphant among those
who continue to lose
faith in the political
establishment.
A new U.S. News
poll shows the dimensions of this amazing levitation. A full 45 percent of those polled say
they would consider voting for Perot today-a 14-point increase since the start of
Clinton's term. In a hypothetical race. Perot
runs dead even with the president. And
while they still harbor suspicions about
37
�0
^
^
^
^
^
Perot wants you. Wis appeal is to the alienated American middle, a kind of no-fly zone impenetrable by the two major parties.
Perot's character —more than half view
him as naive, scary and "a little too
much of a dictator" —74 percent of respondents believe he truly wants to help
the country. And a majority of them believe he would be better than Clinton at
handling the economic issues at the
core of the last campaign.
No doubt about it. Ross is on a roll.
With last year's election nastiness behind
him. he seems a calmer version of himself. No more waking up daily to read
about his alleged paranoia, deceptions
and confused political views. His handlers- those he calls "the professional crowd who spread that stuff to an
ever eager press who will print anything"—have gone back where they
came from. "In war." barks Perot,
"there are rules. Even mud wrestling
has rules. Only politics has no rules."
Life of a salesman. Now Perot is
where he likes to be—writing his own
rules. On Jay Leno last week, he appeared less the political despot than
the charming dinner partner, regaling
the audience with tales of his speedboat cruise with Michael Jackson and
Macaulay Culkin. He's back but as
the salesman in it for the long haul,
with both the perfect pitch and product-a professional critic on the issues, the symbol of a growing crusade
that stands above politics, for now.
U.S.NEWS & WORLD REPORT. MAY 17.1993
Yet the political potential is obvious.
The U.S. News poll describes Perot's supporters as a movement of the alienated
American middle - as large as 25 percent
of the electorate —with no interest in being siphoned off by either major party.
"These people are not in transition,"
says Democratic poll taker Celinda
Lake, who conducted the U.S. News survey with Republican pollster Ed Goeas.
"And it's getting harder to get them
back." Instead, these voters have moved
into a political no-fly zone that Republicans and Democrats, much to their disOOOD NEWS FOR PEROT
His fortunes haverisenalmost in direct
relation to Clinton's growing problems
• 7 % OP AMI RICANS HAVE FAVORABLE
P I I U N M TOWARD MROT, COMMRBD
WITH 53% fOm CUNTON
74% SAT MROT IS TRTINO TO HELP THI
COUNTRY, WHILB ONLY 19% THINK HE IS
OUT FOR HIMSILF
42% HAVE MORE CONFIDBNCBIH MROT
THAN IH CUNTON ON MOTECTIHO THE
MIDDLE CLASS, AND MORE AMERICANS
THINK PEROT WOULD DO BETTER THAN
CUNTON HANDUNO THE BCOHOMT
may, have been unable to penetrate.
Although Perot himself may never
govern, he is making it hard for anyone
else to do the job. In 1969. Richard Nixon
began his presidency like Clinton, with
only 43 percent of the vote. But Nixon
could feint rightward on race to pick up
George Wallace's supporters; Clinton
faces an array of moving targets. Even
when he courted Perot through deficit
reduction, the divisions deepened. Of
course, Perot likes to say he wishes Clinton well. "Let's assume he does something brilliant. I would be the first to say,
'That's a home run.' " That politesse
belies the truth: If Clinton succeeds,
Perot's movement could crumble.
The converse is also true: So long as
Perot can hold his forces togetheror build on them — Clinton has a hard
time finding his governing majority.
And if he cannot build enough support to succeed on both health care
reform and fixing the economy, says
Democrat Lake, "you will see a fundamental political realignment"
growing out of the Perot movement.
If that happens, the Republicans may
be the sacrificial lambs. The U.S.
News poll shows voters have more
confidence in Perot than in Republicans when it comes to handling all
domestic issues.
Small wonder, then, that both
U.S. u n a noil ot 1.000 itgstnM w i m conauctod t» Celinda like o( Mellman-Lamnjs-Lwe and
Ed Goeas of the Taronce Group on May 3-4.1993. Marpn al enor. pun Of minus 3.1 percent.
Percentages may not add up to 100 oecause some respondents answeted -Don t Know
�O ^ I O Bl/TOw - SUCK S f f FC" I-
r
1
. •
IV
Perfect pitch.
Jay Leno last week on the "Tonight Show," relishing the role ofa charming national siren
Clintonites and the Republicans are obsessed with Perot, vacillating among
strategies for co-opting him (box. Page
47). They profess to care less about the
man than his supporters ("I am less worried about Ross Perot personally than
about the 19 percent who voted for him
last year," says Republican National
Committee Chairman Haley Barbour),
but no one has found an accurate gauge
on the key questions: Can you capture
the Perot voters without Perot? Just how
much of this is about Ross?
Perot talks. For now, the answer is that
the man and the movement are inextricably linked. Perot is playing the
role of America's siren, says Lake,
and Clinton, whom Perot considers
weak, is the latest target of choice:
Perot's hostility toward the president's policies is now almost as severe
as it was toward George Bush last
year. He will "prevent Bill Clinton
from being a majority president as
long as he keeps up this level of criticism," adds Goeas. When Qinton
strikes back, Perot sharpens his own
claws - and they are ever more lethal,
as he showed last week in a wideranging interview with U.S. News (excerpts. Page 43):
• He accused Clinton of trying to distract the public from his faltering
presidency by considering "a little
42
• He lashed at Clinton for breaking his
campaign promise on taxes. "Go and
look at the state-of-the-union vision for
America. Now, instead of just taxing
$200,000, we're down taxing everybody.
And this guy wants to get rough with
me?" He promised a full-scale TV assault on any trade deal Clinton supports
that "ships" American jobs to Mexico.
Ross's real revenge may be that his
abrasiveness only guarantees more attention. The Senate tipped its hat to
Perotism last week, passing rules cracking down on lobbyists, and Clinton himself proposed sweeping campaign finance reform aimed at the Perot
voters. Senate Republican leader
BAD N I W S FOR P I R O T
Deep doubts persist about whether he has the Bob Dole is leaving nothing to
chance-courting UWSA members,
temperament to be president
disaffected Perot supporters and Pe54% THINK HB CAN Bl DBSCRIBBD AS " A
rot himself with regular phone calls.
U T T U TOO MUCH OP A DICTATOR,"
"As a party leader," says Dole, a
WHILB 51% THINK HB CAN BB DBSCRIBBD
presidential aspirant. " I have some
AB " A U T T U SCARY"
responsibility to broaden the base."
Even George Bush's son Jeb-a
Florida GOP gubernatorial candi5 4 % OP THOSB WHO L1KB THI ISSUBS HB
date—was front and center at a winADDRBSSBS HAVI DOil BTS ABOUT
ter Perot appearance in Miami. SenWHBTHBR HB WOULD 1
HAKBAOOOD
ate Majority Leader George Mitchell
met with a Maine UWSA organizer
to discuss polls-and with good rea3 1 % SAT THIT WORRY MOST THAT HB
son: Maine was Perot's best state,
WOULD HAVB A HARD TIMS OBTTINO HIS
with 30 percent of the vote. "They all
•DBAS THROUOH WASHIHOTON
talk about how we have a 'similarity
war" in Bosnia. "The promises are just
imploding. So it's a good time to distract
the American people." (For White
House reaction, see Page 47.)
• He attacked the president's upcoming
health care reform agenda because of
its escalating need for tax hikes and its
likely harm to business. "Now, every
time he talks, the costs go up, " he said.
"We do not need a nationwide health
care catastrophe." The U.S. News poll
shows that 39 percent would be more
likely to oppose the president's health
care package if Perot found it faulty.
USJ4EWS & WORLD REPORT. MAY n. 1993
. 'I
�of interests/ " says Clay Mulford. counsel to UWSA. "What they feally mean is
PEROT ON ATTACK
they'd like to co-opt our organization."
In the recent Texas bazaar to fill Lloyd
Bentsen's Senate seat, five of the top six
finishen; are card-carrying UWSA members. Even Hillary Rodham Clinton's
oss Perot sat in his Dallas head- we're putting an additional tax burbrother. Tony Rodham, went to Oregon
quarters last week with U.S. News den on small business in health care
last month to woo UWSA organizers.
editors David Gergen and Gloria
and new regulations - environmen"Tonv kind of lost his cool and said,
Borger and offered these views:
tal, you name it— and we are having
'Your president is in Washington, not
• Ontaterrentionin Bosnia. My biggest family lesave. If you're in business, all
Dallas."" reports state director Cele
concern is that anytime things get
you have to do is go south of the borHall. No converts were recorded.
complicated in this countiy, we liketb der and:leave 'ail that behind you:
"Albino monkey." To hear Perot tell it.
start a war, [For Clinton,] thefirst100 • On his movement 1 am incidental.
the very idea that he's a potent political
; days didn't go well,... Everything's in 'JTam^pqe voter! The only thing I can
icon is plain silly. Sure, he gets big
disarray. Everything we told people " ' ddls tiHp aU'tliese people organize
crowds —he beat the Dalai Lama s record draw in Santa Barbara last Marchbut that's not the point. The point is
vintage Perot: "I'm kind of like an albino
promises are just implodmonkey in a zoo. People come because
ing. So it's a good time to
they never saw one." And if he "fell out
distract the American
of a tree," then the movement could
people: You have-all =.
"steprightin and not miss a beat — a little
these interesting forcesat ~
hiccup but not anything significant." Pework. When you're shutrot speaks only of "we"-and maintains
ting down the defense inall the decisions will be made from the
dustry, you can get a little
bottom up by the members who have
war going. When you're
spent $15 apiece at shopping malls and
downsizing the militaiy,
street comers to join UWSA. The rare
you get a little war going.
reversion to the singular is only to deWe should not rush
clare, " I am incidental. I am one voter."
over there. It's easy for '
Humble protestations aside, control is
' die elite to send 'the sons
not something Perot gives up easily.
and daughters of working
Since UWSA was launched in mid-Janu• people off to fight in bat- On "Donahue.'
ary, Perot has made 37 appearances in 14 : tleVThe one variation
i, #
states. In the next few months, rallies are
would^pporfj: Ifyou could dp'itwithj ™
planned in Kansas, Missouri, Minnesota,
cruise missiles, that would be assurgi-'
iflibrganizat
Michigan, Connecticut and Maryland.
•.' cal and clean as you could getit. " ' ^ ^ w m ^ ^ j ^ ^ ^ o n g r t C T m place .
As the self-appointed national watchdog,
• On CBnton's health care plans. Ybii
"he's the charismatic leader of the movetell the people during a campaign
'^raJe Vt&ep aSive id politics and'
ment," says Joan Vinson, director of
that you will revolutionize health care feeling^that^h^or she can make a
UWSA's Maryland operation.
' .and save tens of billions of dollars a differen(^.^rom ething happened
Many of Perot's new followers are doyear net after adding 30 million peo- to me to^y/ttere would be a little
good citizens who might also belong to
ple to'insurance rolls. 1 said.'That's a hiccup but 'ndf anything significant.
Common Cause and the League of
It wouid jtSt-i^ep going.
/
tightwire walk without atightwire.
Women Voters. In several states, the volYou can't do it."" Now, every time he • On hb praMential ambttioas. As
unteers have been hosting candidate and
talks, the cost goes up. The £rst trial far as' havidg 'any personal agenda, I
issues forums and meeting with state,
balloon is $30 billion, then comes $60 don^t'hiivfe;d^e except to get the
local and national officials on issues
[billionj. then $90 billioi£ thenigif. pr^lem sblVedL We feel very
ranging from schools to the proposed
$100 [billion] to $150 billion. We"* -; s t r o n g l ^ s ^
have four
North American Free Trade Agreement.
should try pilot programs to make
years to wait; that we need to work
But mostly what seems to drive them is
sure it works. We can stand a small
night and day^nbw to build and
that they are still hopping mad about the
catastrophe. We do not need a nastren^en tJur country. I have an
size of the deficit, especially given the
tionwide health care catastrophe.:
obiig9tioii.tb ail these people in
Clinton budget's tax increases. Typically,
• On the danger of Mexican free trade. United We Stand to provide them
they despise the insider political culture
At the same time we're creating
with^e lewCTage. See,/they insist
in Washington - and their state capitals.
free-enterprise zones in the inner cit- that I never say never. So, I won't.
And they are very apprehensive about
ies, we're negotiating NAFTA [the
• On endorsiiig candidates. That
their economic fortunes. Moreover, the
proposed North American Fiee would be up to the members. I'm
new converts have more loyalty to the
Trade Agreement], which will take
most comfortable providing platlarger civic landscape than to Perot himthe very jobs that are most. apt for
forms. I'm kind of like an albino
self. They know they need Perot to flourthe inner cities and ship them down monkey in a zoo. People come beish; whether they need him to survive is
to dollar-an-hour labor in Mexico.
cause they never saw one. I can
an open question. But if the organization
While we're shifting jobs to Mexico, draw a crowd, for some reason.
does outgrow its need for its inspiration,
it won't be soon. "Their biggest chal-
A diversionary 'little war'
R
1
;
4
4
U.SJ4EWS & WORLD REPORT. MAY 17.1993
�about UWSA's mission. Orson Swindle, Perot's former
campaign chairman, wantlenge."' says pollster Lake,
ed UWSA to be a partisan
"is to become something
more than Ross Perot."'
organization with a Washington. D.C. office fielding
For now. United We
tf!
candidates and lobbying
Stand America takes its
orders from Dallas —and
Congress and state legislaDallas follows Perot. It's
tures. Perot and Mulford
the kind of shoestring operprefer to keep it nonpartiation he relishes: this baby is
san for now. which is one
his. Like the wizard bereason Swindle went to
hind the curtain, he runs a
work for a Republican think
skeletal staff that controls
tank headed by Jack Kemp.
the money and the informa"Other organizations are
tion. Outsiders are not at
trying to influence politics
the top-Mulford. Perot's
with cash," says Mulford.
trusted son-in-law, oversees
"We're trying to influence
operations, and even he is a
politicians with voters."
part-timer.
Philosophical considerations aside, the Perot inner
The secrecy and drama
circle made a bottom-line
are classic Perot. No one
decision: Crossing into paroutside the inner sanctum tisan politics could endannot even state UWSA offiger the group's tax-exempt
cials-knows the amount of
status, possibly leaving Pemoney collected or how
rot himself to foot the tax
many members are in the organization. Dallas is keep- The faithful. New members sign up for the cause in San Antonio.
bill.
ing mum until Perot unveils
So far, no decisions have
all movement membership details-the state will choose their own state chairs. been made about whether the group
number of joiners, a list of officials and a
But outside that structure, there is should endorse candidates. The U.S.
bank balance-by Dec. 31, 1993, at the considerable grousing about Dallas's se- News poll suggests that UWSA convery latest, he promises. In fact, Perot crecy and control, not to mention its top- gressional candidates could beat Resays he is spending his own funds to run down flow chart. Some of the legions of publicans and tie the Democrats in
the operation now, placing all the money disaffected Perot supporters sniff at the 1994. And Perot strategists would like
collected in a holding account: " I want to new members they call "Perotbots." In to see some UWSA members challenge
be in a position to send everybody their Idaho, Illinois and Ohio, major disputes professional politicians in 1994. But
money back if we don't reach critical have arisen among former volunteers what would they stand for? In Dallas, a
mass or if we decide there's no reason to who resent the installation of paid direc- fledgling research unit has been estabbe doing this."
tors beholden to Dallas. They say UWSA lished to develop issues and to coordiUp and coming. There are estimates state chapters are exaggerating their nate contacts with the numerous think
that the group already counts as many as memberships. "UWSA is much less au- tanks and advocacy groups that are
2 million members, more than the num- tonomous," says Mike Rupert, a former contacting Perot. But so far. at least,
ber of donors who contributed to both Los Angeles volunteer who has not some of Perot's policy positions seem
major political parties last election year. joined the group. Dallas officials say the contradictory (story, Page 48). In fact,
In California. UWSA officials say 2,000 conflicts are overblown.
former Perot economic adviser John
new members are signing on each day;
There is also considerable confusion White wonders aloud why Perot has
they estimate 150,000 have joined so
been griping so loudly about Clinfar. But even state leaders admit that
ton's economic plan. "Much of what
much of the membership plays no acO O O D NEWS FOR P I R O r S
he criticizes the president for is in
tive role. (And some politicians are
MOVIMUfT
his own plan," he says.
skeptical. " I don't see much indicaHis supporters could become the crucial swing
In any case, the early returns for
tion of this vaunted grass-roots orgaforce on major issues
Perot wannabes are mixed. In Wisnization," says Texas Republican
consin last week, Mark Neumann,
80% OF VOTIRS RATINO UNITID WI
Sen. Phil Gramm.)
who called himself a "Republican
STAND HAVB A FAVORABU OPINION
This effort is markedly different
Ross," narrowly lost his bid for the
from the sometimes overeager Perotcongressional seat vacated by De30% WOULD VOTB FOR A UNITID WI
philia of the last campaign. For one
fense Secretary Les Aspin. In Texas
STAND AMERICA CONORISSIONAL
thing, the new recruits are thinking
last month, Richard Fisher, a selfCAN DIDATI, COMPAMD WITH SO% FOR A
beyond tomorrow. "Everyone gets
styled Perot clone, finished fifth in a
DUNOCRAT AND 16% FOR A RIPUBUCAN
frustrated if we say we're not ready to
crowded Senate race with 8.1 percent
sign on to their cause," says Mulford.
of the vote. Fisher pointedly did not
39% SAT THAT IF PIROT
"But we re in no huny." So far, 21
receive Perot's own blessing or a
CUNTON'S HIALTH CARS
states have executive directors-perUWSA endorsement. In the Los AnPACKAOS, THIT WOULD B l MORI U K I L T
sonally picked and paid by Perot. In
gles mayoral campaign, self-made
TO OPPOSB I T '
the UWSA organizational plan, repmillionaire Richard Riordan is hopresentatives to be elected in each
ing that his image as a Perot-like busi-
• UN W
SE S
..
44
U&NEWS & WORLD REPORT. MAY 17.1993
�THE INNER C I R C L I
Who's out;
who's in
ith Ross Perot, "inner
W circle" has always been
a relative term. The group
that surrounded him during
the presidential campaign is
nearly all gone, although
some holdovers are running
United We Stand America's
national operation.
Tom Luce, the 1992 campaign manager, is practicing
law while mulling anotherrun
for governor of Texas. Relations between Luce and Perot
soured when Luce spent the
night at the Bush White
House shortly after Perot
temporarily dropped out of
the race last July. Mort Meyer-.
too, a Perot confidant, is back
running Perot Systems and
was interviewed for the chair-
on good terms with Perot. Ed
Rollins, another shon-termer,
returned to his political consulting business in Washington. He remains persona non
grata with the Perot camp.
Two members of the old
team who have made the transition to UWSA are Clay Mulfonl, Perot's son-in-law, who is
counsel and top behind-thescenes strategist, and Sharon
Holman, a longtime Perot aide,
who continues to handle the
media and other duties. Darcy
Tbe old team. From left, Luce, Rollins, JdnLuiiAfey
Andersoa, a West Point gradu man's job atlBM. J i a » r f f i | ? ate and Perot Gfoup employSqoires, Perot's comnnmica~V' ee, is UWSA's executive directions director, keq^s in touch- tor, and RutyStHcfcar, a
from his horse farms iiear.;' ': former Air Force colonel, is
Louisville, Ky.Jo»mW«to; the the field director-James Stockcampaign'sissues director; j \ dale,-Perot's runningmate, renow runs a businessprogjam;^ turned to theHoover Institute
at Harvard's John EI Kennedy in California, butwhen Perot
announced UWS&in JanuSchool of GoVerriment"
ton Jordaa, astmrttermpolilfe \ aiy, Stockdaleseatin a check
cal adviser, nstiraeidte Wldti for $150 withtheiequest that
Jbeand hsfaini^bdthe first
tie Q>mmunicatk>nsiiis^
"JiJ.memb^^^^^^Vj!:
Tbtktom. Clay Mulford
Knoxvffle^If
:
nessman who can break the gridlock will never been involved in politics in my the alluring tease of whether he would
help him in the June runoff.
life," says Elle Miller, an Ohio coordina- run, then the avalanche of negative pubMeanwhile, the vision of the man at tor and stepgrandmother of six. She con- licity. Perot still deeply distrusts the
the center of all this will remain in siders the money she spends on press, says one confidant, and intends to
prime time — a half-hour on trade and a UWSA-about $200 a month-an in- continue his efforts to circumvent the
series on health care, Perot says. vestment in her grandchildren's future. mainstream media. (Fifty-two percent of
Among Perot's top advisers, there is "This is very personal to me," she says. those surveyed by U.S. News think Pesome concem that he may be risking "I've never had any doubts about what rot's treatment by the press has been
about right.) But, now, says a friend, he
overexposure — as demonstrated by the I'm doing."
decline in viewership of his "infomerRoss Perot could not have said it bet- feels on terra firma again, building a
cials"-and that he needs to find new ter. Without a political campaign staring company to last, piece by piece. "All my
television formats to spread his mes- him down, he now seems more comfort- time," he says, "goes into this."
sage. Still, in just one day last week, the able taking the long view. Last time
But just what does Perot want? There
Dallas office received 25,000 envelopes around, the arena swallowed him u p - are many answers. Perot, predictably,
with petitions responding to Perot's
says he just wants the government to
televised call for support of his defiwork again. After his attempt at selfcit-slashing preference for spending
immolation in the campaign, his forRAO NIWS POR P I R O F S MOVEMENT
cuts instead of tax hikes. Beyond
tV.'
iTKere are still limits to the reach of Perot's . mer colleagues are of two minds: First
TV, Perot's forces are studying ways
are those who hate Ross Perot as a
' popularity and his coalition
to speed the use of interactive techconniving, egotistical, dishonest paranology. By the end of the summer,
570% OF WOMEN AND 61% OF MEN HAVE
noid and who believe he is doing this
UWSA expects to have a direct com"' DOUBTS ABOUT WHETHER HB WOULD
for his own self-aggrandizement.
puter and fax link from Dallas to
''MAKE A OOOD PRBSIDBNT'' '"
They prefer to remain anonymous for
representatives in each of the nafear of incurring Perot's fury, yet the
tion's 435 congressional districts.
message is clear: This political move6 0 % OF BLACKS AND 54% OF COLLIOS
ment is the hobby of a restless billionORADS WOULD NOT VOTE FOR PEROT
Volunteer services. Then there are
aire, a businessman buying options
the volunteers. S e weeks ago, Donna
b
and attention.
S * % THINK THE NEWS MEDIA HAVE BEBH
Miller left her home in Ashland, Ky.,
TREATIHO PEROT ABOUT RIOHT
and made her way to Dallas with her
There are those, however, who conseeing eye dog to volunteer full time
sider him a patriot and believe he
4 7 % HAVE PAID ATTENTION TO HIS
for UWSA. Such idealism still permetruly wants to make America better.
POST-ILBCTION TV SHOWS, DOWN FROM
ates Perot's ranks. Like Perot, they
To Jim Squires, the retired newspaS S % DURINO THE CAMPAIGN
idealize and want to save national inperman who served as Perot's press
stitutions that have gone sour. "I've
secretary, this latest adventure is sim:
46
U.SJJEWS & WORLD REPORT. MAY 17.1993
�plv "the fulfillment of the commitment"
10 clean up the governmenj. "He does
ESTABLISHMENT JITTERS
not give up easilv "
Armchair psychologists have tried to
explain Perot's penchant for crusadesrescuina Vietnam prisoners of war and
his empiovees trapped in Tehran, trying
n the night in 1992 when Paul
10 save General Motors and Du Pont and
Tsongas withdrew from the
countless individuals in trouble. And
Democratic presidential race, Bill
nou. the U.S. government. But Perot reClinton couldn't savor the moment.
mains a stranger to nuance and will have
He was already nervously assessing
no part in dissecting his motivations.
another emerging campaigner.
When asked about this rescue thing, he
"'What about Ross Perot?" Qinton
speaks of Tehran's "Wings of Eagles"
asked a friend. "Do you think he'll
experience (a book he personally apaindmtno anything?
proved). " I did not want to rescue any"Mort than one year and 19.7 million
body. 1 was stuck with it
When you do • Ti^tvbtes later, Clinton is still looka rescue, one good thing can happen and ^ l ^ & ^ ^ ^ ^ ^ ^ ^ ^
everything else can be bad." As for the
'•—
'
POWs, "they asked me to do it. No one
else had the resources." The same holds
for the political movement.
The 1996 question. But will the movement alone be enough to hold Perot?
Ross Perot, says his son. "has to have five
or six mountains he's climbing at one
time." Would it help if a run for the
White House were in his future? Perot
denies eyeing the presidency in 1996 —
without fully closing the door. "1 certainly have no interest or desire." he says. " I
have an obligation to all these people in
United We Stand to provide them with
the leverage. They insist that I never say
never, so I won't. Now, I have said —and
they would agree with this-that if we
have to do that, then we have failed in our
: -njg d^^lus shoiiildenBut, unlike ithe
first four years. We've failed to get the
early "days after the election, today
two parties to do the right thing." Even
aintqiaand his aides no longer think
Ross Jr., who says his father has no interthey rah winTerot oyer; Qay Mulest in running, sees a slight problem with
ford," Perot's aide and son-in-law, did
this stance. "I've told him. if you're not
meet with and urge, top White House
careful, you're going to get people so
0ffidal£OT&uding Chief of Staff
wound up again that you're not going to
^ Mack McLarty,\to push for political
have a choice." he says.
Tefonns,*Arid aides say Qinton tried
Perhaps that is precisely what Perot
' reaching outttf Perot during the early
wants. "I'll never be satisfied, that's my
budget debates in February, calling to
nature," says Perot. "If everybody pro. ^solicit his'ideasVSut "Perot threw evnounces it a Swiss watch that keeps
-. etythingbaidcin the president's face,"
time to a thousandth of a second, I'll be
iumes a Demqcratic strategist. "Then
saying—well, how do we make it keep
' he ratcheted ujj'his own attacks." ""
time to another thousandth of a sec- . ^ J Sacnt hope. Now, the question is
ond? That's just my nature."
7 whether the Ointonites should attack
. ^aut'LasCweek, after Perot's comThat determination to fix and control
could mean his rise or his fall. But more
rin|nts to l i & Newsvn Qinton's Bosthan for most politicians, the choice is
ruz p<Mky, they couldn't resist:-*'!!!-;
in Ross Perot's hands. Right where he
intemperate
wants it. As he heads downstairs to
accusations," fumed communications
drive himself home, the billionaire en. chief George Stephanopoulos. One
trepreneur—who may well control the
senior Ointon adviser added^tV
balance of power in American polidear Ross Perot is out for Ross Perot,
tics-first insists on turning out every
eniire going to discredit hisfurther
last light.
•
comments about Bosnia-and possiI t t y about dinton." Clinton's secret
BY GLORIA BORGER AND JERRY BUCKLEY
.hope: Perot self-destructs.
TBe magnificent obsession
O
;
WITH DAVID GERGEN. STEVEN V. ROBERTS,
DORIAN FRIEDMAN AND BUREAU REPORTS
US.NEWS & WORLD REPORT, MAY n. IMG
:
'
?
.
Even if they can't appease Perot.
Democrats still hope they can woo his
voters. The main strategy is to emphasize cutting the deficit, reducing government waste and reforming the political system. The problem is that
Qinton has not lived up to his campaign rhetoric on any of those fronts.
And other approaches that might appeal to some Perot supporters-such
welas efforts tb fight crime or reform \
t ^ ^ ^
^
probably
- weaken Qinton's focus on
j the economy, the
one issue that most concerns Perot backers.
"Democratic advisers ar./gue that ultimately, if the
'president wins victories in
" Congress on hfs budget
and health care reform, he
will show he has ended the
^.gridlock in Washington
' and thereby appeal to mil.' lions of Perot supporters.
" 'The Democrats aren't
;iaidne in their Perot obsession; Republican National
^ ' --'"'-'-•' Chairman •.;.'/.;;
has urged
GOP state'chanrmeri to stay in touch,
with iocaTPerot organizations. And
Senate Minority Leader Bob Dole,-a
potential Republican presidential
candidate in 1996, has been careful to
stroke Perot He has encouraged the
Texan to endorse Republican candidates and has set up a meeting on
June 5 with some of the top state organizers of Perot's 1992 campaign. After
Perot's last "infomercial" attacking
the deficit,'Dole called to praise him.
Yet even in the midst of such
courting, operatives for the major
parties are urging journalists to confront Perot. "You guys in the media
have not forced him to be accountable," says a frustrated senior Qinton
adviser.; "You haven't focused on
what he says." But relying on journalists to derail Perot has been tried before; George Bush used that inertial
approach for most of last year, and it
only made him look weak and hapless
against a man who claims to have all
the answers: ; •;
0
r
J
BY KENNETH T. WALSH WITH
STEVEN V. ROBERTS
�• COMMENTARY
Not thinking BIG enough
His supporters think he's great on the issues. But if you look closely,
Perot uses some familiar politicians' tricks to duck tough questions
hen pressed for specifics about how he would cut
the deficit and clean up Washington. Ross Perot, the
inveterate salesman, refers inquisitors to the fine
print. "'Everything is in the book," he said on "The Tonight
Show with Jay Leno" last week, plugging his latest ghostwritten publication. "Not for Sale at Any Price." This is classic
Perot: claiming credit for courageous policy stands while
avoiding the unpleasant business of publicly defending them.
Judging from his surging poll numbers, this tactic has convinced many that he really has come forth with bold and
sensible reforms. Read closer, however, and Perot's policies
seem less practical, effective and sweeping than he implies. Indeed, he is guilty of some of the
same sins that he accuses traditional
pols of committing.
Two such sins, timidity and equivocation, are evident in his ideas to reduce
the budget deficit. Perot rightly won
accolades last summer with his plan to
trim once sacrosanct entitlement programs. Yet the man who drafted that
plan, John White of Harvard University, concedes that the reforms he and
Perot proposed, such as higher taxes
on the Social Security benefits of the
affluent, were mild compared with the
real medicine required: cutting benefits
entirely to people who don't need them.
"Sooner or later we're going to have to
means test entitlements," White says flatly.
Early in the campaign. Perot himself seemed
to approve of means testing Social Security. But
he backed off after being upbraided by a disgruntled Florida retiree on a TV call-in show.
While his new book offers a list of milder entidement
reforms, many of which Congress backs in its current
budget resolution, Perot rarely mentions entitlement
cuts publicly. Nor does he dwell on his plan's massive
fudge: $140 billion in unspecified cuts in health care
spending. He isn't afraid to lambaste the $275 billion
in tax increases in President Clinton's budget. Yet
that figure is $63 billion less than the revenue hikes
Perot seeks. (The difference, he says, is that Clinton's
plan, unlike his own, fails to balance the budget.)
Other problems are evident in Perot's proposals on
his other favorite subject: reforming the money-and-lobbyist-driven culture of Washington. Some of his ideas are
worthy, if unoriginal — like limiting campaign contributions
to $1,000 and providing free broadcast time to candidates.
But others are seriously flawed. Last month, a group of
Republican congressmen eager to court Perot supporters asked Congress's nonpartisan lawyers to draft legislation based on a list of reforms Perot had offered on
television. The lawyers concluded that most of those
ideas were "unlegislatable." Some, like his proposal to
W
48
lausnwnw s» HM OflORTORusstm
"eliminate foreign lobbyists completely.'' are flatly unconstitutional. Others are fatally imprecise. Perot would limit domestic
lobbyists to providing "only information - not money directly
or indirectly." Well, what does indirectly mean? Would a gun
owner violate the law if he gave money to the National Rifle
Association to buy newspaper ads?
But even if all of Perot's reforms could be enacted. Washington would still be in the pockets of special interests. That's
because the incentive for candidates to outspend each other
would remain, as would the ability of interest groups to skirt
limits by "bundling" individual contributions.
Curiously, the billionaire Texan has yet to embrace
the one reform that offers the best chance of
breaking Washington's money culture: limiting the total amount campaigns can spend.
The Supreme Court ruled in 1976 that laws
restricting spending violate the First
Amendment. That leaves two options.
One, a favorite of Common Cause,
is to give public money to all candidates who voluntarily restrict their
spending. Perot has objected to that
on budgetary grounds. The second
is a constitutional amendment to
limit campaign spending. Clay Mulford. counsel to Perot's United We
Stand America, says the organization is
studying such limits and that Perot is "not
philosophically against the idea." But he
hasn't come out in favor of it. either.
Similar weaknesses lie behind many of
Perot's proposals. He opposes the
North American Free Trade Agreement because it would suck jobs out
of the country, ignoring the fact
that jobs are already flowing to
Mexico in droves even without
NAFTA. He worries about the
proliferation of guns in American
cities but does not support gun
control. Perot often promises to
devote more "study" to such thorny
issues. When politicians make the
same excuse, he accuses them of
"slow dancing." Almost everyone
agrees that Ross Perot has played an
extremely useful role by forcing politicians to begin to face up to the
deficit. But unless he comes up
with more-convincing solutions,
he's in danger of losing that role
and becoming just another
cranky voice in the crowd. •
BY PAUL GLASTRIS
U.S.NEWS & WORLD REPORT. MAY 17.1993
�B SN S
UI ES
Gas guzzling
Demand for natural gas declined throughout much of
the 1980s. As a result, gas production and exploration
fell. But today, gas consumption is on the rise,
Fueling the future
Natural gas is hot and could fulfill its fiery potential in the 1990s
aniel Yergin called his recent
(bestseller on the history of oil
"The Prize." If a similar book
were to be written on natural gas, says
William Hederman, an industry analyst
at Virginia-based R.J. Rudden Associates, an apt title might be "The Puzzle." Cheap, plentiful and the cleanest
burning of all fossil fuels, natural gas is
considered a near ideal energy source.
Yet it is also a hydrocarbon with a history that has kept it from living up to
its full potential. In the late 1970s,
fears that supplies were dwindling led
Congress to curb consumption and decontrol prices. That in tum spurred
production. The result: a prolonged
"gas bubble," or supply glut, that
drove hordes of natural gas companies
out of business.
But now the "methane age" may finally be at hand. A confluence of favorable long-term trends, ranging from
growing concern over the environment
54
to rapid deregulation and improved exploration technologies, has the gas industry fired up. This year, Americans
are expected to consume more than 20
trillion cubic feet of natural gas for the
first time since the late 1970s (1,000 cubic feet is enough to heat a typical
American home for a day). What's
more, the fuel now boasts a quarter of
the $240 billion U.S. energy marketand its share of the business is projected to climb to about one third over the
next few decades.
The dreaded gas bubble also appears
to have finally burst. While production
has been flat, demand for the fuel has
been rising in recent years —despite the
economic slowdown. With supplies
now tightening, spot gas prices have
rocketed almost 80 percent from a year
ago, to $2.02 per million Btu. New
rules issued by Washington's Federal
Energy Regulatory Commission, intended to promote competition in the
gas industry, should also help keep
prices firm.
Burning issues. The gas business still
must face a number of burning issues.
For one, if prices rise much higher, customers may defect to other fuels since
many industrial gas users can easily
switch to oil. Environmentalists support
natural gas now, but that could change
soon once producers start pushing to
develop offshore fields. Finally, a number of potential customers remember
that some supplies were cut off during
the mid-1970s, in part because few pipelines were interconnected. "The industry does not have a good public image,"
conceded a recent report by the National Petroleum Council.
Nonetheless, the outlook for gas has
never been brighter. As stricter environmental regulations on vehicle and power plant emissions kick in later this decade, demand for gas should increase
further. In the year 2000, for example,
U.SLNEWS & WORLD REPORT, MAY U IOT/^
�En9r&. Amencan Gas Assoctatjon.
Natunl Gas Wee*. USNMR estimates
ROO L J T T l £ - U S * * W
decease
iple.
70 percent of new vehicles purchased by
large fleet owners will be required by
law to run on alternative fuels. All told,
the number of natural-gas-powered cars
and trucks is projected to climb from
30,000 today to 3.8 million by the year
2005. The amount of natural gas consumed by new gas-powered electric
power plants is also expected to double
over the next several years.
The gas business is also counting on
help from the green-minded Clinton
administration (story, Page 56). President Bill Clinton has said he is committed to using more natural gas because
of its environmental benefits and its
ability to reduce America's growing dependence on imported oil. The government "ought to do what we can to facilitate the development and laying of
gas pipelines," the president declared
last December.
Natural gas is also emerging as the
energy source of choice overseas. In
Europe, for example, the Organization
of Petroleum Exporting Countries predicts that demand for gas will expand
four times faster than that for oil over
the next several years. And even as
powerful oil conglomerates have circled
the globe, natural gas companies, too,
are starting to extend their international reach.
7.1993
U.S.NEWS & WORLD REPORT. MAY 17.1993
keep
~ still
sues.
. cussince
.asily
>port
iange
ig to
nummber
uring
pipeidusige,"
tion< has
iron30W-
Few have been more aggressive overseas than Enron Corp., America's largest natural gas enterprise with almost
$11 billion in assets and the biggest gas
pipeline system in the United States.
Net income for the vertically integrated
Houston-based giant has climbed by an
average of almost 30 percent a year
since 1988 and topped $300 million in
1992. Kenneth Lay, the company's politically connected chairman, has vowed
to tum Enron into the natural gas
equivalent of such globe-girdling oil
concerns as Mobil and Exxon. "We
want to be the first company countries
think about when they think about developing and utilizing natural gas," says
Lay. In short, says the 50-year-old Ph.D.
economist: "We want to be the first gas
major."
Last month, Enron took a significant
step in that direction when it unveiled
the world's biggest gas-fired combined
heat and power station in Teesside, an
industrial port on England's northeast
coast. Enron is a partner in the $1.2 billion power plant, which will supply almost 4 percent of Britain's total electricity needs. And when Lay says Enron
offers a complete package, he is not
joking. His company designed and built
the 23-acre Teesside power station,
helped secure bank financing, bought
and processed the gas, trained the staff
and will operate the plant and sell the
power, too. Enron is now exploring similar deals in nations as far-flung as Kuwait and Mexico.
Well connected. Enron has enlisted
some high-powered help for its empire
building overseas. Lay. a fund-raiser for
President George Bush, startled Washington by hiring former Secretary of
State James Baker and former Commerce Secretary Robert Mosbacher as
consultants. Enron's chief has also appointed Wendy Gramm. former chairman of the Commodity Futures Trading Commission, to his company's
board. Baker has just completed a paper for Lay on India, and Mosbacher
used to be on Enron's board.
At home, Enron has been quick to
exploit new opportunities created by
deregulation. For example, the gradual
deregulation of electric utilities has
given rise to independent power producers, who require guaranteed longterm fuel prices before they can get
financing. So Enron offers them contracts at a premium over the spot market—and thgp locks in that margin
by providirif^funds upfront to cashstrapped gas producers in return for
a fixed portion of their future gas
flows. The gas is then sold to indepen55
�U'CHIEL H*OT
dent power producers.
man Thomas O'Leary in
Such inventiveness has
response to a question
helped push Enron to the
about emerging global
front of the gas boom.
markets for gas. "All we
"Enron has emerged as a
do is drill wells and sell
value-added middleman
gas."
for numerous steps in the
Burlington Resources
natural gas process." says
has also been quicker
Hederman. And despite
than most rival natural
the gas industry's trougas companies to exploit
bled past. Lay believes
recent technological adthe good times are here
vances, ranging from
to stay. " We've replaced
new horizontal drilling
coal and wood and whale
techniques to advanced
oil before then as an inreservoir stimulation.
dustrial fuel." he says.
Improved technology,
"We believe that because
for example, has alof environmental conlowed the innovative
cerns, gas will become
company to recover gas
the growth fuel around
left behind from fields
the world."
produced in the 1950s
Main line. Enron is aggressively pursuing new markets for natural gas.
and 1960s. In fact, BurFew people in the gas
industry would have made that predic- report by Morgan Stanley, every 10-cent lington estimates that recent technolotion in the 1980s. Yet, even during those spike in natural gas prices adds $28 mil- gies have added 50 percent to the
firm's 6 trillion cubic feet of natural
troubled times, at least one company lion to Burlington's operating income.
was able to prosper: Burlington ReBurlington's corporate strategy could gas reserves.
sources, the nation's largest indepen- not be more different from Enron's.
Like Enron's Lay, O'Leaiy is confident natural gas exploration and pro- Whereas Enron does everything from dent that the natural gas industry has put
duction company. Since 1985, the exploring and drilling to operating its its checkered past behind it. The gas
Seattle-based producer's operating in- own power stations, and is global in business has been scalded time and again
come has jumped an average of 16 per- scope, Burlington is a sharply focused, by earlier predictions of booms that nevcent annually, to $240 million last year. domestic-oriented company. Almost all er seemed to materialize. Yet both leadPoised to profit Burlington has been of Burlington's reserves are in the Unit- ers reflect a growing consensus that the
called the Wal-Mart of the natural gas ed States; and in contrast to Enron's current surge is the real thing. Even
business. Its costs to find and produce empire building, Burlington has sold or Daniel Yergin, the author of "The
gas are estimated to be about half the spun off $1.4 billion in real estate, tim- Prize," concurs. "Gas is the new giant,"
industry average. As a result, few com- ber and other assets over the past sever- says Yergin. "In the 21st century, [it] will
panies are better poised to profit from al years to concentrate on its core busi- be at least a peer of oil."
•
the rise in both natural gas consump- ness: exploration and production.
BY JIM IMPOCO
tion and prices. According to a recent "That's not us," says Burlington Chair... "'. • — — •
. ff> .Di,
PIPIUNE POuflCT-pR/'p-"^"'' ; '^ntativessay would make it harder for interests. The vice president'lidmmis•... •-.
.. ..
.•^.iu^;..j<ftE^,gvrjff;,j.. ^them td plass the costs ou tu consumers: tradpn officials say, enco ""•"•'•
Lobbytat. Stfltfbne'bf tfe industry's bepartment of Energy to pr
best;allies in j i e VTOte HbusefcChief creasing its research-and-devet
jbf Staff Ma&McLam, former'chair- subsidy for gasfrom$144"iniBftt
^jhan ~md*di^;e^th** officer of JHXrmillion. And aides say G ^ W a '
i Sfaeveix^ !^natura) leading advocate of OmtiM^ahler
'W% uring ^ e l r a i ^ ^ ^ i f ^ 0 m t b n
fe^l^^ffi'o^ratmg
rwenues last month requiring the ggtemment
l # and AI Gore: wert cheerleaders Of $2.7 bdlion;: M c j L ^ y m among the to increase by at least 50 percent its
•for natural gai^^aijjired; peirsua- ; officials who met with indus^repre- purchase of cars and t r u ^ ruir^pn
sively that gas v ^ M envirorimentally ' sentatives several' weeks ago' anc^ at compressed natural gas and outer alsuperior, plentiful'sulatitnte for oiL their request, helped change the origi- ternative fuels. As a result, the Energy
And they proniise'd ^tha^'if Elected, nal 'administration jplan ^ that would bepartment plans to buy l£250Such
they would promote the use of gas.
have applied, the new tax at the natural vehicles next year, up fronrthe^SOO
Now that t H ^ ^ ' W ^
gas pipeline. TUef coD^cdbn point was projected by the Bush admmistra
House, it is not cttar how vigorously changed in April'fromthe pipeline to Aides say.. Gore remains enthusiastic
^ local utmties, tn^Mmdusby says thfc about promoting gas and wants-evencampaign rhetoric.T6r'starters, gas in- provision is just as unacceptable. The tually to convert the entire'federal
indnstiy continues tp Io|t%. agamst the fleet .^e still believe in na^nftgas,"
provisioh, but the White House doesn't says a White House officiaL*t^ust
iaipect Another c h i ^ ^ l t s poation. takes a while to get things &ug£
local umitiesrathCT^ani
despite McLarty's sympathy.
tomers—a system that uu
Gore has also been helpful to gas
„ BYXENNETH T. WALS1
A new power ^ i.
sowc^^rgas
£
r
:
f
;
1
56
USJ^EWS & W
D REPORT, MAY 1 .
7
�I B SN S
UI ES
Summer
without
sunshine
Clinton attempts to
brighten job prospects
for poor youths
O
ne of the annual staples of
springtime punditry is the prediction that a "long hot summer"
of strife will beset American cities. President Bill Clinton, like many before him,
has asked for additional funding to create summer jobs for teenagers to ease the
pressure in poor neighborhoods. It is one
of the few provisions of Clinton's ill-fated
jobs program that could survive as Congress wrestles with the specifics of his
budget. Although cut from a proposed $1
billion to at least $500 million, Clinton's
summer program would still allow localities to provide jobs and remedial education this summer for a minimum of
340,000 more poor kids ages 14 to 21.
Clintonites argue that the urgency for
such programs is
growing. And last
week's employment
report contains some
supporting evidence.
According to the Labor Department, teenCLINTON'S
age unemployment in
April grew from 19.5
ECONOMY
percent to 20.7 percent. At the same time, the nation s jobless rate remained stuck at 7 percent for
the third straight month. Payroll employment grew by 119.000 jobs, far below the
normal post-recession recovery rate.
Still, the track record of summer
youth jobs programs suggests they hardly change lives in the ghetto. They can
teach kids the basic value of work, provide them a paycheck and keep them
from sliding too far academically until
September. But even the best summer
job won't mitigate the big problems facing millions of disadvantaged teens.
Clinton officials appear to understand
that. "We have designed this new program to leam from the mistakes of the
USXEWS & WORLD REPORT. MAY 17.1993
Looking for work. Young people applying for community summer jobs in Boston
past and to build on its successes," explains Labor Secretary Robert Reich.
That may be so, but the Clintonites still
face some big obstacles. Among them:
• Convincing the skeptics. Some federal
summer jobs programs have been notorious boondoggles. The first efforts in
the Johnson administration, begun just
before the Watts riot in Los Angeles in
1965. were patronage swamps. And subsequent programs became widely associated with subsidized recreation or
make-work. Yet, the worst abuses were
wiped out by the mid-1980s. In February
a report from the Labor Department
concluded that, with few exceptions, last
summer's participants were "productive, interested, learned new skills they
could apply to their schoolwork and
took pride in their employment."
Some economists, however, question
the practical benefits of summer jobs. " I f
the objective of the program has been to
take money out of the federal treasury
and put it in the pockets of needy kids, it
has sort of succeeded," suggests Marvin
Kosters, an economist at the American
Enterprise Institute. "But that shouldn't
be confused with a real job that requires
an honest day's work for a day's pay."
• Elusive benefits. While the Clinton plan
may help poor kids in the short run, summer jobs programs should not be expected to yield lasting payoffs. One program
seen as a model by the White House, the
Philadelphia-base'd Summer Training
and Education Program, or STEP,
showed early promise of helping teens
academically. But over time, the teens
were just as likely to have dropped out of
school as their peers who didn't participate in the program, and their test scores
and employment rates were no better. By
age 19, one third of the female STEP
graduates were single mothers, and three
fourths of those were on welfare.
Clinton's proposed expansion does
take an improved —if not entirely new —
approach. Responding to findings that
poor kids may forget 30 percent of what
they've learned during the school year
each summer, the plan requires local
programs to offer 90 hours of academic
"enrichment" to all kids who need it. In
addition, Clinton has put the hard sell on
U.S. businesses, urging them to match
new government-funded summer jobs
with as many in the private sector. Members of the National Alliance of Business,
for example, are aiming to create an additional 300.000 jobs this summer.
As always, the verdict on these efforts
depends on how success is measured.
The officials who devise antipoverty programs do not expect that any single program can be a permanent fix. Thus, their
goals are modest. Reich says his mission
is "to help poor kids retain over the summer what they learned before and to give
them a modicum of structure, discipline
and work experience." The public,
though, doesn't want more money tunneled into efforts with limited benefits.
Clinton's task now is to convince Americans that even a small-scale summer jobs
program is a worthy investment.
•
BY DORIAN FRIEDMAN
�I B SN S
UI ES
Waging war on low wages
Michigan's DougRoss hopes to re-educate Washington aboutjob training
D
oug Ross knows all about the vi- engaging speaker with a fondness for
sion thing. For the past two television news cameras and doubleyears, he has crisscrossed his breasted suits. His high profile under forhome state of Michigan preaching his mer Michigan Gov. James Blanchard in
gospel of "enterprise economics" as the the 1980s and more recently as president
best way for Americans to ensure high- of Michigan Future Inc., a nonpartisan
er living standards and a place in the think tank, has fed speculation that the
new global economy. A former state jobs program he most favored was the
commerce director. Ross believes that one that would make him governor. But
rising real wages will
only occur with
wholesale changes in
education and training and with a more
democratic
workplace. "We have to
CLINTON'S
take control of our
lives and change the
ECONOMY
way we view the future," Ross says. "It's no longer a question of social or philosophical preference. It has become a matter of
economic imperative."
If that sounds Clintonesque, it's with
good reason. For the past several years,
Ross has been one of the "new Democrat" voices from out in the states to
whom Clinton has been listening, and
soon his could be one the president hears
up close in Washington. Ross. 50, has
been nominated to be assistant secretary
of labor for employment and training.
Given Clinton's belief that large-scale
job losses will continue, this is clearly no
bureaucratic backwater. Indeed, Labor
Secretary Robert Reich has proposed a
30 percent increase in spending —from
$5.8 billion to $7.5 billion — for employment and training programs next year.
Business support. Ross's vision of a
new economy dominated by skilled
workers in lean production systems
making high-quality products is not
original. And his nomination has met
resistance from some in organized labor, perhaps because of his championing of small- and medium-sized companies, which are traditionally nonunion.
But Ross's supporters, including Republican businessmen and some union
leaders, say he would bring fresh thinking and considerable cheerleading to
the task. "Doug is best when he's motivating others about what could be, what
should be," says Beverly Wolkow of the
Michigan Education Association.
Controversy is no stranger to Ross, an
58
pitch and then say. "I don't get it.' or I
have real things to worry about.' " says
Ralph Miller, executive vice president
of Aero Detroit, an engineering service
company with 1.000 employees in the
Detroit area. "They get it."
If Ross is confirmed, one of his earliest initiatives could be a new employment insurance system to supplement
KEVIN K H U N TOO USWtbW
Wired for worit. Ross believes the next generation must be trained for high-tech jobs.
during hisfive-yeartenure as commerce
director, Ross won bipartisan praise for
enlisting business leaders in partnerships
between government and industry and
for promoting foreign trade.
Michigan has provided a sobering,
yet hopeful backdrop for Ross's economic agenda. General Motors, Ford
and Chrysler cut 180,000 jobs in the last
decade, but 18,000 smaller manufacturing and industrial service companies
that were started or expanded in the
same period created 370,000 new positions, according to a University of
Michigan study. Still, transforming an
economy built on mass production using mainly unskilled workers is a huge
task. Fortunately for Ross, many Michiganders seem willing to try. "There are
very few people who listen to Doug's
the current unemployment insurance
program. At the center of such a new
system would be a Career Opportunity
Card, a voucher or wallet-size card that
wouid entitle unemployed and underemployed workers to purchase education or
training from public and private sources.
The idea is derived from a job-trainingaccess card Ross developed in Michigan.
Whatever the specific initiatives,
Ross won't have to spend a lot of time
convincing Reich and Clinton of the
need to "cross to a new economy." But
based on his experience in Michigan,
Ross also knows that getting the rest of
the country to go along will require an
education in itself, especially because
federal resources are so limited.
•
BY JERRY BUCKLEY IN SOUTHFIELD, MICH.
USHEWS & WORLD REPORT. MAY 17.1993
�I B SN S
UI ES
Caught in the undertow
A wave of Pacific Rim exports hurts growth in America and Europe
I Clinton and his chief trade negotiator. Mickey Kantor. have
been playing a game of bad cop/
bad cop with Tokyo lately in an effort to
open Japan's huge market to more
American products. But a new analysis of
world trade shows that the Pacific Rim
harbors an even bigger challenge to U.S.
exporters —and to U.S. jobs and wages.
The source of this
challenge is the string
of eight newly industrialized economies,
or NIEs, that stretch
across the Pacific Rim
from Korea to SingaCLINTON'S
pore. Taken separately, these tiny powerECONOMY
houses have stunned
the West since the early 1980s with
growth rates of 6 percent to 7 percent
per year —double or triple the growth
rates of more advanced nations. But
now, this blazing growth has converted
the NIEs into major players on the
world export scene. Taken together, the
NIEs have almost tripled their world
market share in the past 15 years, and
they now control a bigger share of
world exports than Japan or Germany.
Climbing higher. According to a new
report by the WE FA Group, a Pennsylvania forecasting firm, this year these
eight economies will export $19 of merchandise for every $100 exported by their
counterparts among industrialized nations, an amount that will climb to $23 by
1998. That 4 percentage point rise in
market share is worth some $100 billion
in additional exports - or roughly the entire export volume of Canada last year.
The Pacific Rim NIEs "are here to stay,"
says WEFA economist Allen Shiau.
While this trade battle is fought
largely in the ports and factories of the
Pacific Rim. it is inflicting casualties here
in the United States. One reason for stagnant wages and sluggish hiring in the
current U.S. recovery, which has seen job
growth at about one eighth the typical
post-recession pace, is that American
employers are scrambling to slash labor
costs to compete with the NIEs. Labor
costs in the Asian developing nations, for
example, average $4.23 per hour, compared with $15.45 in the United States.
The WEFA Group predicts that the un-
Bi
employment rate will remain above 6
percent in America and above 8 percent
in Western Europe through the mid-'90s
as industrialized nations struggle to stay
ahead of their new competitors.
The competition is also taking its toll
on profits of U.S. exporters. Economist
Robert Brusca of Nikko Securities notes
that although U.S. exports have been
cals. Last year, for example. Korea exported $4.4 billion worth of automotive
goods, and Singapore shipped almost $17
billion worth of advanced petrochemicals. WEFA's Shiau bought a high-tech
air conditioner recently and found it had
been made in Malaysia. "If that air conditioner can be produced in Malaysia, with
the most modem design specifications
EXPORT EXPANSION
The rapid rise of Pacific Rim
exports is contnbuting to
increased joblessness and
lower wages in tbe
developed world.
growing at roughly 5 percent annually in
recent years, export prices have been
flat. However, some analysts note that
U.S. consumers benefit from cheaper
products made in the Pacific Rim.
Western leaders might welcome the
new competition with greater enthusiasm if the world economy were expanding fast enough to absorb the flood of
goods from the Pacific Rim. But a new
forecast by the International Monetary
Fund predicts that the world economy
will grow a sluggish 2.2 percent this
year. Although that is an improvement
over last year's 1.8 percent growth rate,
it marks the third consecutive year of
subpar growth for the world economy.
Until recently, many Western companies dismissed the NIEs as low-skill assembly entrepots. But Taiwan. Korea
and others have moved into high-technology, high-value-added industries such
as semiconductors and specialty chemi-
but at $4 an hour," says Shiau, "the manufacturer simply won't do it here."
The rising affluence of the NIEs has
turned them into attractive export markets for American and European companies. Indeed, imports of the developing nations grew a stunning 10.2 percent
last year. But, Brusca notes, many of
those imports are not destined for internal consumers but are used as materials
for factories and refineries that in tum
export the finished products to compete
again in world markets.
The result is unwelcome news in
Western capitals from Washington to
Berlin, where leaders are struggling to
reinvigorate their listless economies.
The traditional fiscal and monetary policies are frustrated when the world's
markets are prowled by hungry and aggressive tigers.
•
BY DAVID HAGE
U.S.NEWS & WORLD REPORT. MAY 17.1993
61
/V
�O T E EOO Y
N H CNM
BY SUSAN DENTZER
Reinventing Clintonomics
T
he campaign version ot Clintonomics. with its middle-class tax cut and grandiose spending plans, was
buried on Election Day. Now, the second version —
President Clinton's 1994 budget proposal and five-year
deficit reduction package-is undergoing a transfiguration. As Congress begins the dirty work of assembling
next year's budget, everything from the president's "investment" plans to his tax proposals is headed for an
overhaul. It's unclear what the plan will look like when
the process is complete or whether the president will
want to call the final product his own. But given the need
to sell the program to the public-and to congressional
Republicans —Clinton probably has
no choice but to declare victory
and live with the results.
Divesting "investment": Clin
ton proposes to spend $165
billion over the next five
years for new "investments" in everything from
air-traffic-control equipment to stepped-up job
training. But many of these
items now look vulnerable.
Clinton's budget is already
about $7 billion over the
legally mandated caps on
so-called discretionary
spending outlays for fiscal
1994: as a result, lawmakers will have to choose
between cutting the president's proposed investments and slashing other
spending that they have
long supported. "We don't
want to cut back on the investments," asserts Robert
™
Rubin, who heads Clinton's National Economic Council. But privately, administration officials say they will negotiate. The betting is that
many of Congress's cuts will in fact come from the investment portion of Clinton's budget —about half of which
probably wouldn't yield big returns or meet the test of
contributing much to long-term economic growth.
ses of Clinton's other investment proposals could well turn
up some that would produce slight, or even negative, returns and that Congress will junk as a consequence.
Tangle over taxes. A tougher struggle lies ahead for the
president's tax proposals, which aim to raise $272 billion
over the next five years. Having crafted massive tax overhauls in 1981, 1986 and 1990. many lawmakers on Congress's two key tax committees have their own fixed ideas
about what should-and shouldn't-be done. High atop
their list of the latter are Clinton's proposed investment
tax credits for small and large businesses, slated to cost
about $15 billion in lost tax revenue through 1994 and a key
feature of the president's plan to
spur short-term economic growth.
Here again, although publicly
arguing the case for the ITCs,
the administration has signaled that it will entertain
substitutes "that would be
productive economically,"
Rubin says. One option
aimed at small firms is to
raise the $10,000 limit on
the equipment purchases
that a business can deduct
from earnings in one year.
Congress could also pare
back or drop Clinton's proposed increase in the corporate tax rate from 34 to 36
percent.
The biggest tax fights will
come in the Senate, where
opposition to Clinton's $73
billion energy tax, which
would be levied on the heat
content of fuels, is especially
pronounced. Among the
many objections: The White
House billed the tax as environmentally friendly, but coal, a
prime source of atmospheric carbon dioxide, would be
taxed at half the rate of petroleum under Clinton's plan.
The mounting opposition suggests a possible replay of prior
years, when Congress considered such broad-based energy
taxes and resorted to a hike in the gasoline tax instead. A
quarter-per-gallon increase in the gas tax, phased in over
five years, could result, predicts Randall Weiss, director of
tax economics at Deloitte & Touche.
One other area to watch: a move by Congress to add
even more spending cuts to Clinton's $496 billion deficit
reduction plan. That would make the package look even
less like the one the president originally proposed, partly
because it could force further cutbacks in his investment
spending. But such a step would clearly appeal to jaded
students of fiscal policy, who know that the hefty tax hikes
in the package could easily end up paying for more spending down the line. And if it makes the voters happy, Clinton won't have any trouble taking credit for it.
•
'A tough struggle lies ahead for the
president's tax proposals.'
Consider Clinton's plan to add $326 million to the government's $341 million immunization program next year to
vaccinate more preschoolers-a separate proposal from an
earlier one, now scaled back, to buy all childhood vaccines
and give them away. This is a mom-and-apple-pie idea that
seems worthwhile: who could be against keeping kids
healthy? Yet an analysis by the Virginia-based consulting
firm Lewin-VHI questions the notion that this proposal
represents a good "investment" in economic terms. Vaccinating more children might prevent 39,000 cases of disease
in 1994. saving just under $40 million in health care and
other costs. Thus, the expense of expanding the program
could exceed the extra dollar savings by eight to one. Analy62
MAMS BSHOFS FCR USNMR
U.SJ4EWSftWORLD REPORT. MAY 17.1998 /•
�KEVIN HQRAN FOB USH&WB
Interior life. Babbitt's basic challenge is finding a balance between the pressures for development and respect for the land.
America's landlord
Bruce Babbitts land reforms are driven by a new vision of the West
nice Babbitt surveys the crowd
• packing Montana State Universi'ty's ballroom in Bozeman. In the
second row. a sunburned, booted rancher looks dismissively at a young environmentalist clad in Patagonia fleece and
neon-hued athletic shoes. Babbitt, who
as secretary of the interior may be the
most powerful man in the American
West, is five contentious hours into this
first of several public hearings on grazing on public lands. When he proposed
the meetings, he told aides: We'll kill
them with process, we'll listen and listen
until the last cowboy walks out exhausted. By 3 p.m. the meeting is running late,
and when he asks the crowd whether
they should take a scheduled break or
press on. the room rings with cries to
continue. Smiling broadly, he declares:
"We ve achieved our first consensus."
Bi
U.S.NEWS & WORLD REPORT. MAY 17.1993
Cowboys and environmentalists alike
burst into surprised laughter.
Former governor of Arizona, onetime
presidential candidate and master consensus builder. Babbitt. 54, is in his element. Aside from hiking in the Grand
Canyon, there's nothing he likes better
than searching for the common threads
in a raging conflict, and in recent months
he has spent countless hours doing just
that. As interior chief, the landlord of
over 440 million acres of national parks,
wilderness areas and rangelands. Babbitt
is at the center of the nation's most divisive battles over resource development
and conservation. With the sometimes
wavering support of President Bill Clinton and Vice President Al Gore, he
hopes to overhaul the use of Western
public lands. He wants among other
things to redirect the Endangered Spe-
cies Act to avoid impasses such as that
between loggers and environmentalists
over the spotted owl. and to pare down
the federal subsidies for the loggers,
miners and ranchers who use Western
public lands. He is driven by what he sees
as a new American West — a place where
the old myths of rugged individuals conquering a wilderness are yielding to the
reality of an increasingly urbanized West
with exhaustible resources. "What is
emerging." says Babbitt, "is a new partnership for living more intelligently and
lightly on the land."
No fences. Federal lands, says Babbitt, have been managed with a reigning
philosophy of "y'all come and get it"
since the 19th century, when the government wanted to encourage westward
expansion. Indeed, many of the rules
and laws that govern federal land use
63
�• S IN E & S C T •
C C
E
OI Y
E
have been on the books smce the days
of Annie Oakley. Although miners extract at least S3 billion worth of minerals annually from federal lands, for instance, no royalties are paid under the
1872 General Mining Law. American
Barrick Resources .Corp.. based in Toronto, has claimed title to public lands
that hold at least $10 billion in gold.
Babbitt says, and under the existing law
he may be required to give them the
land for a one-time fee of $5 an acre.
Cattlemen also receive a healthy subsidy from Uncle Sam. The government
charges only $1.86 a month to graze a
cow and a calf on public lands-a fraction of the $6 to $10 that private landowners typically charge. Moreover, both
mining and ranching have taken a heavy
toll on the environment. According to
the Interior Department's Bureau of
Land Management, more than half of all
rangeland is in poor or fair condition.
Acid mine drainage, heavy metals, mercury and arsenic pollute the ground and
water around many mines, posing health
hazards to people and wildlife alike. At
least 50 hazardous-waste sites on the Environmental Protection Agency's Superfund list - a roster of the nation's worst
dumps-are from hard-rock mining.
Rip-flop. In February, President Clinton announced as part of his economic
program a plan to scale back the century-old subsidies. Babbitt championed
the plan, which would have boosted
grazing fees and charged royalties on
hard-rock mining. But in late March, he
was reined in when his boss, feeling the
heat from Western senators, retreated
on the higher mining and grazing feesa move that underscores the power of
those legislators, who often use the tug
of Western mythology to defend the interests of modem ranchers and miners.
Babbitt was angered by the episode,
but he insists that it requires only a
change in strategy, not policy. As he
pointed out in a recent speech, he has
the authority as interior chief to raise
.grazing fees unilaterally. "I'll admit I
was slow to realize it." he joked, "but
I've got it now; it's going to happen."
Unlike some extreme environmentalists. Babbitt does not believe that federal
lands should be "Cattle-free by '93." In
fact, he holds that ranching is a good way
to maintain wide-open spaces and protect native plants and wildlife, and that
many cowboys are excellent stewards of
public lands. Yet big, rich livestock operators shouldn't be getting a handout, he
argues. While opponents of grazing-fee
hikes warn that increases will drive small
ranchers out of business, a recent con64
"The patenting of land into private ownership for $2.50 to
$5 an acre is an outrage. It has nothing to do with mining
needs and too much to do with land speculation."
gressional report shows that the public
range is dominated by big ranchers. The
500 largest grazing allotments average
58,000 acres each, and together make up
about one third of the available acreage.
Babbitt is proposing a two-tiered fee system that would charge big operators
higher fees than small ranchers. He also
will push to restore overgrazed rangelands either through stricter enforcement of existing laws or by rewarding
good land managers with lower fees.
By all accounts, mining reform, which
must be accomplished legislatively, is the
stiffer challenge. In the coming months
Babbitt hopes to convince Congress that
the system by which private companies
can claim title to public lands for as little
as $2.50 an acre should be abolished. He
also wants hard-rock miners to pay royalties and to be required to post bond to
assure that they clean up after themselves. Currently, the Interior Department is a defendant in several Superfund
cases because when the miners dumped
the hazardous waste, the United States
was the official landowner. Not only were
publicly owned minerals given away, says
Babbitt, but now taxpayers may have to
pay billions of dollars in cleanup costs.
Despite his own rethinking of Westem-land policy. Babbitt knows the old
impulses well. Bom into a prominent
northern Arizona ranching and mercanU.S.NEWS & WORLD REPORT. MAY 17.1993
�"His talent is understanding when and
where to put on the pressure."
On the stump. Babbitt's 19SS bid for
the presidency crashed before it ever
really took off. While he won over the
press with his straight talk about deficit
cutting and a national consumption lax.
he failed miserably at selling himself to
voters. Much has been made of his facial twitches, which can convey the impression that he is constantly
on the verge of speaking,
and his deep, slow voice,
which invites parody. But his
true problem was that he is
not a natural campaigner.
Political rhetoric doesn't
come easy, because it requires a glibness he doesn't
possess, and he doesn't relish
raising money and working
crowds. Ex-staffers still tell
the story of how one night in
Iowa he was welcomed into a
farmhouse living room and
instead of greeting supporters, he wandered over to the
bookshelf to browse.
Although Babbitt never
broke double digits in the
polls, he still came out
ahead. After a year and a
half of campaigning, he'd
built a national constituency
that helped position him for
a job as the president of the
League of Conservation Voters. After two years with the
organization, he knew most
members of Congress and all
of the environmental comBABBITT
ON CATTLE
C R A Z I N G
munity, so when he was
tapped for interior he was
"In the West, good ranching is the best way to maintain wide-open ready. "I was offered the job
Christmas Eve," he says,
"and by New Year's. 1 had
spaces and biological diversity. But ranchers have to run their
an agenda."
businesses in harmony with the land."
His biggest handicap in
achieving that ambitious
agenda may well be his own
ging and grazing. But the scars were cel- ment during his tenure was resolving the department, which is inefficient and
ebrated, he says, as evidence of a proud issue that dwarfs all others in the arid burdened with bureaus often working at
history of individual accomplishment.
West: water. Throughout the 1970s, Ari- cross purposes. Further. Babbitt's habit
His vision of the West began to unrav- zona boomed, with farmers, miners and of speaking his mind, whenever, wherel in college, when a professor urged him burgeoning cities locked in fierce compe- ever, could cause him trouble with the
to read Wallace Stegner's book "Beyond tition for water, which was being pumped White House down the line as well. He
the Hundredth Meridian." which chron- out of the ground twice as fast as nature is up against the political clout of the
icles the second opening of the Ameri- could put it back in some parts of the mining and cattle lobbies, and will need
can West. "It was like a rock through a state. A state committee had worked for the full support of the president to prewindowpane," he says. "Suddenly I saw two years to allocate the dwindling re- vail. Still, he's optimistic that land rea history of conflict and destruction." source but had reached an impasse. In forms ultimately will sell. Babbitt feels
He was studying geology, viewing the late 1979. the young governor agreed to as Wallace Steg'ner did. that it is hard to
discipline as a "tool to complete the con- step in and mediate, and six months later, be pessimistic about the future of the
quest of the land." But doubts about al- the group reached a settlement. "He's a West. Wrote Stegner, "This is the na•
lying himself with the mining industry, good listener, he masters the details, and tive home of hope."
he crunched everybody," says Phoenix
and a growing conviction that he could
make more of a mark in public life, led natural resource lawver Robert Lynch.
BY BETSY CARPENTER WITH LISA BUSCH
tile family. Babbitt grew up steeped in
the very traditions he now w^ants to lay
to rest. A skinny, awkward and very
bright child, he took from his reserved,
naturalist father a passion for the high
chaparral and red-rock canyons surrounding his hometown of Flagstaff. At
the time. Flagstaff was a small, resource-dependent town, and the local
landscape was scarred by mining, log-
U.S.NEWS & WORLD REPORT, MAY IZ 1 9
93
him to law school, a job in the Great
Societv's War on Poverty, and the Arizona attorney general's office. In I97S.
Babbitt vaulted into the governor's mansion when the governor stepped down
and his replacement died, leaving the
attorney general next in line.
BabbiU frequently confronted environmental and development issues as
governor. Indeed, his finest accomplish-
65
�BY MORTIMER B. ZUCKERMAN
E D I T O R I A L
EDITOK-IN-CHIEK
HONEY, I SHRUNK THE PAYROLL
T
he media may be in a frenzy trying to bash Bill
Clinton, but the public is focused on something
else-the sagging U.S. economy. People sense
that we are not recovering from just another recession,
that something more profound is occurring. They fear
that without radical change, this weak economy may
continue for a long time. Their concern is whether
America can change fast enough. And rightly so.
What's going on here? What appears to be happening is that the historic parallel between increasing output and job creation may now be fractured and that
this may make a chimera of full employment in a free
society; that we may be in some kind
of permanent jobs recession unless
national policies are changed. Witness
the fact that in the 25 months since
the recession bottomed out, we have
replaced only 598.000 of the 1.66 million jobs lost, compared with about
4.3 million jobs produced in the first
25 months after previous recessions.
We may be moving toward an
economy whose growth depends, paradoxically, not on the expansion of its
labor force but on its contraction. The
world and, to some extent, the United
States are swamped with excess production capacity —probably 20 to 30
percent in most industries. On top of
that, there are no new large fast-growing industries
that can serve as engines of growth at home; abroad,
none of the industrial countries is booming enough to
fire our engines by absorbing exports. Such countries
as Mexico and China now absorb the low-skilled, lowwage, labor-intensive jobs while the higher-paying jobs
at home shrink because the labor content of all manufactured goods is falling. Meanwhile, computerized information systems have eliminated thousands of clerktype jobs and the layers of middle managers who
supervised them. A lot of hard-working people are being replaced by fewer, smarter-working people.
The result? There is no surge of hiring in sight. Helpwanted ads are scarce. Corporate America is doing more
with less. The rising cost of health care and other benefits has pushed up the price tag on hiring new workers;
companies are reluctant to hire and are working their
existing employees harder. No wonder middle-class
working people feel beleaguered. They recognize that
only radical change will provide long-term economic
security, that only a fiscally sound government-with
lower deficits and debt service - can free up the money
to pay for productivity-increasing investments.
The political climate has changed in large measure
because of Clinton's determination to address the deficit seriously for the first time in 12 years. It is no longer
political suicide to propose large tax increases, especially on the wealthy, provided they are tied to cutting
the deficit. Clinton's vision has caught fire and may
even have passed him by. Now the public is calling for
even deeper cuts in government expenditures and for stepping up the
pace of deficit reduction.
But can he pull it off? He has a
surly opposition, and his own party's
instincts are to spend. Even so, Clinton's budget proposals will be considered under parliamentary rules that
favor the executive more than those
that enabled the Republicans to kill
his stimulus program. No filibuster
will be allowed. The final budget total
must match deficit targets already approved by Congress in March, so any
Republican fighting a tax increase on
the rich or any liberal Democrat opposing spending cuts must offer alternatives to keep the deficit from growing. This should
more or less keep the program intact.
The Republicans in this case have no standing for
simple opposition; after all, it was on their White House
watch that the deficit got out of control. To block everything in the name of the wealthy, to merely oppose in
general terms would make them appear to be the promoters of privilege and the guardians of gridlock.
Pope John XXIII often said, "See everything. Overlook a great deal. Correct a little." Clinton's priorities
must be the budget deficit, then health care. He will lose
his political base among the broad middle classes if he
fiddles with his priorities to appease the culturally liberal
pressure groups within his party, gets too diverted by
other issues or is shortchanged by inadequate staff.
There is nothing wrong with having made political
mistakes in the first 100 days. He had just better not
respond with encores in the second 100 days.
•
'Clinton's
priorities must be
the deficit, then
health care. If he
fiddles with them,
he'll lose his
political base.'
76
USNEWS & WORLD REPORT. MAY 17.1993
I ~L I
�iILL CLINTON, FOREIGN POLICY STAR—BY FRED BARNES
r-l-r
MAY 24. 1993 • $2.95
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Local h r
eo
"The worse I do. the more popular 1 get"
—private remark by President Kennedy
after the Bay of Pigs disaster
Am I alone in thinking there's something perverse, even a bit obscene, about
the current lionization of Attorney General Janet Renor Reno, we're told, is "a
prized asset" (The New York Times), "the
very best appointee of the Clinton
administration, bar none" (Morton Kondracke on "The McLaughlin Group"). At
a recent black-tie press banquet, she was
"accorded superstar status," reports The
Washington Post Congresspersons rush to
praise her ("a breath of fresh air ...
absolutely outstanding"). Representative
Patricia Schroeder gushes: "You've
raised the responsibility and accountabilitv of public service to an incredibly high
level in a way we've never seen before."
What exacdy has Reno done to merit
this glory? She made a disastrous decision that resulted in the loss of more
than seventy lives. Then she accepted
"responsibility." In a bizarre bit of political alchemy, this somehow protected her
from suffering anv of the consequences
that normally attend disastrously handled responsibilities. Farfromrestoring
accountability, Reno seems to have hit
on the formula for avoiding it. Make a
dreadful mistake? Go immediately on
"Nighdine." Say the buck stops with
you. Recount in moving human terms
the agony of your decision. And watch
your pollsrise.Truman + "Donahue" =
Absolution.
Reno is an outsider who serves Washington's politic need to revolt against
Washington politics. But what really put
the locals over the top was Reno's dramatic, televised response to John Conyers of the House Judiciary Committee:
"Most of all. congressman, I will not
engage in recrimination." Here Reno
did more than accept responsibility for
her role; she was shielding her agency
from criticism for its role. It was this
refusal to criticize the FBI, not Reno's
willingness to accept criticism herself,
that led some FBI agents to call her a
"stand-up guy.'' (Reno did call for a post- misrepresentation in any situation will
Waco "examination," but onlv one that have consequences.
would "focus on the future''—analyzing
A second function of recrimination is
ihe need for more "training'' and investigative. George Washington mav
"staffing" rather than fixing blame.)
not have been punished when he took
Here is a virtue Washingtonians can "full responsibility" for chopping down
appreciate. Reno wasn't taking a refresh- that cherry tree. But at least he had
ing outsider's stance; she was taking the revealed who chopped it down. Who.
traditional, self-protective stance of the exacdy, gave the go-ahead for the initial
permanent government. In fact, virtually raid on David Koresh's compound? It's
every major bureaucratic bungle of the hardly enough to simply pick a highlast forty years has been accompanied ranking official and sack him (ATF direcboth by claims of "responsibility" and tor Stephen Higgins seems the leading
righteous calls for avoiding any "recrimi- candidate). Most of the fumbles and
nation" that might actually cost some deceptions probably occurred in the
people their jobs. When stories began to middle levels of the bureaucracy, where
leak about who had planned the Bay of officials even now are surely closing
Pigs invasion. President Kennedy not ranks to thwart any investigators. In
only accepted "the entire responsibility," these situations, a perfunctory recrimibut declared that " e should have no nation may not suffice; you need an
w
sort of passing of the buck or backbiting, orgy. Why do we know the truth about
however justified." Ronald Reagan's Watergate? Because Kissinger's plea
acceptance of "responsibility" for the went unheeded. Mid-level Nixon aides
1983 Beirut disaster had the effect of began desperately seeking to pin the
shielding the responsible military com- blame on each other, leaking to both the
manders. Most memorably, as the Water- press and prosecutors.
gate scandal was breaking in 1973,
Yes. a readiness to recriminate may
Henry Kissinger (then Nucon's national have its drawbacks. Recriminations can
security adviser) issued a heartfelt plea be unfair (the "who-lost-China" debate
against an "orgy of recrimination."
remains the pre-eminent example).
But there's a lot to be said for recrimi- Anticipation of future finger-pointing
nation, even orgies of it. Speaking for can also produce an unwUiingness to
myself, I know that when I'm part of an take risks. But when lives are at stake,
organization that screws something up, I risk-aversion may not be a bad thing.
There is also an etiquette to recrimitend to want to know who screwed it up
and why. Perhaps this makes me an inef- nation. Nobody wants a leader who
fective, Queeg-like executive. Yet recrim- angrily demands an inquisition in the
moments immediately after a fatal disasination serves two obvious purposes.
First, deterrence. It's well and good to ter. (Imagine Reagan ending his Chal"focus on the future," as Reno puts it lenger speech by declaring, "I'm going to
But the best way to ensure the smart per- get to the bottom of this, dammit")
formance of FBI and ATF agents is to Calm and consolation come first But
penalize those who perform stupidly. A that doesn't mean we want leaders who
prosecutor such as Reno, of all people, use those emotional moments as the
understands the prophylactic virtues of occasion to forestall an accurate placing
of blame.
punishment
Indeed, Washingtonians tend to weigh
Since the Waco raid, for example,
there have been broad hints in the press the virtues and drawbacks of recriminathat bureaucratic impulses—frustration, tion quite differendy when the recrimipride and worse—may have motivated natees don't work for the federal
the FBI to push its tear gas plan. "After bureaucracy. If a train crashes in Florida,
fifty days, we looked like fools," a "high- there is no talk of sparing the engineers
ranking FBI official" told 77i« New York and switchmen. Would Washington
Observer. "Were we going to sit there and reporters have applauded a Reno-like
wait for this guy tofinishhis treatise on call to avoid "recrimination" in the wake
the Seven Seals?" another FBI official of, say, the Three Mile Island nuclear
complained to The Washington Post Still accident'
There's no reason to doubt Reno
others suggested that embatded FBI
director William Sessions felt he had to when she says she made a judgment call
"the best way I know how. But even her
take a gamble to save his reputation.
Does Reno feel that perhaps her sub- admirers tend to concede that she didn't
ordinates misled her—exaggerating the make it well. In record time (for an "outdangers of a continued standoff and sider") she seems to have been captured
minimizing therisksof the gas assault? by her agency—and when disaster
If so, how will she discourage them from struck, she instinctively protected those
doing it again? It doesn't matter, in this who had captured her. Only in Washingrespect, if there is ever another Waco- ton would that make her a hero.
like cult situation. What matters is that
FBI officials know that misjudgment and
�C R EP N E C
O RSO DN E
talked up [mv] wife." Again speaking for
the president. Stephanopoulos denies
this charge as well.
Weisberg savs 1 "neither confirmed nor
denied" that I leaked word of the president's interest in mv wife as attorney general. Bui 1 did denv thai allegauon and 1
do so again. .And so do ihe two journalists
Weisberg memions as recipiencs of mv
T tht tditori:
o
In his April 2ti ariicle ailed "Clincest." supposed "leak." Al Hunt of The Wall
Jacob Weisberg accuses me. in effect, of Street Journal and Tim Russert of NBC
beinn a corrupt journalist. Let's check News, who have both written to TNR denying Weisberg s charge. Why didn't Weisout his assertions:
Weisberg savs 1 "told the president- berg call them before publicauonr
elect that if he was looking for a female
With respect to The New York Times
judge tor attornev general, he should piece Weisberg refers to: the TimMgot it
pick someone like [mv wife. Federal wrong (as the paper later indicated). Mv
Judge Kimba] Wood who had 'manage- wife didn't contradict me. as Weisberg
ment experience
' " As I told Weis- says; she contradicted the Times's incorberg. anvone who bothered to inspect rect storv.
the record would quicklv conclude that
To support his charge that mv covermv wife does not have "management age of Clinton " through the campaign
experience" as the term iscommonlv un- and after" has been "soft," Weisberg says
derstood. 1 never recommended my wife that "in one post-election piece [I] comlor the job—i >n those terms or anv other. pared Clinton to Lincoln and FOR." The
Speaking for the president. White House clear import is that I compared Clinton
Communicauons
Director
George favorably to those two giants. In fact, I d i v
Stephanopoulos confirms my denial of cussed Clinton's having compared himthis allegauon.
self to Lincoln and Roosevelt. There is a
Weisberg savs Clinton "reportedly told significant difference here and one that
aides" after 1 plaved golf with him (as part any reader of my piece would note
of mv coverage of the president-elect for straightaway—a reader without an ax to
a 'Amf article) "that [1] had relendessly grind, that is.
Clincesttest
ln mM e o oe
eH e BNMr
PROPHECY BELIEF IN MODERN AMERICAN CULTURE
P A D L B O Y ER
" thoughtful and thought-provoking,
A
exploration of contemporary religious
apocalyptic"-- A G.Mojnbai.flostonSuridayC/obc
"A splendid book, which works both as
compelling cultural history and as a
carnival sideshow."
—L S. Klcpp. Vifagc Voice Ulcrary Snfjp/tinent
Weisberg writes that "In his column
The Political Interest.' Kramer never
declared his own when he piled on criticisms of Zoe Baird's nomination" to be
attornev general. In fact, the onlv time I
menuoned Baird at all was af ter she withdrew her nomination. In a column about
Senator Pat Movnihan 1 compared Movnihan s level of irritauon with the White
House to the public's upset over Baird's
selection. Here is exacdv what I wrote:
"Not since November." says Pat Movnihan
sadly. "Not a single call. Not from the president or any of his top people. 1 would have
thought someone would have gotten in
touch bv now. I just don t get it."
For the senator from New York, a giant
intellect who has succeeded Treasury Secretary Llovd Bentsen as chairman of the powerful Finance Committee, these few whispered words are a warning shot at least the
equal of the spontaneous outpouring of
public outrage that doomed Zoe Baird last
weelt.
"Call it Clincest." Weisberg writes.
"Kramer and Wood were both part of an
extended society of aspiring Clintonites—" Aside from her forty-minute
interview with the president, my wife had
never met or spoken with Clinton. She
was approached by the White House to
discuss her serving as attorney general
without ever having expressed an interest
in any job in the administration. I obviously have had a fair amount of contact
with Clinton, but only as a reporter. We
have never socialized.
MICHAEL KRAMER
Chief Political Correspondent
Time Magazine
New York, New York
UtU HHtn:
In his story "Clincest," Jacob Weisberg
writes that Michael Kramer recommended his wife, Judge Kimba Wood, to
the president for nomination as attornev
general. The president has instructed me
to tell you that it never happened. Kramer
never recommended his wife for that or
any other position. Nor did the president
subsequendy tell anyone that "Kramer
had relendessly talked up his wife" during
a golf game in Litde Rock that included
Kramer, the president and two other people. The president never told anyone that
because that never happened either.
GEORGE STEPHANOPOULOS
"No book provides more comprehensive
information about the awesome degree t o
Av.nl.iblc at bookstores or fr o m
which Biblical literalism and prophetic fci-vor
Harvard
University
hnvc invaded the hearts and minds of Amcncins.
P r e S S
Cimbndgc. MA 02138
Call toll-free: I-800-448-22-12
rich and poor, educated and ignorant."
—Martin Gardner. Wnshinpron Post Rook World
Bclkn.ip Press $29 95 cloth
Assistant to the President and
Director of Communications
Washinglon, D.C.
UOttiHm
Your Jacob Weisberg, in his piece on the
Clinton ruling elite, alleges that 7»n*magazine's Michael Kramer leaked the potential appointment of his wife, Kimba Wood,
as attorney general to journalistic friends,
including me. There are only two prob-
�lems: one. at that time I was 10,000 miles
awav in Asia, and two. alas, we were beaten
on the possible Wood appointment bv TJie
New York Times, and The Washington Posl. If
this is the wav Kramer takes care of his
friends. 1 want on his enemies list
We are all duly impressed that Weisberg paraded his prestigious academic
credentials in the arucle. 1 wash, however,
he would have learned one simple journalistk practice: to make a phone call to
verifv informanon.
.ALBERT R. HUNT
Washington Bureau Chief
The Wall Streetjournal
WashingUm, D. C.
Titktriltin:
In his article "Clincest," Jacob Weisberg
writes, "Kramer reportedly leaked the
information to fellow journalists, including his fnend Al Hunt of The WaU Street
Journal nnd Tim Russert of NBC, who both
had the story early."
NBC News broke the Kimba Wood story
because of White House correspondent
Andrea Mitchell, not me. Her source was
not Michael Kramer, it was an administration official. If Weisberg or his factchecker had called me, I would have told
him just that.
licit Wtliktri rtpliit:
Michael Kramer's abilitv to summon a
presidential denial is impressive land supportive of mv larger point about Clincest), but he's not telling the truth about
what happened. Mv source, who was present in Little Rock through the transition,
heard what Kramer said. He argued for
his wife on the basis that, unlike other federal judges, she had "management experience," meaning the experience of managing complicated trials like Michael
Milken's. This is a perfecdy legitimate use
of the term. In order to be fair to Kramer,
I included his denials in my storv. but I
believe my source, not him. (A reporter
for The New York Observer, who independendy reported exacdy the same story,
came to the same conclusion.)
On the leaks to fellow journalists,
CLINCEST
TIMOTHYJ. RUSSERT
Washington, D. C.
I read Jacob Weisberg's outstanding arucle, "Clincest." with a mixture of amusement, horror and—I admit it—envy.
Given my educational and vocational
background and political views, I like to
think that with one or two different turns
in the road I could have been an F B and
O
FOH, rubbing shoulders with the powerful at Renaissance weekends.
The horror comes from the potential
for disaster that arises from government
by an inbred group of academics and
intellectuals, however well-meaning.
Here in Ohio we had a governor, Dick
Celeste, who was a Democrat and former
Rhodes scholar with a highly intelligent
and outspoken wife. They surrounded
themselves with like-minded people, and
the result was a tenure marred by one
scandal after another—and a Republican
successor. I would like to hope Clinton
will learn from our experience, but I'm
not optimistic.
Kramer is simply fictionalizing, as my
notes of our telephone interview clearly
demonstrate. For quotation, he would
"neither confirm nor deny" that he
leaked word of his wife's imminent
appointment to Russert and Hunt I
thought it was weird that he wouldn't simply deny it on the record if, as he claimed,
it never happened. So I pressed him on
the point. Kramer would not deny it for
the record. He told me, however, that
Hunt and Russert would deny it, a
strangely clairvovant claim. What ethical
journalists are supposed to do in such a
JEFFREY BENDIX
situation is to refuse to say anything about
Cleveland Heights, Ohio
who their sources are or are not How did
Kramer know Hunt and Russert would
deny it if he didn't have an understandI am a subscriber to TNR and a fellow Oxo- ing with them? I did not think it necesnian (Keble '74. Jurisprudence). How sary to hear Russert and Hunt recite what
come I'm just a mere lawyer and not in Kramer told me they would say. Maybe,
the White House"- Or in the administra- for the record, I should have.
tion?
Kramer says the Times story reporting
that Kimba Wood initially gave the White
FRANKIE LEUNG
House "full details" of her employment
Los Angeles, California
of an illegal immigrant was wrong.
Agreed. But. as Howard Kurtz of TAf
Washington Post also reported. Kramer
himself was the source for the article!
Af ter the White House and Wood denied
the account, the Times published an
explanatorv storv by a different reporier,
which did not in fact "indicate" that the
paper was at fault It said: "the person
who was interviewed for the Sundav article clearly seemed intent on conveving
the impression that Judge Wood had
been entirely forthcoming in her conversations with White House officials."
Kramer still doesn t admit that he was the
person doing the misleading.
Clinton indeed mav have compared
himself to Lincoln and FDR. but Kramer's
article elaborates the comparison, at
great length, and without skepticism. On
his next point, my argument was that
Kramer shouldn't have written about Zoe
Baird at all without disclosing that his
wife was in competition for the same job.
On Clincest in general, I was talking
about the attitude and aspirations of certain people around the Clinton administration, not about the amount oftimeor
specific activities they have engaged in
with the president himself. In any case,
Kramer has socialized with the president,
as he himself acknowledges in his letter,
in playing golf with him. Or is there some
reason why that doesn't count?
Al Hunt is playing games. The Times
and Postbeat the Journal with their February 2 stories reporting that Clinton had
narrowed the list to several women, one
of whom was Kimba Wood. The Journal
reported this on February 3. These are
the stories Hunt appends to his letter. But
it was the Journal, as I wrote, that scooped
the Timesand the ftofwith its February 4
story reporting that Wood was about to
be named. That day. the rim« and Post
both reported a short list of three including Wood. Gerald Baliles and Charles
Ruff. Whether Hunt was still 10.000 miles
away on February 4 I cannoi say, but I
don't see why that absolves him in any
case. There are telephones in Asia.
A reliable source tells me that Russert,
too, received early information about
Wood from his friend Kramer. That is
actually consistent with a close reading of
his letter; perhaps Russert passed the tip
to Andrea Mitchell, who then "got the
story" from an administration official, or
perhaps Mitchell got it independendv. It
doesn't mean Russert didn't hear from
Kramer.
George Stephanopoulos writes that
the president "has instructed" him to
deny that Kramer recommended his wife.
Stephanopoulos was present at the Litde
Rock interview. If Kramer never mentioned Kimba Wood, why doesn't Stephanopoulos say so unambiguously himself? I stand by my original version.
HAY 24,1993 THE NEW REPUBLIC 7
..o
i
�N TB O
OE O K
I t ENO SUCK-UP WATCH: "Suddenly. Ms. Reno has
vaulted to national prominence
She has become a
prized asset, a popular figure whose candid, caring tone
has neutralized critics
Inside the department. Ms.
Reno roams the halls to shake hands with startled
empiov ees and has given a spate of speeches, frequenilv
evoking the idealism of Robert F. Kennedv."—The New
York Times. Mav I . 1993
Thanks io Amhonv Wright. Amherst. Massachusetts.)
WLINCEST,
CONT'D:
Last
week Janet Reno
named most of
the Justice Department's assistant
attorneys
general. .Among
her
appointments:
Frank
Hunger,
Al
Gore's brotherin-law, will run
the Civil Division: Anne Bingaman, wife of
New Mexico Senator Jeff Bingaman, will head
the
Antitrust
Division; Eleanor
Dean Acheson,
granddaughter
of Dean Acheson
and
Welleslev
friend of Hillary 's, will head the Office of Policy Development: Sheila Foster Anthony, wife of former Arkansas
democratic congressman Beryl Anthony (and close
friend of the Clintons'), was picked to run the Office of
Legislative Affairs; Lani Guinier, a Yale Law classmate of
the Clintons' and a friend, was chosen as assistant A.G. for
Civil Rights; Gerald Torres, Yale Law grad and Children's
Defense Fund alum (a twofer!), will head the Environment and Natural Resources division. On the other
hand, none of the DOJ selecdons was a Rhodes Scholar.
• OURS INSINCERELY: Perhaps the most poignant
part of John Frohnmaver's new book on his doomed
tenure as chairman of the National Endowment for the
Arts is his account of his resignation letter. Hisfirstdraft,
a two sentence note sent to the White House, prompted
a call from Edith Holiday, the secretary to the cabinet.
She said it was "awfullv curt" and might "leave the wrong
impression," and asked him to pad it out and "say someT-,,-
p r n r - o t tr- M A Y ? 4 TOQ3
thing nice about the president.'' GentJeman Frohnmaver
obligingly rewrote the letter to include routine sycophantic blather about how much Bush's "personal support has meant to me during these difficult times" and
express his sincere belief that "vou and vour administration have accomplished a great deal and I'm sure the
best is vet to come." The president's brief response, in
contrast, didn't even muster the usual expression of
regret, an omission dulv noied bv the press. The White
House itself even put out the word that Frohnmaver had
been summarilv fired. Here endeth the last possible
thing that could be said in defense of President Bush.
When push came to shove, he couldn't even write a nice
thank-you note.
W EX,
LIES
AND
THE
ETHICS COMMITTEE:
You
may have heard
of the upcoming, open hearings on Senator
Bob Packwood,
and may even
have
believed
they had something to do with
sexual
harassment Well, not
exacdy.
Bowing to peutions
signed by 200
Oregonians, the
Senate
Rules
Committee
is
holding hearings
May
10
on
whether
Packwood should be unseated for election fraud because he
lied to The Oregonian last November about sexual harassment allegations against him and intimidated other
women from talking to the press about their harassment. Actual Ethics Committee hearings on the issue of
his sexual conduct are not certain to be held and, even if
they are, won't take place for several more months and
may not be public. This is a useful reminder of the Senate's inability to discipline its own: instead of focusing
on the central issue. Oregonians are forced to target an
activity—lying to reporters—without which our entire
poliucal process would grind to a halt.
H
I OME NEWS: With this issue, David Shipley replaces
Dorothy Wickenden as executive editor. David comes
from the op-ed page of The New York Times. Weston
Kosova becomes managing editor and Jacob Weisberg a
senior editor, to concentrate on political and cultural
reporting. •
j
I
I
I
I
I
I
I
I
�THE FLAPJACK FILE
BURN FOR MAMA
By Douglas G. McGrath
Saturday, April 17, 1993
At approximately 6:17 a.m.. Agent Searle and I
reported to personal quarters for duty. Agent Simons,
who was guarding the door, showed us a picture of his
bovs Sam and Alex. It was some kind of trick shot
where they looked like they were standing on top of
the Washington Monument. Simons said there's a guy
who takes these right on the Mall and they make real
cute Christmas cards. I ' l l tell Annie. Then we heard
Flapjack and the Rod yelling again. The first thing was,
"I am not some piece of decoration! You promised I
could have a role once we got here!" to which she said,
"I know. Bill, but there's just not that much for you to
do!"
The door opened. The Rod came out, followed by
Mr. Steph. The right lens of his glasses was cracked and
there was oatmeal on the other. "Somebody call Armani
Occhiali!" he shouted as he followed the Rod toward
the Oval Office. Mary, one of the maids, came out next,
looking a litde shell-shocked. "Well," she said, "that's
the last of the Reagan china!"
Flapjack was last. He stopped and shook our hands.
"I'm sorry you had to hear ail that, guys." He bit his lip
sympathetically. "It must have been painful for you.
Although I'm not to blame for the noise, I want credit
for taking the responsibility and I feel your pain." He
took a teacup handle out of his hair. "Agent Duke,
how's your wife, your unfortunate income tax audit and
the discoloration trouble you were having with your
lawn?" Before I could answer he said, "Agent Simons,
thank you for recommending the Stephen King book,
which I read last night before rereading Hobsbawm's
Industry and Empire. How did Sam Jr.'s check-up go?
Any cavities in addition to the two you once mentioned? Though it wasn't my fault, I had cavities myself
as a boy. We didn't have money to correct them,
because this was still a country of trickle-down where
the rich didn't pay their fair share and the middle class
worked harder for less money than they made ten years
ago. But we fixed those cavities by believing in a place
called Hope. Agent Searle, anything upsetting you'd
like to tell me about "
But before Searle could answer, Flapjack started running. "Sorry! I've got to catch Hillary before she locks
that door—"
He got his foot in the Oval Office jdoor just before
the Rod closed it. She sighed and chewed on her head5
band for a minute. "All right. Bill." she said. "You can
talk to Janet Reno about the sund-off in Waco." He said
thank vou and tried to kiss her. "Not now!" she whispered, as several people in black hoods approached.
"Mv health group is here."
We spent the morning with Mr. Steph. A woman
named Annie Leibovitz was photographing him for the
centerfold of Seventeen. She told us she doesn't usuallv
work for Seventeen, but she's the onlv photographer Mr.
Steph will work with anvmore. so she made an exception.
Then we took Flap over to Justice to meet with Janet
Reno. When we came in she was burning a phone book.
There were stacks of old ones right by her desk. "Anytime we do a raid," she said, " I have the guys bring me
these litde beauties. They go up in seconds! Do what
you want with the drugs, I tell 'em. but get the tinder to
me!" She took a can of Final Net and sprayed it over the
top of the fire. The flames leapt up. Ms. Reno let out a
laugh. "Look at it jump! Come on! Jump for Mama!"
Flap bit his lip and smiled that eerie near-Carter
smile he's got. "You know, Janet, one of my favorite
songs from Elvis's post-skinny years is 'Burning Love.'
And one of the things I miss most about Arkansas are
the walks my daughter Chelsea and I used to take by the
river near the chicken rendering plant. We used to walk
along that shore and throw matches on the river and
watch the surface burn. It was beautiful!" Ms. Reno
grinned.
Then they discussed the stand-off in Waco. Ms. Reno
said that the FBI wanted to move. She said, "Our agents
in the field are getting reallv dred, so we might as
well—"
"Move when they're tired?"
"Exacdy. Think how surprised the other side will be
when they see we're moving in such poor condition."
He nodded. "One more question, and it's the question any tough leader has to ask: If this thing is a bust,
will you take the blame?" She scrunched up her mouth
and tilted her head uncertainly. There's a Manhattan
phone book in it for you," he said.
She said she'd take the blame.
On our way home, Flap said, " I think Hillary's going
to give me a lot more to do when she sees how that
turns out!"
Thursday, April 22, 1993
The compound in Waco was leveled. The Rod will
now handle all law enforcement issues. Flap doesn't
mind. He's just worried that Ms. Reno will have to
resign and he'll be forced to find another female attorney general.
" I guess I'd better try to get people's minds onto
something else." he said. " I think I'll call Hillary and see
if she'll let me have some air strikes in Bosnia."
She couldn't take his call right then, so, while we
waited for her to call back, Simons and I helped him
pick out some new china.
DOUGLAS
G.
MCGRATH
is a New York writer.
/
�saving that air strikes against Serbian forces were a live
option—Defense Secretary Les Aspin was the unnamed
WHITE HOUSE WATCH
author of the remark—a senior aide of Secretary of
State Warren Christopher called the Pentagon to complain and to silence further talk offeree. .-Vs the war in
Bosnia continued. Clintonites despaired of finding a
peaceful solution but remained warv of getting too
involved. 'This is the most goddamn difficult issue anv
countrv has faced in manv vears," groaned Assistant Secretary of State Strobe Talbott.
What prompted the policy shift was the refusal of the
Bosnian Serbs to sign the peace plan negotiated by Vance
By Fred Barnes
and Owen and, more importandy, the brutal Serb
advance on the Muslim town of Srebrenica. The "princior President Clinton, it turns out the operadve
pal's committee"—Christopher. Aspin, national security
analogy to Bosnia is not Vietnam or Beirut but
adviser Anthony Lake, CIA Director James Woolsey, u.N.
the Persian Gulf. The foe in both cases was a
.Ambassador Madeleine Albright—had been meeting off
bloodthirsty aggressor bent on gobbling up the
and on for weeks on Bosnia. Now Clinton began attendterritorv of a not-exacdy-saindv ethnic rival. Friending meetings and, as an
ly persuasion, the first
aide put it, "focusing.on
step, was tried to no
Bosnia like a laser."The
effect. Next, economic
shift was soon apparent
sanctions were applied,
in Clinton's public
then tightened, but
comments. When he
failed to alter the
and Egyptian Presiaggressor's behavior. As
dent Hosni Mubarak
a last resort, the use of
met with reporters on
American military force
April 6, Clinton insisted
was threatened. The
there "is some chance
mere threat didn't work
that we can make this
against Saddam in the
peace process work." At
Gulf, so force was actua news conference on
ally used. In Bosnia it
April 23, his tack had
worked, at least pardy
shifted. " I think we
because Desert Storm
should act," he said.
had made the threat
"We should lead." He
of U.S. militarv insaid limited air strikes
tervention
infinitely
against the Serbs and
more credible. The
lifting the arms emSerbs, both in Bosnia
bargo against Bosnian
and Serbia, knuckled
Muslims "deserve some
under and accepted a
serious consideration."
peace setdement, subClinton's aides were
ject to parliamentary
moving, too. Republiratification.
can Senator Richard
Clinton owes PresiLugar, a hawk on
dent Bush a debt for
Bosnia, chatted with
Desert
Storm, but
Lake at a dinner party
mosdy it's the president
at the home of Zbighimself and his top
niew Brzezinski, Presiadvisers who deserve
dent Carter's national
credit for this foreign
D R A W I N G BY V I N T l . A W R t N C K F O R T H E N E W R E P U B L I C
security adviser. Lugar
policy success. They
was delighted to find that Lake favored stronger action
defdy changed direction in mid-April without a bitter
against the Serbs.
struggle inside the administration or a spate of recrimiThe take-charge strategy was hardly risk-free. One
nations in Congress. Until then, the Clinton position,
problem was Russian President Boris Yeltsin. Before his
based on the notion that there are no good guys in the
summit with Yeltsin in Vancouver on April 4 and 5, ClinBosnian conflict, had been half-heartedly to back the
ton got a special briefing on the Serbian issue in Russian
peace process promoted by former Secretary of State
politics. Yeltsin, he learned, is no fan of Serbian leaders, ^
Cyrus Vance and British politician David Owen. When a
regarding them as unrepentant Communists and allies
Defense Deoartment official was quoted in earlv April as
ASTAR IS BORN
F
|
,
!
;
^
�of his enemies in Moscow. Bui the Serbian issue is especially touchv because hundreds of Russian volunteers are
fighting alongside the Serbs. In Vancouver Clinton and
Yeltsin discussed Serbia and Bosnia intensively. Yeltsin
wanted Clinton to stick with the peace process and not
take tougher steps against Serbia. He made it clear he
understood that a U.S-Russian spat over Bosnia—a Russian veto of stiffer sanctions at the u.N., say—might cripple U.S. support for reform in Russia. Clinton said he'd
trv not to do anything that would play into the hands of
Yeltsin's pro-Serbia adversaries before the April 25 referendum in Russia. His aim was to avoid complicaung life
for Yeltsin, but he added that the United States has an
obligadon to stop the bloodshed in Bosnia.
Clinton couldn't deliver on his side of the tacit bargain. (At his April 23 news conference Clinton said, "I
have not made any agreement, and [Yeltsin] did not ask
for thau" This was technically true, but somewhat misleading.) The problem was the Serbian siege of Srebrenica, gruesome scenes of which were playing on
American T.v. When the administration and European
allies sought to strengthen u.N. sanctions against Serbia,
Russian Ambassador Yuli Vorontsov threatened a veto.
In the end, a deal was worked out: stiffened sanctions
were delayed until after the referendum and Vorontsov
abstained from the Security Council vote. Still, a veto
seemed possible until the moment of the vote on April
17, and the episode unsetded Clinton. He feared his top
foreign policy goal, steering Russia safely to democracy
and capitalism, was in jeopardy.
A second problem was the military. The conventional
view at the Pentagon, not shared by Aspin, was that air
strikes wouldn't work, and might get American pilots
killed or captured. Admiral David Jeremiah, the top
deputy of General Colin Powell, chairman of the Joint
Chiefs of Staff, spread this view in the press. At a threehour White House meeting with congressional leaders
on April 27, he was at it again. When Clinton ducked
out for twenty minutes for a ceremony honoring the
NCAA champion men's (University of North Carolina)
and women's (Texas Tech) basketball teams, Jeremiah
was questioned repeatedly by members of Congress. His
pessimism spurred General Merrill McPeak, the Air
Force chief of staff, to announce later that air strikes
would be easy. Aspin was appalled at this public rift, but
did nothing to stop it.
The other problem was Congress. Hawks were plentiful, including some like Lugar and Democrauc Senator
Bob Kerrey of Nebraska, who thought Clinton had
made a mistake when he ruled out deploying U.S.
ground troops against the Serbs. But doves sounded off
when Clinton gathered nine senators and twelve House
members at the April 27 session in the Sute Dining
Room, GOP congressman Doug Bereuter of Nebraska
favored lifting the arms embargo, but not injecting
American force. Democrat John Murtha of Pennsylvania
backed intervention but wondered if other hawks would
turn dovish once body bags began coming home. Clinton, who only asked quesuons, was moving toward a
decision to send in American warplanes. He asked one
question several times: What if limited U.S. military
intervention fails? Both Lugar and Bob Dole said Clinton couldn't let that happen. In other words, he'd have
to use enough force to guarantee success.
The decision, known as "lift and strike." was made
four davs later at a Saturday morning meeting at the
White House. Some Clinton aides, notablv Albright and
a handful of State Department underlings, had been
pushing for this all along. The actual plan for lifting the
embargo and dispatching limited air strikes was worked
out by Christopher and Lake. No timetable for implementation was set, but it was to be "sooner rather than
later," an official said. Or maybe never. Since consideration of force had driven the Bosnian Serbs back to the
negotiating table, perhaps the threat of force would
impel them to setde. It did, roughly twentv-four hours
after WTiite House aides left the May 1 meeting and let it
be known Clinton had taken the military option.
Clinton's brilliant success in his first foreign policy
foray involving military force brought with it two ironic
twists. Bv reversing his initial policy, he redeemed a campaign promise. As a candidate, he'd zinged Bush for passivity in the face of Serbian atrocities and said he'd consider air strikes and more. The second twist: after
rejecting the use of ground troops to fight Serbs, Clinton now is obligated to send as many as 30.000 to Bosnia
as "peacekeepers." I f U.S. troops must go, the military
argues that "a division plus," big enough to throw its
weight around and protect itself, should be deployed.
With so many heavily armed Serbs at large, American
ground troops mav have to fight after all. Just as in the
Gulf. •
MOSCOW
POSTCARD
MAY DAY
By Liesl Schillinger
T
here could not have been a more perfect May
Day in Moscow this year; the skies were bright
blue, and the lilacs were blooming. There was
no parade in Red Square, as there had been for
seventy-odd years, but the mood was festive nonetheless,
as Russians started a four-day holiday. Girls walked
around Gorky Park in the strumpet-short skirts that are
popular here this spring—thigh-high, they end a foot or
so above the knee, leaving very, very litde to the imagination—while boys on roller skates zoomed between them
on the footpaths and strains of percussion from a heavy
metal concert in Gorky Park's Green Theater thrummed
in the air. Not too far off, in Gagarin Square, license of
another kind was being exercised, as 5,000 anti-Yeltsin
'1
�But if Egypt was capable of negotiating accords with
Israel, those accords still fall short of genuine peace. In
Egypt todav. more lhan a decade af ter Camp David, anuIsrael and anti-Semitic tirades are a staple of the government-controlled media; schoolchildren still learn Middle East geography on maps that do not include Israel;
and citizens who dare to visit Israel are ostracized by
their fellow citizens.
The Egyptian regime, too, is threatened bv strong
fundamentalist forces that have recently demonstrated
new militancy, mounting deadly attacks on Coptic
Christians, tourists and government officials. Thev
decry the accommodation with Israel. A fundamentalist
takeover would doom the current relationship between
Israel and Egypt, despite all the concessions and sacrifices Israel made to win that relationship.
Before any lasting peace can be achieved, .Arab
nations will have to rein in the power of militant Muslim
fundamentalism and irredentist Arab nauonalism.
which oppose the existence of Israel and pose threats to
those who would seek reconciliation. And this must be
accompanied bv a dramatic shift in .Arab attitudes
toward other ethnic and religious minonties within the
Middle East. Persecution of the Kurds. Sudanese blacks.
Druse and the various Christian communities in the
.Arab Middle East has escalated in recent decades,
reflecting the increasing intolerance of the .Arab Muslim
majority. Israelis and others delude themselves if they
think that .Arab populations will accept a Jewish state in
the region without having first accepted other minorities in their midst.
KENNETH LEVIN
is a historian who writes frequendv on
the Middle East.
Mitch Kapor, Data Hg w y Guru.
ih a
1 HE N W D M C A F O CYBERSPACE
E E ORT RM
By Robert Wright
D
uring the mid-1980s, when Mitch Kapor and
Bill Gates were America's twin software titans,
telling them apart wasn't hard. Before striking
it rich, Kapor had spent time as a disc jockey, a
stand-up comic, a transcendental meditation instructor
and a counselor at a mental hospital (where, he liked
to tell journalists, he had performed "the psychic equivalent of emptying bedpans"). Gates had gone straight
from college into business, showing the single-minded
drive for which he remains famous. Kapor had called
his software company "Lotus"—simple, elegant, quietly
reflective of his spiritual leanings. Gates, in something
shv of a vast creative leap, had named his microcomputer software company "Microsoft." Gates's main
product, the operating system DOS, was, like the company's name, serviceable but clunky. Kapor's smash hit,
the spreadsheet Lotus 1-2-3, was stylish and userfriendlv.
.As the decade passed. Gates got richer and richer
and Microsoft got bigger and bigger. Kapor got rich
and dropped OUL He left Lotus, which, he said, had gotten oppressively corporate. He would leave it for Gates
to be the "empire-builder, someone who wants to build
the Standard Oil of computing."
Kapor, in short, seemed the more authentic embodiment of Silicon Valley's hacker ideals: anti-corporate,
nonconformist, vaguely whole-earthish, creative. With
time this contrast hardened into hacker iconography.
Gates was the anti-Christ, a man whose corporate stranglehold on the software industry had left it awash in
ugly products. Kapor was a folk hero.
In 1990 Kapor and Grateful Dead lyricist John Perry
Barlow started the Electronic Frontier Foundation, a
public interest group devoted to defending the civil liberties of hackers. (Some were getting stifling attention
from, for example, federal agents who didn't see the
humor in entering government or corporate computers, even ifjust for kicks.) Kapor's place in Silicon Valley
lore seemed secure.
The story has since gotten more complex. The Electronic Frontier Foundation (EFT) has moved its main
office from Cambridge to Washington and expanded its
domain. In particular, it is paying great attention to Al
Gore's pet project, the "data superhighway"—the
nationwide fiber-optic grid that, we are told, will revolutionize research, education, entertainment and commerce. Kapor is no longer just a gadfly and defender of
the oppressed, but, increasingly, a Washington Player.
He is a star witness at congressional hearings and a common quote in stories about the "information infrastructure." He and EFF work closely with the chairman of the
House Subcommittee on Telecommunications and
Finance, Ed Markey of Massachusetts (Lotus's and
Kapor's home state). And they have easy access to t h e ^ j .
�Clinton administration, with which, Kapor savs, EFF is
"in svnc" philosophically.
With power comes suspicion. Kapor savs: 'You can
find people who will go on record as saying EFF—that
bunch of Washington sellouts.'" Indeed. In expanding
from civil liberues to the ideologically complex issues of
infrastructure. E F has alienated some members and
F
some (former) empiovees who feel it has lost its purity
of mission. And the foundation's success in Washington
has brought complaints from other groups that occupy
roughly the same niche—or would occupy it, at least, if
there were room, EFT is "a thousand-pound canary," says
Jeff Chester of the Center for Media Education; it is
perceived as the respectable liberal voice on the informauon infrastructure. And "because Ed Markey's door
is always open, thev have incredible influence on Capitol Hill, I think to the exclusion of other groups that are
working in the public interest."
Beneath this complaint is a sense that Kapor is drifting from his cultural and ideological moorings, that the
Zen-master dropout from corporate America has
become a tool of corporations. EFF, originally funded by
Kapor and a couple of other computer millionaires, is
now underwritten mainly by companies and trade associations from just about every relevant walk of life: IBM,
Apple, AT&T, MCI, Bell Adantic, Adobe, the Newspaper
Association of America, the National Cable Television
Association. Even the dreaded Microsoft. Jamie Love of
the Center for Study of Responsive Law, a Ralph Nader
group, says, "You've got the group that's billed as the
principal public interest organization in these debates
being funded mosdy by companies and trade associations."
The question of whose interests are served by EFF is
indeed important. Though the data superhighway has
been heavily hvped, its significance is, if anything,
underappreciated. The visionaries are probably right to
say that for decades a growing portion of human interaction will take place electronically—in "cyberspace."
And the sizeable cultural and political effects of this fact
will depend on the architecture of cyberspace and the
laws that govern it, both of which remain up for grabs,
and both of which gready concern companies backing
EFT. If Kapor has sold out, he will assuredly not go to
hacker heaven.
^
he data superhighway is much misunderstood.
For example: contrary to popular belief, it
alreadv exists, AT&T, MCI, Sprint and others have
laid gobs of optical fiber from city to city, and
these glass lines can handle the commonly cited
superhighway services: routine teleconferencing and
telecommuting; interactive multimedia education;'
video on demand; interactive home shopping (eventually featuring 3-D on-line catalogs); remote medical diagnosis; prompt delivery of any book or article in the
world, etc. What is lacking are lots and lots of more
local fiber links, which will carry signals from superhighway to the home. One reason this distinction gets
muddied is that, as one congressional staffer put it,
T
"Saying 'We must build a nationwide superhighway
sounds better than saying, 'We must build nationwide
on-and-off-ramps.'"
The "we" part is also misleading. The builder of the
data highways and bywavs won't be the government.
The work will be done by cable T.v. companies, regional
Bell telephone companies and other private actors. And
the Clinton administration won't be footing the bill. It
has promised onlv $1 billion annually for a project that
is expected to cost between $200 billion and $400 billion
over fifteen to thirty years.
The likely builders of fiber networks are seeking less
direct federal support. The regional Bells want to be
freed to compete with cable T.v.; then, they say, thev'U
have an incentive to invest heavily in local fiber networks. Thev wouldn't mind tax breaks or looser rate
controls, either. The cable companies would like to be
free of price regulation, which dampens revenues and
thus slows their replacement of coaxial cable with fiber.
But, having just been re-regulated, they're now talking
more about tax breaks.
I
n Washington the sense of urgency about building
a nationwide fiber network has abated a bit since
the presidential campaign, when Gore carried the
goal to new prominence. One reason is Mitch
Kapor. On the day before Clinton's inauguration, in a
standing-room-only hearing of Markey's subcommittee,
Kapor championed a near-term alternative to a fully
fiber network that EFF had been pushing for some time:
integrated services digital network, or ISDN. By enabling
existing copper phone lines to carry digital signals (onor-off signals, instead of wavy "analog" signals), ISDN
would make the lines much quicker conduits of data.
Kapor's testimony inspired the lead paragraph of a
story in the next day's Washington Post "Plans advocated
by the incoming Clinton administration and others to
use fiber-optic cables to create an elaborate new nationwide communications highway may be elbowed out by
less cosdy technologies."
This is a litde misleading. Kapor supports a nationwide fiber grid, and sees ISDN as a transitional step, not a
substitute. Still, he does oppose big government financing for fiber, and this financing did seem a live prospect
in January, after Gore's ambitious campaign rhetoric.
Gore now says he was misinterpreted and had never
envisioned a big government role. In any event, the
interest in ISDN stoked by EFT and Markey helped end
discussion of any such role.
Arguments rage over ISDN. Some call it a distraction—a marginal and, anyway, inevitable step that will
only sap public support for fiber subsidies. Others call it
a waste—sure to be rendered obsolete by fiber fairly
soon (though much of the investment in ISDN, such as
digital switches, might survive the transition to fiber).
Whatever ISDN'S technical merits, one thing it definitely
succeeds at is illustration. It is a nice example of EFT'S
ideology—of the shape Kapor thinks the eventual fiberoptic network should assume, and of the political, cultural and economic values embedded in such a net-
V
�vou'll come in. take lots of pictures and file them on a
work. ISDN helps explain what Kapor means when he
computerized database in vour den. But if the pictures
calls EFT'S worldview "Jeffersonian."
have to be accessed-via cable-T.v. lines, vou'll have a
ISDN, which is alreadv available to more than a third
problem. Cable svstems aren't generally designed to let
of .Americans (unbeknownst to most of them), could
vou send data: they're designed to let vou receive it.
reach virtuallv everv .American home in four or five
.And even if the lines are made two-wav. vou still have to
vears. Over existing copper lines, it moves data twentvsend the data through a central botdeneck to get it to
seven times faster than a 2400-baud modem. That
other people; cable systems typically have a "tree and
would mean rapid-fire faxes and database retrievals and
branch" structure, so that getting one branch in touch
the easv transmission of graphics and photographs,
with another means going through the trunk. To get
both of which are verv informauon-intensive. ISDN
your Home Home Shopping Service through the trunk,
wouldn't bring seamless video, but, with the aid of new
vou'd probably have to promise the cable company a
data-compression tricks, it could bring video worthy of
piece of the action and do God knows what else to conteleconferences.
vince it that the operation was viable.
ISDN could revolutionize, say, house hunting. Sit at
With ISDN, you need nobody's permission. The phone
your terminal, define the kind of home you're after,
system is designed for decentralized, home-to-home
and then "tour" each candidate: see color pictures of
communication; it is a switched network—not a tree, but
the house, of every room, of the view from every wina web in which the shortest disdow. Moving from one room to
tance between two points is a
the next would take a few secreasonably straight line. What's
onds, versus a couple of minmore, as a matter of law, the
utes at 2400-baud. You wouldn't
regional Bells have to make
buy a house without touring the
their system available to everyreal thing, of course, but you'd
one at the same rate, since they
remotely reject plenty of
are "common carriers"; they
houses, saving eons of drive
don't pass judgment on the
ume. The fact that people
content of your communicaactually watch those Sunday
tion—it's none of their busireal estate shows—which offer
ness. So long as you're on the
about four shots of each house
Bell system, you can just set up
and no control over which
the Home Home Shopping Serhouses appear—suggests a
vice in your den, advertise it
large potenual market for
and wait for the calls to come
a Home Home Shopping
in.
Service.
In championing ISDN, Kapor
ISDN would also simplify, for
has been inspired (seduced,
example, expert medical consultauon for rural residents. An M I T C H KAPOR B Y J I M H O L L O WAY FOR T H E NEW REPUBLIC critics say) by his success at
Lotus, which hinged on the
x-ray or CAT scan comprises vast
open architecture of the IBM personal computer. Any
numbers of bits, and sending one by conventional
software designer could take the computer's publicly
modem can take ten minutes. Telecommuting, too,
available specifications, create compatible software and
would be easier, ISDN would let you remotely control
sell the software without anyone's permission. The
your office computer with litde or no bothersome time
result was an explosion of entrepreneurship. ISDN, similag. And because ISDN divides the phone line into three
larly, would provide an "open platform" for experimenparts, you and a colleague can talk to each other while
tation, a seedbed for enterprise.
looking at any text or images you're discussing. Less
sexy services—the electronic magazines, bulletin boards
The ensuing proliferation of new data services,
and databases that are already common—would
Kapor thinks, would help solve the chicken-and-egg
become much cheaper to run and easier to use.
problem that has slowed the laying of fiber by the private sector. Once the Home Home Shopping Service
In grasping ISDN'S connection to EFT'S core doctrines,
was a success, a better version—a high-definition T.v.
the most important thing to appreciate is that, even
tour through each house—would seem to be a sure
when it is transporting video, ISDN is not like cable T.v.
bet So fiber would seem to be a surer bet. Here, again,
Many politicians talk as i f the regional Bells and the
Kapor speaks from experience. The success of P.c. softcable companies are equally viable builders of fiber netware—especially Lotus 1-2-3—brought massive investworks—whoever can do the job fast and cheap should
ment in subsequent, more powerful generations of
do it. But a choice between the two could be momenhardware.
tous, assuming they pattern the new fiber systems on
their current systems.
The fiber lines that would gradually overshadow
ISDN'S copper lines should, savs Kapor, follow the same
Suppose, for example, you want to start the Home
basic form: a switched network, open to all. with no disHome Shopping Service. Sounds easy: tell people you'll
continue on page 24
sell their homes for much less than brokers charge;
�regulation. Also, a centralized fiber system would offer
cnminauon on the basis of content. The coming fiber
much more variety than a centralized coaxial system.
grid should resemble the phone system, not the average
Still, it probably wouldn't bring the explosion in concable T.v. system.
sumer choice that Kapor hopes for.
In stressing the supenoritv of switched, open networks. Kapor seems not especially trammeled by the
And "consumer choice" isn't the half of it. EFT'S argumonev EFT gets from the National Cable Television Assoment for a switched, open network is much deeper than
ciauon. Describing how cable companies have tried to
the Home Home Shopping Service example suggests.
exploit the term "information infrastructure," he says,
That example covers onlv the argument's economic
"Thev have all these great slides that they make up
dimension. The other dimensions are cultural and
about it. They say, 'We can deliver informauon-age benpolitical.
efits, we've got our fiber-opuc networks.' And thev don't
One nightmare scenario for a data superhighway, says
talk about the fact that the networks are closed—you
Kapor, is that it would take the famous Bruce Springcan't put your own content on it. You know, I mean like
steen lyric and multiply it by ten: 570 channels and
/a/a/limitauons."
nothing on. " I mean, we could have tremendous bandwidth into the home and individuals and groups not
To sav that the new grids should resemble the phone
have any access to it but continue to be passive recipisystem isn't to say that phone companies have to build
ents for whatever the people who control access to that
them. Cable companies can build switched fiber netmedium want to do with it." In
works. In fact, Time-Warner is
other words: "just more corpobuilding a small one in suburratism."
ban Orlando. And maybe, with
a radical attitude adjustment,
Surely he exaggerates. Even
cable companies could even
monopolistic cable companies
adopt the mindset of a comdon't do "whatever they want."
mon carrier. But we certainly
They cater
to
consumer
can't assume that companies
demand in a crude way, since
accustomed to the somewhat
more viewers mean more
Stalinist world of cable T.v. will,
money. Still, it is true that the
if left to their own devices,
vision of 570 channels looks
choose to build switched, open
positively retro next to Kapor's
networks.
vision: a network devoid of cenFor that matter, we can't
tralized control, a network on
assume that the regional Bells,
which everyone can be proonce allowed into the T.v. busiducer as well as consumer, and
ness, will choose to build
no audience is considered too
switched networks. The Bells'
small—a network that supplefascination with video programments popular culture not just
ming tends to rest on a kind of B I L L C L I N T O N BYJIM H O L L O W A Y FOR T H E NEW REPUBLIC with highbrow culture, but with
cable envy that could foster
unpopular culture.
uncritical emulation.
If someone wants to telecast his daughter's cello practice live, to one or ten or fifty people, then let the fun
Whoever the various highway builders are, then, they
begin. And i f the daughter wants to use a camcorder,
may need some, well, guidance. If the government gives
computerized animation, a desktop editing system, text
them their cherished incentives to lay fiber, perhaps in
from the Bhagavad Gita and clips from Birth of a Nation
return it should get some say over highway architecture
to produce an interactive multimedia product, fine; let
and the rules of the road. So far this idea hasn't permepeople download it and experience it at their leisure. If
ated Capitol Hill. Last year the Bush administration's
she wants to host a teleconference seminar afterward,
FCC issued its "Video dial tone" ruling, allowing phone
that's fine, too. Maybe, as her following grows, she'll
companies to carry video programming owned by othbecome a multimedia Truffaut
ers. Now a bill sponsored by Democratic Representative
Frederick Boucher of Virginia would free the Bells to
And if the content of her product, and of the ensuing
own some of the programming they carry—a major
tele-discussion, is political (text from the Federalist Papers
item on their wish list Yet the Boucher bill says nothing
and clips from C-SPAN), that's fine. Maybe it will seed a
about network architecture. And it doesn't entirely
new ideology, maybe she will host ever larger electronic
resolve questions (though it does address them) about
town meetings. In the world of tomorrow, anyone can
whether the Bells' ownership of video content might
grow up to be Ross Perot—without becoming a billionconflict with the role of common carrier.
aire first.
In this light, the principles EFT wants embedded in
Legislation as undemanding as the Boucher bill
the fiber network assume new meaning. Ensuring
could mean that in twenty years, after zillions of dollars
cheap, easy and equal access becomes more than a
are spent on fiber optics, some cities will have two cenlubricant for entrepreneurship; it is a guarantee of free""
tralized, corporatized T.v. systems instead of one. That
'-Mlmral and noliriral pynrf«<!ion—the extension of the
�First Amendment into cvberspace. When Jerrv Berman.
formeriv of the ACLU and now EFF S executive director, is
asked what lobbying about the data superhighway has to
do with EFF s original mission, he savs information
infrastructure is "the fundamental civil liberues issue of
the twenty-first centurv."
Berman and Kapor recommend a paradigm shift.
The phrase "500 channels," which often crops up in
discussions of the superhighway, is best banished from
future discourse. The preferred model is internet, the
global computer meta-network, which encompasses
various insutuuonal archives and millions of personal
computers. On internet people can read and post messages on bulletin boards; send e-mail to a friend;
"broadcast" e-mail to lots of friends: search databases
and download articles and software; play games bv
long distance; join in discussions—whether in "real
time" or on bulletin boards—that become magazines
in progress read bv lots of people who don't contribute; and so on. Friendships blossom, clubs form,
debates rage, EFT itself arose from internet discussions
between Barlow and Kapor, who live half a country
apart. And recent debate over EFT'S corporate backing
and ideological fidelity has been catalyzed by internet.
Internet involves no dominant corporate players, no
central source of information, no central source of anything. It is with evident satisfaction that Kapor calls it
"one of the world's largest functioning anarchies."
I
nternet, being hard to access and navigate, is
mainly a world of computer jocks. But, says Kapor,
"you've got to get past the idea that it's nerds
only" and see "the beauty within its soul." Imagine
a user-friendly, multimedia internet over a switched
fiber-optic network: practically infinite capacity and
infinite reach in a world of cheap video equipment,
subdy interactive software and so on. Uses of the network would be reminiscent of various mixtures of T.v.,
radio, telephones, computers, magazines, mass mail,
c.B. radios—a new medium of such flexibility and
power that there's literally no telling what it will be
like. This is the vision of the hackers. They believe that
thinking of the new medium as high-octane T.v., as
some legislators seem inclined to do, will only lead to
bad legislation.
All in all, "Jeffersonian" is probablv a defensible
description of EFT'S vision. And not just because the government's role would be simply to lav the groundwork
for the economic, cultural and political manifestation
of liberty. Jefferson believed that the basic resource of
his day—land—was a "naturalright,"and that its acquisition by the masses should be promoted, in part to foster self-reliance. These days, land is not such a vital
resource. The sine qua non of prosperity, increasingly,
is information. "If you give individuals a suitably rich
information environment," says Kapor, "whatever their
discipline or profession is, you're empowering them
economically." Access to data lets people "strike out and
have an independent economic existence." And, unlike
land, information is potentially infinite. Everyone can
cultivate it. and evervone can share in the harvest. But
onlv if the information infrastructure is designed with
that in mind.
Putting a gigabyte in every pot sounds like a liberal
enough goal. So what are the substantive complaints
from the left about EFF? They're hard to flesh out. .After
mentioning shadv corporate backing and complaining
about EFT'S hogging the spodight. critics tend to lapse
into minor or off-the-mark issues (such as "reserving
channels for nonprofits," a concern that, though perhaps valid in the short run, EFT hopes to render moot).
But there is one genuine and weighty difference
between EFT and its liberal critics: how to get the gigabyte in every pot.
Kapor wants to do it bv lowering the cost of the gigabytes. As the personal computer industry showed, "Volume goes up, price comes down. The same thing will be
the case here." just structure cyberspace so enterprise
can flourish, and access to data will grow cheap, "like
televisions and telephones today."
B
ut markets don't do their magic overnight.
Highway builders, left to their own devices, will
put fiber in affluent neighborhoods first. And
even if all homes were suddenly given broad
bandwidth, each exotic new service would, for a time,
be pricey. Marc Rotenberg of Computer Professionals
for Social Responsibility expresses a common fear when
he talks about the "network equivalents of Beverly Hills
and East L.A." He and some others on the left want to
address such disparities by making public schools and
libraries information oases in low-income neighborhoods. He wants to "get the network out to K-12," and
he worries about EFT'S "lack of support for public
libraries."
Kapor actually supports subsidies that will get
libraries and schools linked to internet, and to the
fully fiber network of tomorrow—including subsidies
in a second Boucher bill that he finds more meritorious than the first, EFT has managed to avoid an open
split with the American Library Association. (Few
things are worse for your image than thousands of
kindly librarians bad-mouthing you.) Still, tension does
exist. Kapor frowns on an idea that some states are
considering—building whole fiber-optic networks specially for schools and libraries before the market has
lowered the cost (especially of the "boxes" that will
connect user to fiber). The best wav to help libraries,
schools and poor people, he says, "is to get the mass
market moving as quickly as possible." The question is:
"What are the minimal government interventions
required to ensure access? I mean, no doubt there will
be some small percentage of people who need to get
subsidies, just as there are for telephone service." And
"we'd be prepared to hop on it as hard as necessary to
ensure equity of access." It's just that "some other
issues, like network architecture—like, is it going to be
open, and can vou put your own content on it?—are
much more problematic right now."
Between Rotenberg and Kapor lies an issue that has
�is simply a hacker's vision. It doesn't have thatjerrvhelped tracture the left over the past twenty vears: the
built qualitv we expect from an agenda designed to
relative role of markets and government in realizing libsatisfv a dozen different corporations. In fact, simultaeral goals. The verv language thev use pinpoints them
neously sausfving the various interests backing EFF
on the ideological map. Rotenberg, explaining Kapor's
would be impossible. There are very few things thev all
attraction to ISDN. savs somewhat suspiciously, "Mitch
favor.
saw verv exciting entrepreneurial possibilities." It's "not
so much that he was trying to make a buck" as that he
But by the same token, fear of antagonizing them
naturally identified with business interests. (As if busicould induce paralvsis. And. though paralysis doesn't
ness interests and the public interest necessarily
vet seem a major problem ( witness Kapor s opposition
diverge.) Kapor. meanwhile, talks about special interests
to the large fiber subsidies beloved bv cable and the
with the full-throated disdain o f a New Democrat (or an
Bells), it is also true that EFF has been slow to take a forold Republican). "Thev come and thev got their hand
mal stand on some issues, including the divisive quesout," he savs. "And it's amazing and disgusung to me to
tion of the Bells' entry into video programming. This
see the parade of people sucking on the government
permits Love to observe suspiciously, "A blank slate is a
teat. I mean it's reallv true. You sit in enough hearposition, when you think about it."
ings—vou know, they're nice people; they're familv peoSuch suspicions may not be well-founded, but thev
ple; I could have interesung conversations with them.
are not crazy, and they are unlikelv to fade completely
But they're condiuoned and
away. Which is sad. EFT came on
adapted to operaung in an envithe scene as a White Knight,
ronment where the wav thev get
beholden to no one, moved
resources is bv whining. And.
only by a few heartfelt values.
you know, we can't afford to do
This autonomv distinguished it
that."
from almost every other interest group, public or otherwise.
Kapor avoids common labels
(Even Love's patron, Nader—
for his oudook. "NeoliberaT is
who coined the term "public
"very declasse," he says. In fact,
interest group"—gets money
any variation on "liberal"
from trial lawyers associations,
(except "posdiberal") bothers
which have quite a stake in the
him, so tainted is the term by its
litigiousness he foments.) As
old "programmatic" methods.
long as EFF relies on corporate
But he can't dodge "New
backing, it can never again
Democrat"; he's a longtime
claim that special purity. It is
contributor to Democratic camtrue that an earnest neopaigns, and he sure isn't an old
Jeffersonianism (that is, HackDemocrat.
erism) seems to be Kapor's drivOne possiblv apt label for
Kapor's ideology is "Silicon Val- THOMAS JEFFERSON BY | I M HOLLOWAY FOR T H E NEW REPUBLIC ing force. But it is also true that
most EFF backers will in the long
ley"—construed broadly to
run profit from a neo-Jeffersonian world, in which data
include the American computer culture anywhere from
flows fast and free.
northern California to Kapor's turf in Massachusetts.
.Among manv hackers, the emphasis on free expression
Kapor sometimes seems overly optimistic about that
and moral tolerance is unyielding, and is nourished bv
world. But here, again, he is being true to hacker cula deep suspicion of authority. But a thoroughly left-wing
ture, which exudes a nearly mystical faith in the benign
aversion to government intrusion, when applied to ecoforce of uninhibited information. Barlow often cites
nomic matters, leads to the right end of the political
Pierre Teilhard de Chardin, the Jesuit priest who envispectrum (or, at least, to the "neo" end of "liberal").
sioned the technological assembly of a planetary "nooHence EFF co-founder Barlow's identity, as rendered by
sphere," a global brain that would seal humanity's spiriKapor: "an acid-head ex-Republican-county-chairman."
tual destiny: Point Omega. "Whether or not it
(And no, the Republican part didn't precede the acid
represents Teilhard's vision," he has written, "it seems
part.) Though many hackers have at one time or
clear we are about some Great Work here—the physical
another been on the government dole, typically
wiring of collective human consciousness. The idea of
through the Pentagon's research budget, there is still in
connecting every mind to every other mind in fullSilicon Valley a large suspicion of subsidies, a strong
duplex broadband is one which, for a hippie mystic like
strain of laissez-faire.
me. has clear theological implications."
All told, Kapor has a plausible line of defense
Kapor doesn't put the matter in theological terms.
against charges of sellout: coherence, EFF seems driven
Still, when you ask him about some possibly malign
by a consistent ideology (neoliberal, New Democrat,
effects of a nationwide fiber grid, he exhibits a trust in
whatever); and that ideology seems a natural exprescyberspace that verges on faith.
sion of Kapor's worldview, which in turn is rooted in
For instance; What about the much-feared cultural
> :
vio'nn nf the data suoerhiehwav fragmentation of America—the death of Cronkite, the
�Carrwrights and other images that once formed a
common American heritage? Remember, Kapor savs,
people are "quite social and sociable and we depend
on shared meanings." So. " I think there will always be
some role for vehicles of communication that serve
broad markets. Thev mav be less comprehensive and
less powerful than thev have been, and franklv that
would be a goddamn good thing." But "this notion that
we all onlv talk to other people that are just like ourselves is a fear that I actually don't see anv rational justificauon for."
.And what about grid-induced gridlock? Surely the
new medium will, as internet has already begun to do,
spawn groups bound bv interests of stunning narrowness. .And surelv when these interests are political, their
weight will be felt in Washington. If Congress is bombarded bv letter-writing campaigns now, just wait until
minute special interests are coalescing on-line (and
often doing their letter-writing on-line). Kapor savs: "I
think what will happen is that all that stuff will wind up
being discounted in the political process. At the point
at which anybody can do it, it just won't be taken seriously."
B
oth of these issues—cultural disintegration and
electronic gridlock—deserve deeper analysis,
and in neither case would the analysis likely
end on as sanguine a note as Kapor's does.
These are genuinely scary problems. In fact, they are at
some level the same scary problem: the more efficient
sorting of people into their designated boxes, whether
cultural, political or both. This is one of the darker
dimensions of Teilhard de Chardin s superorganism
metaphor: the ever sharper division of society into cells
of ever more finely specified roles. That such divisive
constraint should result from freely flowing information may sound strange, but the early signs are that this
perverse correlation holds. Its ultimate test will come
with an electronic grid of exacdy the sort that EFF
recommends.
There's no sense trying to escape the test. The alternatives seem either equally scary or just plain absurd. (A
government-mandated return to broadcasting, with
only three channels allowed?) America has no real
choice but to dance with the guy who brung us: stick
with Jeffersonian laws of information flow and address
problems as they arise. In the meanwhile, we can have
faith in the timelessness of the nation's founding principles. But faith is all it will be.
If there's a silver lining here, it's that national disintegration can have globally integrating effects. Americans
of different class, religion, vocation or avocation may
indeed have less contact with each other next century
than now, but they can have more contact with similarly
situated foreigners. Kapor gets gleeful standing at his
computer and reading a piece of e-mail from someone
in Iran who has just announced the creation of an Iranian "node" on internet. This internationalist impulse, this thrill at crossing deep chasms, is shared by
mnnv rvhernams and bv genuine liberals in both the
nineteenth- and twentieth-cenmrv senses of the word.
.And. obviously, by Teilhard de Chardin. who believed
that, as national boundaries weakened under the
weight of cross-cutting affinities, war would cease to be
practical.
WTio governs a global cvberspace? W'hich nation's
constitution defines, or denies, vour right to put a radical message on an Iranian bulletin board? "A lot of stuff
that we've done has been very United States focused."
Kapor savs. ".And that's a shortcoming, because vou
have to think globally." EFF has looked into cvberspace
questions of an international cast, and "we can see an
agenda of issues that we could grow into over the next
several vears quite comfortably if we had the resources
and so on." (Hmmmm. The Standard Oil of public
interest groups?)
K
apor is approaching his three-year anniversary
as a presence in Washington. And "vou know, I
don't find it verv hard to take, which surprises
me." Surprises a lot of people. More than one
critic has noted the irony of his having left corporate
America with conspicuous disdain for its ethos and then
having shifted his focus to Washington. Might as well
move from Sodom to Gomorrah.
No, there's a difference, he insists. "The difference is
that in business, because you're legally obligated to
protect shareholder interests, and because there's a
whole culture that virtually demanded disingenuousness and manipulation, it just became increasingly difficult for me, given who I am and what I believe, to feel
like I could get up in the morning and do my job without feeling slimy, whereas at least so far, in three years,
I haven't had that problem. I don't mind it being in
the environment. I mean environments are environments. I'm a pragmatist. They are the way they are.
And sort of holding your nose up in the air and saying,
This isn't up to my standards' is a pretty foolish posture."
The Electronic Frontier Foundation advised the Clinton transition team, and at one point there was discussion of an administration job for Kapor. The job was
"nothing incredibly glamorous." Still, "it got serious
enough that I had to think about, well, would I actually
want to live in Washington?" Pause. "No way."
Wise move. If there's one thing Washington doesn't
need it's another formerly well-meaning apparatchik.
And if there's one thing it does need, it's someone who
will persist in the nearlv impossible task of trying to
keep the town focused on the big picture. So far Kapor
and EFT have done more than anyone to clarify the
deeper data-superhighway issues—more than Al Gore,
and more than John Sculiey, the administration's hightech mascot. And in addressing the less deep issues—
how do you pay for the thing?—Kapor exhibits a truer
sense for the uses of markets than is yet evident within
the Clinton administration generally. All in all, he's a
model New Democrat. There's always room for a good
, j
New Democrat in Washington, but right now there's
more room in cvberspace. •
[J
u
�W S I GO
A HN T N
region used more accurate terminology:
he called it an "open jail." But it's the
Serbs who have been most gruesomely
honest. Russian officials visiting the area
(who have no motive for smearing their
"Serbian brothers") told reporters they
had overheard a radio message from the
Bosnian Serb militarv commander
Ratko Mladic in which he announced
that "the cattle had now been driven
into the corral, and the time had come
to tire into live meat." .As the Russians
delicatelv put it. "a very bad impression
was made."
D RT
I I
AS
Nm calling
ae
"MR. PRESIDENT. I CANNOT SAY
Dear Mr. President, because I hate
vou
" Thus begins a letter to the
White House from a Serbian nationalist
emigre in Oregon, who has also tried to
strike up a rather friendlier correspondence with our household. He had fired
off his letter to the president (a copy of
which he enclosed for us—"one of my
grievances to share with vou") in
response to Clinton s tough anti-Serb
talk during the campaign. As the United
States now inches toward action, he's
doubtless getung more irate, and that's
saying something. "God will not let you
exchange Serbian blood for Islam-Nazi
support," he was already warning several
months ago. "[Archduke] Ferdinand
[tried], remember? You know the rest of
the story." If he knew the truth about the
man in our house, he would be apoplectic: no "dear" for us. This zealot mistook
my husband, whose last name can be
either Serbian or Croadan, for one of his
own. It's a mistake that only a couple of
years ago wouldn't have made much difference at all: my in-laws don't come
from Boka Kotorska as he'd guessed, but
from the island of Korcula, just up the
Adriatic coast, two areas that until lately
differed on litde more than the question
of who had the best beaches. In the
hurry to invoke the enmitv of the deep
past to explain Yugoslavia's collapse, it's
just this intimacy of the recent past that
risks being forgotten, as Michael IgnaUeff notes in The New York Review of Books.
Among the many bewildering causes
and consequences of the Balkan disaster
is the sudden transformation of recendy
insignificant differences into insuperable Difference. A mistake over a name
common to two groups can convert the
urge to confide ("I wish I could talk to
you," our correspondent writes: he'll
accept a collect call) into the urge to
attack. The desire to reach out and
touch someone has never sounded less
innocent.
EVERYBODY WHO GETS NEAR T H E
siege of Srebrenica gags on the appellation "safe area" to describe a place in
which Muslims have been left totally
unsafe, "protected" from several thousand Serbian fighters by 146 Canadian
troops. A u.N. official who inspected the
A REAL CIVIL WAR MAKES OUR OWN
incivilities seem a lot less
shocking. Still, I was
taken aback to read
recently in The Washington Post that high school
students in Washington's affluent suburbs
regularly curse their
teachers out. Expletives
are of course standard conversational
fare among kids—among everybody:
"the B word is strongly used, and the F
word," as a senior in one school primly
put it. But when reprimanded, students
now apparendy call their teachers
"bitch" to their faces, and get more creative when the authority figure is male:
"I called him a lot of stuff," a freshman
told the Post reporter, claiming he kept
up the abuse "for a minute straight."
Enforcing discipline, according to the
kids, is the same as showing students disrespect, and they have no choice but to
defend their honor. "I told [the teacher]
the last person who yelled at me got
slapped," a junior explained. What
about teachers defending their own
honor? Another student said that resorting to corporal punishment would
spell trouble, and he wasn't talking
about lawsuits. He had a much less timeconsuming comeuppance in mind: "If a
teacher around here tried to paddle a
student, there would be a lot of teachers
in the emergency room."
SCHOOL PSYCHOLOGISTS, PRINCIpals, parents and teachers all diagnosed
the youthful barbarism as one more sign
of our decadent times: the result of too
much T.v., too litde parental attention,
the corruption of Hollywood, the corrosive power of consumer culture, a new
generation gap, the laxness of school
rules. I would have been sold on the
decline and fall theory, except that I was
in the middle of reading aloud before
bedtime from Farmer Boy, one of the
many books in Laura Ingalls Wilder's
Little House on the Prairie series: The
behavior crisis in our classrooms is nothing compared with the scene in the
1860s. Washington back-talkers look
tame next to the insolent teenagers in
Wilder s one-room schoolhouse. Thev
wreak annual havoc, hounding one poor
schoolmaster after another out of the
school. First thev taunt him into attempting to discipline them, then thev laugh
in his face, jeer at him and thrash him.
.And there is no emergency room: the
most recent teacher was hurt so bad he
died of it later." Enter Mr. Corse, the latest target. Never mind a paddle, he
comes armed with a blacksnake ox whip
fifteen feet long, with which he lashes
the student ringleader again and again,
tearing his clothes and his flesh." Vou
might wonder how modern youngsters
would take to this tla.
grant demonstration of
disrespect bv a teacher
to his students. The
response of my small,
admittedly unscientific
sample: wild cheers for
^
Mr. Corse.
MR. CORSE HAS A FITTING NAME,
given his harsh revenge, and Wilder
jrobably didn't make it up. Sometimes
ife does almost as felicitous a job as
Dickens or Thackeray in christening
people and places. Larry Speakes, Judge
Sofaer, Cardinal Sin: the list is almost
enough to convince you that the guys
were born to their callings. The harmony seems a throwback to the days
when Mr. Taylor, Mr. Carpenter, Mr.
Franklin and Mr. Smith had no need of
business cards. It's quaint to read in The
New York Times that Mr. Trotman and Mr.
Rollwagen recently met to confer about
designs for a pollution-free car. And that
E. Z. Million discussed the endowment
of a university professorship. Some people, of course, have the opposite luck,
and the disharmony of their names hints
at how much they had to overcome. Mrs.
Clinkscales, bless her, managed to
become Duke Ellington 's piano teacher.
The contractor for the Holocaust
Museum won the bid despite a grim disqualification: his name was Mr. Gasman.
But sometimes, alas, ill-starred names do
seem to have prophetic power. Wasn't
predatory male lunging inevitable at a
convention called Tailhook? Or craziness in a place named Waco? Or endless
dithering about the Yugoslav crisis when
EX. foreign ministers met in a Danish
town called Middelfart? In recent
debates among our own officials about
intervening in Bosnia, the pans were too
perfecdy scripted: pessimism about air
strikes from Admiral Jeremiah, American optimism from General McPeak. I'll
know our threats are being taken seriously when the Serbs reinstate their former prime minister. Mr. Panic.
HULBERT 'J
�The
Economist
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�THE WORLD THIS WEEK
The
cooomist
Not so fast
The Bosnian
Serb parliament
rejected the
Vance-Owen
peace plan even though its
leader. Radovan Karadjic,
had signed it at a peace conference in Athens. The parliament promised a referendum.
Lord Owen called that a
waste of time.
Politics and Current Affairs
Germany's Social Democratic
leader, Bjom Engholm, resigned. He had been caught
lying about inside knowledge
of a dirty-tricks campaign
against his own parry.
Britain's ratification of the
Maastricht treaty looked set
for funher delay, following a
successful amendment by
Parliament's Euro-rebels.
May Day saw the worst violence in the streets of Moscow since the attempted coup
of August 1991, as neo-communist demonstrators
clashed with riot police.
Carlo Ciampi managed to
form a new Italian government. His previous attempt
failed whenfourmembers resigned in protest at parliament's refusal to lift the immunity of Bertino Craxi, a
former Socialist leader widely
suspected of involvement in
corruption. The current Socialist leader suggested his
partyformpart ofa new
grouping of the left.
At least 16 people were killed
in India in Hindu-Muslim
riots in the north-eastern state
of Manipur. Police said Hindus attacked a Muslim village
and bumed 50 houses.
Fair chance
Boris Yeltsin's planned visit
to Japan was postponed, for
the second time in less than a
year.
At the funeral of Pierre
Beregovoy, Francois
Mitterrand criticised those
who had "thrown him to the
dogs". TheformerFrench Socialist prime minister shot
himselffiveweeks after his
party's crushing defeat in parliamentary elections. As a
mark of respect, Edouard
Balladur, the new prime minister, postponed a report critical of the Socialists' term in
office.
people died. Guerrillas also
killed a Japanese policeman
in an ambush. The attacks are
designed to disrupt plans for
an election on May 23rd.
Rebel members of Spain's
United Left coalition, third in
opinion polls before next
month's election, called for
the overthrow of the coalition's leaders.
Asian turbulence
Police investigating the assassination of Sri Lanka's president,
Ranasinghe Premadasa, on
May 1st, are blaming the
Tamil Tigersforhis death.
The method of killing—explosives strapped to the body of
a suicide killer—is the one the
Tigers used to kill Rajiv Gandhi. They deny involvement.
A train was blown up in
Cambodia's Battambang
province in the latest of a series of attacks believed to be
carried out by Khmer Rouge
guerrillas. At least 13 civilians
died. In another attack, Siem
Reap, a tourist centre, was
briefly overrun by Khmers
Rouges and troops loyal to
Prince Sihanouk. Seventeen
At a meeting with
Chris Patten, the
governor of Hong
Kong, President
Clinton said he favoured
maintaining China's most-favoured-nation trading status,
but that China had to demonstrate responsible behaviour.
Bill Clinton's aides promised
that his next 100 days would
be characterised by discipline,
a sharperfocusand more
trips outside Washington.
rate taxes, and subsidies designed to spur industrial
investment.
Wish you were here
Egypt announced
that its earnings
from tourism fell
by more than 50%
in thefirstfourmonths of the
year,followinga terrorism
campaign by Islamic fundamentalists. President Husni
Mubarak says the campaign is
being orchestrated by Iran
and supponed by Sudan.
A retired South African general boasted that he could
mobilise scores of thousands
of soldiers to create a separate
homelandforAfrikaners, if
South Africa established majority rule. Meanwhile four
policemen were killed in an
ambush in Soweto.
In Texas, a Republican, Kay
Bailey Hutchison, won the
raceforthe Senate seat vacated by the treasury secretary, Lloyd Bentsen.
David Koresh, the leader of
the Branch Davidian cult,
wasfoundto have died from
a bullet wound to the head.
A r g e n t i n a ' ! inflation
Consumer prices
% incrMM on y u r earlltr
President Carlos Menem announced a medium-term economic planforArgentina. He
promised to bring inflation
down to 4% a yearfromits
current 12%, and to create Im
jobs in the next two years. His
plan includes cuts in corpo-
The United States officially
handed over control of the relief operation in Somalia to
the United Nations. American soldiers will serveforthe
first time under a non-American chief, a Turk.
A special security court in Algiers began trying 58 suspected Muslim militants.
Some are accused of bombing
the airport last August and
many face the death penalty.
Their defence lawyers stayed
away in protest at the toughening of Algeria's tough antiterrorist law.
^
THE iotNOMItT MAV 8TH 1993
�THE WORLD THIS WEEK
-r
-
Business and Finance
The
Economist
of its creditors to forgive
around half its DM2.7 billion
debt.
Going down
US business activity index
s»
Manufacturing in America
contracted in April, the first
time it has done so since last
September. There was also a
decline in the government's
index of leading economic indicators. In March it dropped
bya full percentage point, its
biggest dropformore than
two years. Some of that was
blamed on bad weather. Nevertheless, combined with last
week's plunge in GDP growth,
it prompted the government
to say the recovery is "not
solid".
Germany's six biggest economic institutes rebuked the
Bundesbank for not cutting
interest rates fast enough.
Though they are predicting
that the German economy
will shrinkforthe year, they
expect growth to resume in
thefourthquarter. They also
criticised the government for
its planned increases in taxes
andforfailing to curb public
spending. Industrial output
in western Germany in
March fell 0.6%fromFebruary and was down 10.5% from
March last year.
Making demands
The European Commission
agreed not to claim back a
DM175m ($lllm) loan from
Klockner-Werke, a German
steel and engineering group,
saving itfrombankruptcy.
But the commission demanded deep cuts in capacity
in retumforits support. The
company had already obtained agreementfrommost
A big American clothes
maker, Levi Strauss, which
operates in 40 countnes, said
it will not invest in China
and will phase out use of Chinese subcontractors because
of the country's record on human rights. By contrast,
Unilever, an Anglo-Dutch
conglomerate, announced it
would expand its Chinese operations further with two new
joint ventures, to make ice
cream and detergent, at an
initial cost of $60m.
Anempts by British Telecom
to find a partner in America
foundered again when talks
with Electronic Data Systems,
America's biggest computingservices company and a subsidiary of General Motors,
were called off after disagreement on how much control
BT would have over EDS.
Net profits at Philips Electronics fell in thefirstquarter
by 36% to 103m guilders
($56m)from162m guilders in
the same period of 1992. But
this performance was better
than expected, and its share
price jumped.
After failing to raise new equity and facing $220m in
bond repayments, GPA has
abandoned its current efforts
to restructure. The world's
biggest aircraft-leasing firm
will now try to squeeze concessionsfromits hapless
bondholders.
start of a long overdue shakeup at Kleinwort Benson, the
British merchant banking
group's chief executive, Jonathan Agnew, is leaving. It is
thought his replacement will
come from outside.
Eastman Kodak's shares
plunged 10% following the
sudden departure of its new
chieffinancialofficer. Independent directors issued a
statement supporting Kay
Whitmore, the chairman. But
they added that the company's performance "must be
improved significantly".
Half of all mergers and acquisitions in Britain fail, concluded Coopersft*Lybrand,
an accountancy firm, after
studying 50 acquisitions
worth a total of £13 billion
($20 billion). Management
clashes between merged companies were blamed, as was
failure to do enough homework beforehand.
Going like a rocket
Nearly 30,000 East German
steel, metal and electrical
workers walked off the job in
the region'sfirstbig strike
since unification. The stoppage was called to protest
against the cancellation of
wage agreements which
would have boosted pay in
eastern Germany by up to
26% to achieve parity with
wages in western Germany.
Unions have threatened to
call out 300,000 workers in
coming weeks. Employers
claim that hard-pressed firms
in eastern Germany cannot
afford the pay rises.
Lou Gerstner, the new boss of
IBM, hired Jerry York, Chrysler's chieffinancialofficer
and respected cost-cutter, to
the same (vacant) post at the
loss-making computer giant.
Asil Nadir, theformerhead
of Polly Peck, an electronicsto-fruit group which was once
Britain's fastest-growing company, skipped £3.5m ($5.5m)
bail while awaiting trial for
theft andfalseaccounting
concerning £30m. He turner
up in northern Cyprus, declaring himself happy to b
home. The British govern
ment said it would try tr
him returned to Britair
Matra-Hachette of France
and British Aerospace said
they were close to a 50-50
merger of their missile businesses. The rationalisation is
one of several going on between various European defence companies in a shrinking market.
Shake-up
The biggest group c
of London agenci
Holdings, unexp*
closed eight poo
ing syndicates,
of the market''
• Antral Recruitment.
#£^3152.
In what app
THE ECONOMIST MAV 8 T H 1993
i
�MAY 8TH 1993
Can Europe put EMU together again?
the casefordoing nothing. If Europe's governments had to say why the ERM needs no repairs, they would say the following.
enjoying an economic recovery worthy of the
The ERM has proven its value over many
name. Elsewhere in the European Commuyears. It has succeeded in greatly reducing exnity, growth is slow at best, and in some counchange-rate variability within Europe, and in
tries the recession is still deepening. Why? Britpromoting regional convergence towards low
ain,freeof its ERM obligation to keep interest
rates of inflation. These achievements have not
rates high and sterling strong, urged its recovbeen wiped out by the past year. Moreover, If
ery on with a massive easing of monetary polEurope returns to the exchange-rate volatility
icy. Its EC partners, still bound by their ERM
and misalignments of the 1970s, the great
promises, cannot do the same. What do you
benefits offreetrade within the EC will be in
therefore conclude? It was a mistakeforBritain to join the ERM jeopardy. Without the ERM, countries could competitively dein thefirstplace—and it is a mistakeforcountries such as value their currencies: that would prove as inflationary in fuFrance and Spain to stick with it now.
ture as it has in the past, and it would give rise to the sort of
This argument is fatally inadequate, but its appeal is unde- trade frictions that plague the relationship between America
and Japan, or worse.
niable. In Britain, most people with an informed opinion
would assent to it enthusiastically. In fact, the idea would comRemember, too, that the strains within the ERM have been
mand about as big a majority as the one in 1990 that favoured due to exceptional circumstances. German unification, as semembership of the ERM. Britain is not alone in changing its vere a jolt to the system as you could imagine, obliged the
mind. Elsewhere in Europe, Britain's strengthening recovery is Bundesbank, the system's de/octo anchor, to adopt a monetary
being noriced. Some of the EC's other governments will soon policy that was at odds with the needs of its partners. This was
have to start explaining why they deny their voters a remedy for
especially awkwardforBritain. A new recruit to the ERM, its
recession that has proved so effective.
commitment to exchange-rate stability was untested. Also, it
For different reasons, Europe's governments are refusing to was suffering a debt-driven recession—which made its econface these questions. John Major wants to take creditforthe omy sensitive (even by its own standards) to changes in interest
recovery without owning up to earlier mistakes—which means rates, and ill-equipped to surrender monetary policy to the
he can neither praise the ERM nor bury it. Meanwhile Europe's Bundesbank. On top of all that came uncertainties due to the
other governments maintain an equally awkward silence.
referendums in France and Denmark over Maastricht.
Their largely unspoken view seems to be that the crisis in the
In short, this argument says, the situation in 1992 was
ERM has passed: the system has survived, despite exits and de- uniquely unstable. Henceforth, it goes on, things will improve.
valuations among its weaker members (no bad thing, by the German interest rates are coming down, which will relieve
way). So there is no needforreform. It is business as usual—and pressure on other countries to keep their interest rates high.
the EC's ambitious plans fbr monetary union are unaffected. France, especially, has weathered the storm;fromnow on confidence in its ERM commitment will be all the stronger, which
Time to think again
will also help to lower its interest rates. Soon Britain will be
This will not do. Even if nothing else had changed, widespread worrying aboutrisinginflation; not long after, it will redissupportforthe idea that "Black Wednesday" delivered Britain cover the difficulties of conducting an anti-inflationary moneto recovery would alter the character of the ERM. Whatever the tary policy without an exchange-rate peg—and will begin to
merits of that view, its popularity lessens thefinancialmarkets' wonder about rejoining the ERM.
confidence in the system; and without that confidence the sysMuch of this argument makes sense. It is undoubtedly
tem is weakened. Anyway, other things have indeed changed: it closer to beingrightthan the view that Europe would be better
is ridiculous to pretend that the events of last September, and off if the ERM collapsed altogether. The EC does need exthe exchange-rate strains in Europe that have creaked intermit- change-rate stability to promote intra-regional trade and intently ever since, raise no hard questions about the future of the vestment, and to prevent competitive devaluation. Without a
ERM and the prospectsformonetary union. The sooner gov- doubt, Europe's small, open economies are far too sensitive to
ernments begin to answer these questions, the better.
changes in currencies to withstand, without great economic
If pressed, many ERM-sympathisers would agree that last cost, the unameliorated ups and downs offloatingparities.
year's crisis callsfora rethink, butfewsee the needforanything
As Europe has discovered, however, the hard part is to make
radical. This newspaper—an ERM-sympathiser and an EMU- a system of semi-fixed exchange rates work in practice. Governenthusiast—disagrees. To see why, it is necessary to understand ments appear to have drawn a purely tactical conclusion from
--. '/#7
T H I I C O N O M I t T MAT 8 T H 199)
\
this.
C ONSIDER fromBritain, ejected soisignominiously
Europe's exchange-rate
mechanism (ERM) in September 1992, now
�LEADERS
the ERM'S ordeal: never underestijnate the strength of the financial markets. Once investors are convinced that the interest-rate consequences of an exchange-rate commitment have
become politically insupportable, no amount of talk or foreign-exchange intervention can defeat them. How are such
confrontations to be avoided? The governments' answer, it
seems, is to go back to the ERM as it worked for most of the
1980s—a more flexible ERM, in which exchange-rate
realignments happened now and then, instead of being resisted at all costs. That way, they hope, further shocks will be
absorbed, instead of smashing the system altogether.
How convenient it would be if nothing else were required.
For a stan. it would leave EMU an option fbr the countries that
want it, and a cause of no bother to those that do not. Many
officials (for instance, at the Bundesbank) who doubt the case
for monetary union would like to see this earlier-vintage, lessrigid ERM stay in business indefinitely: they see it as a workable long-term regime for European monetary policy. Others
want EMU to happen, but would not mind a slightly looser
ERM meanwhile. They have concluded that it is a mistake to
approach monetary union by gradually stiffening the ERM. A
quick transition will work better than a slow one. To Europe's
governments, whatever they think about EMU, a retum to the
ERM of the 1980s looks a good way forward.
On this crucial point, they are wrong. The ERM cannot be
left unmodified. To suppose that Europe can retreat to the prerigid ERM of the 1980s—to a system that has been tried and
tested—is a dangerous illusion. The world has changed since
the ERM last worked that way.
The system of the 1980s was sustained by capital controls in
many of the member countries. Most of these controls have
now gone, and internationalflowsoffinancehave expanded
hugely. So theforcesacting on the ERM are much stronger today than ever before. For a while, the conviction in the markets
that the system was secure, and that realignments would be
avoided, was a self-fulfilling prophecy: speculative flows of
capital helped to stabilise the system. An ERM with fully integrated capital markets, and now without the glue of stabilising
expectations of that sort, is anything but "tried and tested": it is
a new experiment, and one that could go badly wrong.
A different sort of ERM is therefore required—one that allows some of its members a flexibility even greater than that of
the early 1980s. There are three main ways of providing this
extra flexibility: wider exchange-rate bands (the existing system
allows currencies tofluctuateby plus or minus 2'4% around its
central rate); bands with "soft buffers", which would allow
members to let a currency move outside its band under certain
circumstances;
and
frequent, possibly automatic,
realignments of the central rates, to take account of differences
in rates of inflation (ie, bands that provide stability in a currency's real exchange rate, rather than its nominal exchange rate).
A system with these features was proposed in the 1980s, though
not fbr Europe, by John Williamson of the InstituteforInternational Economics in Washington, DC (see page 83).
If Britain is to retum to the ERM—as it should—it will need
flexibility under all three headings. Other countries in the system could also be better off with such an arrangement. A "soft
ERM" of this kind could work alongside both the existing ERM
and—later—a monetary union comprising Germany and its
closest monetary disciples. It could be made consistent writh
the Maastricht treaty; a broader EMU could gradually evolve.
And membership could be offered to the reforming economies
of Eastern Europe. They would benefit from real exchange-rate
stability within the European monetary area without having to
surrender all discretion over monetary policy—which, even if
desirable, would not be feasible.
Softly, softly
Every currency system involves a delicate balance of costs and
benefits: no system is unambiguously right. An added form of
membership of the ERM that was soft in all three ways would
give its adherents greater discretionary use of monetary policy
for the purposes of managing their economies. Also, such a system would be less vulnerable to speculative attack. Those are
substantial benefits, but the costs are great, too: more exchangerate instability, and the loss of the anti-inflationary discipline
provided by fixing the nominal (as opposed to real) value of the
currency. Countries optingforsoft membership would have to
put up with the first, and find substitutes for the second—for
instance, by setting (and hitting) targetsformoney-GDP, using
both fiscal and monetary policies.
Untidy, without a doubt. But the ERM'S most valuable
achievement—the single market—would be made much safer
by it. If Europe's governments choose muddling through rather
than such reform, then that achievement, as well as the ERM
itself, will remain at risk.
Drift over trade
Worid treds And 91 owtj 1
Vokmt. IMO.100
* —
Exports
140
120
100
Fine words will not bring a GATT deal—especially if mixed with threats
T
H E guns blaze, the bombs drop. Then there is silence, while
the aggressor waits to hear whether his warnings have provoked the desired response. If there is none, what next? The
aggressor must be prepared to deliver on his threat, with more
bombs and, if necessary, with all-out war. No, this is not Bos- '
nia. It is the emerging trade policy of the Clinton administration, at least as demonstrated by trade sanctions threatened on
April 30th against Japan, Brazil, India and others. Such a policy makes sense only if the administration really is prepared to
cany out its threats, and even to follow them up with worse. Yet
18
1980
U
84
K
88
90
92
at the same time President Clinton claims he wants to do all he
can to complete the Uruguay round of G ATT trade talks, and is
backing the appointment as GATT'S new director-general of Peter Sutherland, an Irishformercommissioner of the E C who
has just the sort of political push to get a trade deal done. Both
directions of policy have their own logic. But to combine them
has no logic at all.
Many in Washington will disagree; toughness on trade,
they think, is exactly the right way toforceJapan and Europe to
open their markets (see page 27). Whether such countries
THI
( C O N O M I I T HAT 8 T H 1993
^
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�LEADERS
first precondition appears to be there already: backingfromthe
EC and America for Peter Sutherland to succeed Arthur Dunkel
as director-general. Mr Sutherland still needs approval from
GATT'S 110 members, but he is the leading candidate and
would come with a splendid mixture of diplomatic credentials, top-level contacts and real backbone. He would be a fine
choice, giving the GATT job a higher political profile.
Appointing the right man is not enough, however; next you
have to pay attention to what he says. And one of the things that
a new director-general will need to do is to say, loud and clear:
you can have GATT, or bilateral do-it-yourself trade policies,
but you cannot have both. That done, he can busy himself getting the Uruguay round's warring panies back to the negotiating table. All must accept that if a deal is to be struck by the end
of this year, negotiation will have to begin in earnest much earlier, preferably during the next two months.
On Sutherland's side
No country should carry all the blame for the round's paIt would be wrong to single out the Clinton administration for
criticism. Although any new administration prefers to pretend ralysis. America's besetting sin is its preference for acting alone,
that its policies differ markedlyfromthose of its predecessor, in writing its own trade laws and using them to break its way into
other people's markets. The European Community's is its dogthis the White House is doing itself a disservice: President
Bush, and his trade representative Carla Hills, were no cham- ged resistance against effons to make itsformersjoin the world
pions offreetrade. They too pandered to protectionist senti- economy. France's new government has hinted it will be more
willing than its predecessor to acceptfreerfarm trade, along the
ment—though more cautiously than do Bill Clinton and
lines agreed abortively between the EC and America late last
Mickey Kantor. The right response to Democratic scorn of
George Bush'sfree-tradeline is "if only he'd had one". The year, but so far there have been only hints. Those talking oppoint is that both administrations have been willing to risk un- timistically about GATT claim to want the makings ofa deal in
timeforthe Tokyo economic summit in June. Which brings in
dermining multilateral free trade. This may not prevent a
GATT deal, though it does make one less likely. But such behav- Japan's besetting sin: its reluctance to lead on multilateral free
iour will continue to undermine GATT once the Uruguay trade, even though it has more to lose than mostfromGATT'S
round is signed. Itrisksturning a triumph into an irrelevance. demise. The Tokyo summit will be the perfect momentforJaTo make a Uruguay deal the triumph it deserves to be, the pan to shed its shyness.
choose to open up in a GATT round or in bilateral negotiations
is beside the point; opening is opening, however it is achieved.
Well, no—but there lies the clue to where America's thinking on
trade has gone awry. Leave aside the danger that the victims of
American threats will (as they should) refuse to negotiate and
may retaliate, causing a war that will shrink trade and hurt economic growth. America's use of its own laws, rather than international rules and procedures, toforceopen markets is a rejection of multilateral free trade, not a means towards it. It
undermines the very GATT deal that Mr Clinton claims to want
to achieve. It pushes countries into bilateral, market-sharing
pacts with America which are the opposite of open trade: outcomes set by lawyers, not traders. In those circumstances,
"openness" can be no better than being closed.
The rebuke from Pale
The West must now steel itself for military action in Bosnia
P
IGHEADEDNESS was in plentiful supply in the Balkans
even before war descended on Bosnia 13 months ago, and
the world should not be surprised to see it once more in the
ascendant this week. Even so, the Bosnian Serbs' rejection of
the Vance-Owen peace plan on May 6th stands out as a spectacular triumph of greed and folly over common sense. It also
obliges the outside world—meaning the West, and above all,
the United States—to come to a decision about the military action it has been threatening. The possibility, if not certainty, of
American attack has acted in combination with diplomatic
concessions and the pressure of sanctions to make Serbia's
Serbs agree to peace. Bosnia's Serbs either do not care or they
reckon the Americans have been bluffing. Any temporising
now will confirm those who take the view that America's
murmurings were indeed bluff. Thefirsttest of Bill Clinton's
credibility has come horribly early in his administration.
Admittedly, a No from the Bosnian Serbs should not be
considered as an unequivocal, irreversible rejection of the
peace plan, any more than a Yes should have been regarded as a
wholehearted acceptance of it. The pressure on the deputies
meeting in their self-styled parliament in Pale this week was
intense (see page 53). It came not justfromthe outside world,
THE ECONOMIST MAT 8 T H 1993
but alsofromtheirfriends(notably the Greeks), their allies (the
Serbs of Serbia), and even their leader (Radovan Karadzic). All
of thesefeltable to argue that the Serbs had already achieved
most of their war aims, and now had a good chance of hanging
on to them. That was because they had extractedfromLord
Owen, one of the authors of the peace plan, a concession at a
meeting in Greece last weekend that would prevent Croat or
Muslim soldiers from reclaiming territory from which Serb
troops had withdrawn. Unless the United Nations peacekeepers proved very much tougher in Serbia than they have done in
Croatia, that would have made it unlikely that Croats and Muslims would havefeltsecure enough to retum to their former
homes. Ethnic cleansing would have worked.
Time to strike?
That eventuality would have been a worryforthe UN had the
Bosnian Serbs said Yes and thereby set the sceneforthe biggest
UN peacekeeping operation ever. As it is, a different worry confronts the West: how best to get the Bosnian Serbs to change
their minds. The obvious solution is to strike their military installations and lines of supply from the air. There are three
main argumentsforthis. First, it would be evidence of western
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�LEADERS
resolve; the Americans would no*t, after all, be seen to have
been bluffing. Second, it would be relativelyfreeof risk to the
American or allied airmen who would carry it out. Third, it
would be disagreeable for the Serbs, who, because they have
been largely untested, have yet to show themselves to be a fightingforcewith much mettle.
Unfortunately, therearealsoargumentsagainst it. Itwould,
for the first time, draw the outside world into the war not as a
neutral peacekeeper but as an enemy of one side. It would
therefore run the risk of jeopardising all the peacekeeping and
humanitarian-aid operations being undertaken throughout
ex-Yugoslavia. And it might not prove effective. That is both
because bombing does not always make the victims knuckle
under—sometimes it can stiffen their resolve—and because it
would be hard knowing what to bomb. Perhaps the most potent weapons used in Bosnia are mortars; they can be fired
from the grounds of hospitals or schools and quickly moved
about. Even in the days of precision strikes, attacks from the air
would risk civilian casualties.
The alternative is to lift the ban on supplying weapons to
Bosnia's Muslims, the main victims of the war and the ones
most likely to fight back against the Serbs effectively. That also
jeopardises the peacekeepers, does lessforwestern credibility
and runs the extra risk of lengthening an already long war,
without changing the balance enough to stop it. The practical
task of getting weapons to the Muslims is also formidable.
The least bad of these wretched choices would be to announce a series of air strikes on Bosnian Serb positions. It is
possible that advance notice of these strikes, combined with
some noisy revving of jet engines from American aircraft carriers off the Dalmatian coast, would be enough to make the Bosnian Serbs change their minds. They have done that before,
and the hope must be that they will do it again. If not, the logic
of the threats made so far is that bombing must follow; threats
may have been unwise, but it would be even less wise to make
them and fail to carry them out. So long as it is confined to strict
military targets—roads, bridges, supply depots, gun emplacements—bombing need not alienate either public opinion in
the West or the ordinary Serbs who must help change the
minds of their stubborn, self-styled leaders.
At the same time the diplomatic and other pressure must
continue. That means the pressure on the Bosnian Serbs, pigheaded though they are: the Serbian border with Bosnia must
be sealed, ideally by U N troops. It also means the pressure on
Serbia and Montenegro, because without the support of rumpYugoslavia the Bosnian Serbs cannot endure indefinitely. So
sanctions must be ever more rigidly enforced on ail fronts and
the lesson driven home that Serbia will remain a pariah state
until a peace is in place.
An imperfect plan, still worth support
In the absence of any other plausible plan, that peace will have
to be based on the Vance-Owen deal. Never perfect, it at least
maintains the presence of Bosnia in its existing borders, and
denies the Serbs their aim of a Greater Serbia and the Croats
theirs of a Greater Croatia. Further, it now has the agreement of
all the belligerents except the Bosnian Serb deputies. They are
not so insignificant that they can be ignored; but nor are they so
important that they can be allowed to kill the only prospect for
peace that does not involve a fight to a standstill.
In many respects the war in Bosnia is the antithesis of Iraq's
seizure of Kuwait. Saddam Hussein's invasion was the clearest
breach of the international rules imaginable; his expansionist
intentions and despotic nature were in no doubt; western oil
supplies were endangered and a consensus could readily be
mustered against the invaders. In Bosnia, the rights and
wrongs are more muddled; no direct western interests are involved; and nobody is sure what can be done, let alone what
should be done. Yet some principles are at stake in Bosnia, and
the world cannot let the complexity of the issues be an excuse
for doing nothing. Aggressors are grabbing territory; war
crimes are being committed. After so much huffing and puffing, inaction now would be seen not just by Serbs but by other
potential ethnic-cleansers as a green light to press ahead. That
must not be the beacon that the West offers after the rebuke
from Pale.
New rules for banks
Keep them minimal
A
BANK supervisor's lot is not exactly happy. If his vigilance
fails, he faces the wrath of ordinary people: depositors
whose savings are atriskand taxpayers whose money is used to
stop one bank collapse from knocking down the entire banking system. Yet if a supervisor is too vigilant, he is lambasted for
sheltering banks from the discipline of the market or the effects
of their own blunders. Striking the right balance is getting
harder all the time as banking grows devilishly complicated,
crossing borders and time-zones, spawning new products, using computers to bewitch and bewilder. Regulators have struggled to keep pace, assuming that they should somehow take
account of all therisksassumed by banks, no matter how bulky
their rulebooks become. They would do better to rethink why
they regulate banks at all.
The latest proposals from the banking supervisors of the
20
world'srichestcountries, who sit on the Basle Committee, are a
case in point. In 1988 the committee came up with reasonably
simple minimum standards (adopted or exceeded by banks in
most developed countries by the end of last year) which sought
to match a bank's capital to the creditrisksit runs. It was clear
then, and has become clearer since, that the risk ofa borrower
defaulting is just one—albeit the most important—of many
threats to a bank's solvency. Other, more complicated, types of
risk need attention.
On April 30th the Basle Committee duly recommended
three big innovations. The simplest is letting banks put aside
less capital when they have arrangements with other banks for
"netting"—ie, reducing what would be multiple payments to a
single transfer ofa net obligation. That is welcome, as is a second proposal to help supervisors measure how movements in
THt ICONOMIIT MAT 8 T H 1993
�LEADERS
interest rates might affect a bank'sfinancialstrength.
The third recommendation is farther-reaching. It is to require banks to hold capital specifically against market riskbroadly, the chance that the price of a share or a bond or a currency,forexample, willfell,and expose the bank that holds it to
loss. The proposal reflects the feet that the business of the
world's biggest banks is shiftingfromlending to the trading of
securities, securitised loans,foreignexchange and derivative financial products such as swaps and options. If it is accepted,
almost all big banks will need more capital by the time the new
rules go into effect in 1997.
The Basle Committee's rules are not binding. Given the
welter of competing ideas on the subject (the European Community has recently adopted a slightly weaker measure, while
securities firms outside the EC often operate under different
rules than those governing banks), its 1993 proposals are less
likely than its 1988 rules to find ready acceptance. Nevertheless,
the new Basle proposals confirm 'the curious charm which
regulation has acquired of late. Of course some bank supervision is essential: economies need functioning payments systems, and sturdy-looking banks do mobilise some savings that
would otherwise be stuffed under mattresses. And a degree of
global harmonisation is a good thing. Taxpayers in America,
for example, can be hurt by the failure ofa global bank's Luxembourg operations, and common minimum standards put a
floor under destructive competitive deregulation. Judged on
these grounds, the new proposals from the Basle Committee
seem to make sense.
Why bother?
The broader test, however, is whether it is correct to extend
regulation at all. Is it right to regulate more and more of what
banks do, especially as these protean creamres are less
recognisably banks each day? There is, after all, another approach worth considering. Rather than widening the regulatory net, why not narrow the banking fishpond?
Internationally or domestically, no supervisory system can
capture or even measure all the risks that banks run, partly because these risks are constantly changing. Instead, supervisors
should consider concentrating regulation—and deposit protection—on those (shrinking) bits of banks' activities which
there is truly a public interest in protecting. The rest might
safely be left to the markets. If a bank's core activities were ringfenced by rules limiting what it could do with insured depositors' money, itsforaysinto securities, swaps and other financial
markets need not threaten.the banking system. Tofinancetheir
more adventurous activities, banks would bidforinvestors'
money, competing with the other non-deposit-taking institutions which they increasingly resemble. Their shareholders,
not the taxpayer, would carry the risk of failure.
The blue and the red
A clash of values between north and south should not be allowed to result in
second-classrightsforthe poor
The regional meetings called to set the agendaforthe big
human-rights conference in Vienna next month have provided
forumsforthis bitterness. The Asian countries, meeting in
ing terrible things to their peoples; at worst it would serve up a Bangkok a month ago, mobilised a vigorous attack on the valforest of platitude. Now there isfearof damage: rearguard ac- ues that they think are being imposed on them. Reaffirming the
tionfromsome developing countries could reduce the human- principle of non-interference in the intemal affairs ofa soverrights movement, which had begun tofeelrather robust, to a eign state, they condemned the attempt to use human rights as
a conditionfordevelopment aid. And they questioned the
lamentation of confused values.
Humanrights,during the cold war, were largely ignored at right of the rich world to set standards, arguing that human
the Security Council, which is the only UN body with teeth. Its rights should be considered against the background of geograpermanent members tended to tum a myopic eye to brutal do- phy, culture and religion.
In theory, the UN's definition of humanrights,as expressed
mestic behaviour on the argument that "he may be a
sonofebitch but he's our sonofebitch." That has changed. The in 1948, embraces everything from arbitrary arrest to an adebit of the UN charter that tells nosey parkers to keep out of other quate standard of living. But the twin human-rights covenants,
one covering civil rights (sometimes known as blue rights) and
countries' business is less respected than it was, as Saddam
Hussein knows to his cost. The election of Bill Clinton has one economicrights(known as red), are by no means equal.
brought in an American administration with humanrightsas There are instruments ofa sortforupholding bluerights:workthe cornerstone of itsforeignpolicy, according to Warren ing groups look into "disappearances", rapporteurs are atChristopher, the secretary of state. Rich countries increasingly tached to particularly sinful countries. There is no such mechanismforsetting red abuse right.
useforeignaid as a lever to promote political pluralism and
individual freedoms.
All this has caused alarm in the third world, particularly Down with the excuse-seekers
among its autocrats. The rich north and the poor south, it is Governments argue that they cannot make a development omargued, have different priorities. For the south, the right to eco- elette without breaking heads. It may be easierforan authorinomic development is what matters. The north should stop tut- tarian regime thanfora democratic one to cany out economic
tutting about juridical lapses or dictatorial ways and instead do restructuring; Chile did it, Peru hopes to. Industrialised counsomething about the low commodity prices and the debt bur- tries are accused, rightly, of double standards. And donors are
in several minds about making humanrightsa condition for
dens that make the poor even poorer.
jamboree
ANtheINTERNATIONALsome muscleontoithumanrightsfitsthe
^ mood of the times. At best, or so was thought, it would
give
United Nations
stop governments do-
THE ECONOMIST MAT 8 T H 1993
_
21
�LEADERS
aid. Certainly, the best hope for more political freedom in
some countries lies in opening them up through trade; that is
why America would be unwise to refuse Chinafiavourabletrading terms (see page 28). Nor can "cultural" arguments alway
be dismissed. Islamic punishments seem awful to Christians,
but long prison sentences are no delight. Any penal system can
be vilely abused.
Goals are not rights
Out of the smudge, some distinctions should be made. Rights
are different from goals. Everyone, bar a few ascetics, thinks it
desirable that jobs and housing and education and medical
care should be available to all. But gifts such as these cannot be
awarded to everybody, ei ther byjudges or by the most ben ign of
governments. The best that societies can do is to strive to
achieve them.
Rights are different. They can be given by passing laws, and
taken away just as easily. They are the weapons of the weak
against the might of the strong. That is why they have a place in
the constitutions of democracies, and none in those of dictatorships. Autocrats may start well intentioned (few stay that way),
but none should be allowed to claim that their pursuit of'good
economic goals is just one way of upholding their subjects' human rights.
In fact, the route to prosperity is seldom on the backs of
tormented people. Rulers who argue that a country has to be
well-ofFbefore it can afford to be politically decent to its people
are generally providing themselves with an excuse for continuing in their bad old ways. As the agenda for the Vienna conference is broadened and flattened, the immediate result looks
like an acceptance of the lowest common denominator. That
would be a pity. The rich north, with no reason to be smug,
would be wise to listen to the south but not, in the end, allow
itself to be diverted from the blue to the red.
Sri Lanka's violence
Other countries should learn from it
I
T IS of no great consequence to the rest of the world that a ment, jobs in the civil service. Therefolloweda series of laws
setting up separate schools for Sri Lanka's different languagesmall island off the end of the Indian subcontinent should
groups and establishing quotasforSinhala-speakers in univerhave sunk over the past couple of decades into a condition of
violence so endemic that the murder of the president and a sities. Many of these measures were later recognised as discriminatory and overturned. But by then it was too late. Angry
leading opposition politician within eight days can be regarded by the locals with something like equanimity (see page young Tamils had started their terrorist movements, among
them the Tamil Tigers, and so the terrible cycle of destruction
41). Yet the story of Sri Lanka's disaster is worth paying atten
tion to. New countries in theformerSoviet empire, now mak- and retribution began.
ing mistakes similar to those Sri Lanka made after
Watch your language
decolonisation, should note where they can lead.
Sri Lanka had a lot goingforit: democracy going back to In theformerSoviet Union, new nations are indulging in the
1931 and a literacy rate which, at 88%, is the highest of the 43 luxury of nationalism, sometimes tinged with revenge on their
countries the World Bank classifies as "low-income". Sri Lanformer Russian masters. The Estonians require a language test
ka's recent governments, which have been busily unravelling before full civil rights are granted, to the dismay of their Russtate controls, see no reason why it should not be a Singapore. sian-speaking population. The Moldovans have made MolYet in the past decade more than 50,000 people have died in
dovan the only official language, putting Russians and Ukraithefightingbetween the securityforces,separatist Tamil guer- nians at the same disadvantage as Sri Lanka once put its
rillas and a now-feded nationalist revolt; and prominent poli- Tamils. The Slovaks are trying to rub out the use of Hungarian
ticians and soldiers are murdered with monotonous regularity. in officialdom. Such measures may be presented as a simple
Economic growth, at an annual average of 4 over the past five way of making the majorityfeelin control of its destiny. Sri
%
years, is not bad in the circumstances, though not as spectacu- Lanka's deterioration suggests that, in the long run, everybody
lar as the South-East Asian growth rates that Sri Lanka aspires may sufferfromsuch exclusivity.
to emulate.
It is easier to fall into a pit than to get out again, and the
So was Sri Lanka's disaster drearily inevitable? Probably prospects in Sri Lanka are grim. Ranasinghe Premadasa, the
not. Unlike many countries that pull themselves apart, Sri dead president, appeared to have leamt that indiscriminate
Lanka was not artificially put together. Tamils and Sinhalese killing of Tamils was not going to make the problem go away.
have lived together on the islandfor2,000-odd years. Despite In the past year he had been restraining the army and trying for
the Hinduism of most Tamils and the Buddhism of most Sina political settlement; and there have been signs that Tamil exhalese, they coexisted for those two millennia without much
tremists may be prepared to talk about autonomy rather than
hostility. Indeed, when the Sinhalese were short of a king in the secession. But the rest of the nationalist-minded government
18th century, they drafted in a Tamil prince to stan the dynasty does not appear to favour thefederalsolution that is the only
that survived until the British moved in.
possible answer. With Mr Premadasa's restraining hand reWhat went wrong? Language, mainly. Short-sighted Sinha- moved, the army may again be allowed to do what it wishes. If
lese politicians decided, after independence in 1948, to make so, many more Sri Lankans will die before the government
Sinhalese the only ofTicial language. Tamils felt deprived of ac- learns that more killing does not necessarily lead to less.
cess to government and of their traditional route to advance22
•
T H I I C O N O M I t T MAT gTH 1993
�AMERICAN SURVEY
Getting the measure of trade
WASHINGTON, DC
The Ciinton administration is often accused of utter confusion overtrade policy.
It is beginning to defend itself
APRIL 30th Mickey Kantor, PresiONdent Clinton'sdecisionsrepresentative,
trade
announced a set of
under American trade laws. He claimed that Japan discriminated against American firms in its
public-sector procurement practices, and
announced that he was reviewing whether
Japan had met the terms of a 1990 agreement with America to purchase supercomputers. He revealed too that he was
examining the records of 16 countries, no
less, and of the European Community, to
see whether they granted adequate protection to the American holders of intellectual
propertyrights.Mr Kantor's actions, as so
often, raised eyebrows abroad, and reopened the question ofwhether the Clinton
administration has a coherent trade policy.
Infeet,in a series of speeches and interviews
in thefirstweek in May, members of the administration have staned to give an answer.
"Coherence" in trade policy is an elusive quality, whether or not the president
takes active charge of it. (With the exception
of preparations last month fbr the visit of
Kiichi Miyazawa, the prime minister of Japan, President Clinton has still not chaired
a high-level meeting on the subject.) America's trade laws arefiendishlycomplex. They
divide responsibility between Congress and
a vanety offederalagencies; they invest
broad discretion in a variety of officers.
Their bark is often worse than their bite. The
only cenain outcome of the April 30th announcements is a paperchase of bureaucratic meetings and interagency reviews:
and high dudgeon abroad.
In theory, the administration could decide simply to ignore all the laws that give
America unilateral power to impose sanctions on its trading partners. Yet even this
could not grant total coherence, since many
of the trade laws can be triggered by private
companies or pressure groups. Mr Kantor,
spealung as the lawyer he is, thinks that a
policy of self-denial would bring the laws
into disrepute. On May 4th, before a meeting of the Council of the Americas, he said
that the only way he could build support for
a system of open trade was to apply die laws
that Congress had put in place, and to hold
THE ECONOMIST MAT 8TH 1993
America's partners to agreements they have
made. Hence the challenge to Japan on the
supercomputer deal.
Carla Hills, George Bush's trade secretary, used to use language like this. It was she
who spoke of using American law as a crowbar to openforeignmarkets, and who said
that the administration, though it might not
much like it, was nonetheless bound to apply the Super-301 trade-retaliation measure
then on the statute book. The prepared texts
An extreme case
of speeches by Mr Clinton and Mr Bush on
trade policy are indistinguishable ftom
each other. Mr Clinton talked tough to Mr
Miyazawa last month about market access;
but it was Mr Bush who took a group of
America's most protectionist businessmen
with him to Japan. Mr Kantor, before the
Council of the Americas, gave a speech committing the administration to implementing a North American Free Trade Agreement by January 1st 1994; on the same day,
he set out the administration's determination to conclude the Uruguay round of the
GATT by December.
Why, then, is the administration so misunderstood? Part of the reason is that, offthe-cuff, Mr Kantor has not yet learned to
speak the language of trade buffs. On May
4th he said in answer to a question, as he has
implied before, that he was an "agnostic"
onfreetrade, protectionism, managed trade
or anything; all he wanted was an "open
world trading system". That "agnostic",
which sounded fair enough to Mr Kantor,
could have carried an explosive charge
across the oceans.
Foreign suspicion is also fuelled by reports that the administration is deeply divided on trade policy. Laura Tyson, the
chairman of the Council of Economic Advisers, who is meant to be on the protectionist side of this debate, flatly denies this:
those who believe it, she says, are living in a
"different reality". Ms Tyson may protest
too much; but she could certainly argue that
at no time in the previous two administrations did everyone involved in trade policy
singfromthe same songbook. It is an error
to rewrite history to pretend that they did.
How do members of the administration
themselves think trade policy has changed?
On May 4th, Mr Kantor gavefourexamples.
First, he said, the administration was more
actively engaged in trade policy than the
Bush people used to be. Second, he argued
that Mr Clinton had tied trade policy to domestic economic policy directly. Third, he
said that America's economic strength was
its best security; and fourth, he said that
America was now committed to leading the
world to global growth.
Not much enlightenment there; the
same reply could have been given at any
time in the pastfouryears. But the previous
day, when the same question was asked of
Robert Rubin, who heads the National Economic Council in the White House, a rather
different answer was given. The president,
said Mr Rubin, believed that a "two-way
process" was necessary to expand trade, and
that he wanted to see "measurable progress" on the removal offormalor informal
impediments to trade. So that the point
would not be overlooked, Mr Rubin deliberately drew attention to the phrase "measurable progress".
Afewdays before, in an interview with
the Economist, Ms Tyson had made precisely the same point. The administration's
trade policy towards Japan, she said, was
based on the idea that if it concluded trade
agreements with the Japanese, it wanted
measures of their success. She said that there
was a variety of such measures. Sometimes
the measure would be evidence that the Japanese had changed a regulation; sometimes
27
�AMERICAN SURVEY
that the number of distributors of foreign
goods had grown, or the rate of acceptance
offoreignbids for contracts. Sometimes, she
continued, the appropriate measure would
be the rate of growth m American exports of
particular goods or the achievement ofa certain market share.
Particular sectoral discussions, she continued, would carry with them their own
specific measures. Ms Tyson has supported
the Japanese-American semiconductor
agreements, the last of which set a proposed
share of part of the Japanese chip market of
20%; she says that not all sectors should be
treated to the "market-share" approach, but
that the administration reserves therightto
use it where appropriate.
Although there have doubtless been examples of such a "results-oriented" approach before—the semiconductor agreements were concluded by the Reagan and
Bush administrations—Ms Tyson's emphasis on the point is new. In traditional trade
theory, rules set a framework within which
the market, and not governments, determines what amounts of goods and services
are sold in any territory. At the limit, it is
difficult to see how an emphasis on measured results is consistent with multilateralism; it is not possible to imagine that
the GATT could police hundreds of agreements, each with its own predetermined
measure of success.
For that reason, when Ms Tyson claims
that it is a "terrible exaggeration" to say that
her approach amounts to managed trade,
traditionalfree-traders,wedded to the advantages of multilateralism, will wonder
what else it could be called. There will certainly be concem abroad that one measure
in the administration's locker is the growth
of American exports. What happened to the
idea that America's power to open new markets was meant to bring benefits to all the
world's traders?
China policy
Mr Patten's
message
WASHINGTON. OC
H
E CHATTED to his old acquaintance
Al Gore, and got on famously with Bill
Clinton; and as Chris Patten, the governor
of Hong Kong, left Washington, officials
lined up to say what afinefellowhe was.
Plaudits are nice; this time, however, Mr
Patten must have wondered if he was not
being killed by kindness.
For even as he was being celebrated for
standing up to China, Mr Patten was tiying
to transmit the message that there is a difference between trade and economics, on the
one hand, and politics on the other. His cen28
Don't hurt her
tral point, as he put it before the National
Press Club on May 4th, was that "you certainly can't help Hong Kong by hurting our
economy."
All this was said in the context of that annual springritual,renewal of China's mostfavoured-nation (MFN) status under American law. MFN status means that, in trade,
China is treated as well as the "most-fevoured" of America's trading partners. Mr
Patten takes the view, as other governors
have done, that since Hong Kong is intimately tied to the booming economy of
southern China, removing MFN status
would devastate the colony.
As in most recent years, a bill is before
Congress that would renew M FN status only
if certain conditions were met by China.
This year, the bill would renew MFN status
until July 1994. After that, it would be renewed only if the president indicated that
China had adhered to human-rights commitments, stopped the export of goods
made with prison labour and made "overall significant progress" on a set of other
matters, which rangefromceasing religious
persecution in Tibet to prohibiting the
transfer of missile technology to Syria, Pakistan and Iran. If the Chinese fail to meet the
conditions, the low-level MFN tariff would
be removed from all goods produced by a
Chinese state-owned enterprise (as defined
by the Treasury). Many China-watchers say
it is impossible to be as specific as that.
Similar legislation, sponsored by Democrats, passed Congress last year. The difference is that last year George Bush promised
to veto the bill, and did so. This year there is
a Democrat in the White House; and one,
moreover, who has promised to be tougher
on China than Mr Bush.
So everyone is in a bit ofafix.The administration, sources say, is anxious that the
annual battle over renewal of MFN status
should not be the centrepiece of its China
policy. Democrats in Congress do not want
to embarrass the president byforcinghim to
choose between a veto of their bill and a
snub of China—to say nothing of wounding
Mr Patten. At the same time, many Democrats on the Hill very much want to show
that a president of their party will deal with
China in a different way from Mr Bush.
Hence the suspicion that a compromise
is in the works. Although Mr Patten's headline message was that no conditions should
be attached to MFN at all, his actual text was
more subtle. In effect, he argued that the policy changes in China that Democrats want
to see can be achieved through better mechanisms than attaching conditions to MFN
status. The question of the proliferation of
missile technology can be attacked through
laws against nuclear proliferation; supposedly unfair Chinese trading practices can be
attacked through application of the trade .
laws. And so on.
This leaves a chance for compromise.
Mr Clinton might say in June that he is renewing MFN until 1994; that he is looking at
the application of other American laws to
areas like weapons proliferation and trade
abuses; and that he is starting some (as yet
murky) process to ensure that the Chinese
are discharging their obligations under human-rights treaties. There is a decent chance
that such an approach would satisfy his supporters on the Hill. It would certainly cheer
up his new friend in Hong Kong.
New York's school boards
A condom in your
pocket
CC'T'HE culture wars are over, and our
X side lost." Thus Irving Kristol, the
godfather of neoconservatism, in the wake
of George Bush's humiliation in November.
To judge from the New York school board
elections, which took place on May 3rd, Mr
Kristol was doubly wrong. The culture wars
are as violent as ever, and the right is on the
offensive.
At stake were nine seats on each of the 32
boards which govern the city's 800 elementary and junior high schools. The election,
the mostfraughtfordecades, could have
turned on any number of issues. Corruption,forexample: local politicians in Harlem and the Bronx use school jobs to reward
their followers and board members dip
their hands into school tills, even pocketing
the proceeds of fundraisers. In a recent case,
a woman was videotaped trying to buy a
THI
I C O N O M I I T MAT 8 T H 1993
�AMERICAN SURVEY
LEXINGTON
A puzzled people
CtHPHE American people don't know very much about the
A Balkans. They are puzzled by it. It's not something that
theyfolloweduntil very recently." Thus Lee Hamilton, chairman
of the House of Representatives Foreign Affairs Committee,
speaking on CNN. The signs are that he is right. For most Americans the Balkans are a place far away, stocked with people who,
for reasons that pass comprehension, delight in murder and
mayhem. This incomprehension applies to all panies: in a recent NBC News/Wall Street journal poll, 58% of respondents
thought that all ethnic groups in ex-Yugoslavia were equally responsible for thefighting,and another 21% were not sure who
was responsible. Only 1 %
6
blamed the Serbs.
This puzzlement feeds
into a distinct unwillingness to risk American lives
in the Balkans. An as-yetunpublished poll by Louis
Harris shows mild suppon
(52% to 42%) for sending
United Nations troops, including some Americans, to
help the Bosnian Muslims
defend themelves. But the
same poll showed more opposing than supporting the
idea of bombing Serbian
guns and supply lines. As
Mr Hamilton says, the figures are "all over the place".
Is this confusion among
the general public mirrored
among what pollsters call
"elite groups"? Not quite;
though that should not be
surprising. For 40 years,
polls have consistently
shown that wealthier, more educated Americans are more "engaged" inforeign-policydebates. That panem does not mean
that those Americans always favour intervention abroad; remember Vietnam. But this time it seems to. In the detail of most
recent polls, better-educated and wealthier Americans clearly favour more intervention in Bosnia than poorer and less well-educated respondents would accept.
Yet even within the elite group there is no consistency of
opinion (the flock of hawks in the editorial pages of the New
Yorfe Times excepted). Some notable Vietnam veterans, like Senator John McCain,foryears a prisoner of war, are adamantly
opposed to intervention. Others who opposed the war in Vietnam are allforit. Some, like Senator Joe Biden, who opposed the
use offorcein the Gulf callforit now. Others, like Senator Phil
Gramm, who supponed the Gulf war want to stay out of Bosnia.
Some argue that the horrors of Bosnia call to mind the Holocaust, to which a memorial museum in Washington has just
been dedicated. Elie Wiesel, who acts as America's tireless conscience on the subject of the slaughtered Jews, himself made the
parallel at the memorial's dedication. A senior administration
official has also said, privately, that it is impossible, this time
round, to argue that the world does not know what ethnic cleansing means. Yet the president himself has said, surely rightly,
"The Holocaust is on a whole different level." There is no simple
division between left and right, and little evidence to support die
easy sneer that those supporting military action by a Democratic
president would have opposed it by a Republican one: the Nation, the country's leading magazine of the left, is dead against
intervention.
These divisions in opinion, so difficult to make sense of, are
perhaps understandable, and not only because of the innate
complexity of Bosnia. Without the unity that the cold war gave to
American foreign policy, everyforeigncrisis is going to be
marked by unease, by a sense that the compass is wildly flapping
around in its box. The old truths no longer apply. All this was
visible during the run-up to the Gulf war. Although, at the time,
most attention was paid to
the misalliance of old-left
peaceniks and right-wing
neo-isolationists who opposed the military buildup, there were some pretty
strange pacts, too, among
those who supported it.
Anyone who thought before
1990 that Richard Perle,
Ronald Reagan's ultrahawkish arms-control man,
and Anne Lewis, a poliucal
consultant who has been a
close ally of Jesse Jackson,
would agree on policy towards Iraq would have
been dismissed as mad: but
they did.
Yet there is one great difference between the autumn of 1990 and the spring
of 1993. The president then
was George Bush, and now
it is Bill Clinton. Mr Bush
had just completed the
most successful six months of his presidency. His European diplomacy had been a triumph; he had sealed something very like
a partnership with Mikhail Gorbachev; he had reason to think
that a deal on the Uruguay round of the GATT would be completed by Christmas. All this gave him the confidence to state
clearly what America's interests were. That does not mean he was
always honest: remember the claim that Saddam was a new Hitler. But he acted as if he remembered the phrase that Dean Acheson used in the spring of 1947, in those days of little sleep and
many martinis when Acheson, George Marshall and Harry Truman had to convince a sceptical Congress to back containment.
The arguments, said Acheson, had to be "clearer than the truth".
Clarity of this—or any-sort has eluded Mr Clinton so far.
Nobody in his administration has yet explained, simply and
plainly, what America's interests and objectives in the Balkans
are. Perhaps we will soon know; perhaps the endless meetings on
Bosnia in which, as one participant has said, everyone has
changed their minds "at least once" imply thoroughness of
preparation. But if, as seems increasingly likely, Mr Clinton will
soon tell Congress and the public that Americanfightingmen
will have to be sent to Bosnia, he will have to do better than say
that he has thought things over carefully. He will have to tell a
puzzled people, with no great desire to put its children in harm's
way, why he is doing precisely that. It is, by a long way, the greatest test yet of whether he is up to the job.
T H t I C O N O M I I T MAT « W 199}
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�ver have a tooth filled, and then
suddenly, a month or two later,
you get a raging ache in the same
spot? That, simply put, is what defense
cutbacks are doing to the economy.
Until now, thoughts of declining defense spending, and arms cutbacks generally have been tempered by visions of
] :e dividends and a gentle post-coldwar letdown. Even announcements of
pending layoffs and plant closings were
items that could be worried about later
Much of the bloodletting was scheduled
for what seemed the distant future.
Suddenly, the future is now, and the
harsh reality is hitting many local communities—and a weak economy—like a
painful throb in a molar. First-quarter
growth was only a meager 18 , thanks
.%
in part to a big drop in defense spending. Defense purchases of goods and
Ei
34 BUSINESS WEEK/MAY 17, 1993
services, adjusted for inflation, are projected to fall by 1 % this year. That's
0
more than the cumulative cuts for the
previous four years put together. And
the pace of actual defense industry layoffs—as opposed to just announcements—has accelerated by 357" in recent
months (chart). "What we're seeing is
the bow wave beginning to hit," says
Richard Bitzinger, an analyst at the De
fense Budget Project in Washington.
"We're finally coming to the end of the
1980s buildup."
onr SUDI. Unfortunately, the latest
surge in defense cuts is hammering an
already vulnerable economy. So far this
year, Corporate America has announced
layoffs of more than 200,000, with many
more to come from stumbling behemoths such as IBM. An almost four-point
decline in the April purchasing manag-
ers' index, meanwhile, suggests that
manufacturing is slumping, at least temporarily. Overseas demand for U. S. exports is faltering as Germany slides
deeper into recession and France follows. And consumers and businesses are
worried about the prospect of huge tax
increases to pay for the Clinton Administration's economic and health plans.
Thafs not to say that the U. S. is on
the verge of another recession. Most
economists expect growth to regain momentum in coming months. Auto sales
are strengthening, for instance, and the
housing market is sure to revive after
its blizzard-induced coma in March.
But the defense industry's downsizing
still looms large. All told, this year's
drop in defense spending could depress
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patient who is weak already," says Richard Belous, chief economist for the National Planning Assn.
Indeed, defense job losses are rocking
almost every region of the country. In
the Dallas-Fort Worth area, the two
largest defense subcontractors have announced big layoffs in recent months. In
February, Texas Instruments Inc. said it
would cut nearly 900 workers. On top of
that, Vought Aircraft Co., formerly LTV
Aerospace, which makes major portions
of the B-2 stealth bomber in Dallas, has
said it will cut 1,500 jobs this year, after
axing an equal number last year.
Why are the cuts coming so fast and
furious now? Many contractors are finding that the peace dividend just isn't
working out For one, Lukens Inc., a
specialty steel producer based in Coatsville, Pa., lost money during the first
quarter on corrosion-protection products,
reflecting weak construction activity.
And demand for Lukens' military alloy
plate, which goes into tanks and submarines, has shriveled—pushing the company into less profitable civilian markets.
Small subcontractors don't often make
headlines, but they're adding to the pain.
Just ask John E. Gregory, president and
CEO at J. T. Slocomb Co., a South Glastonbury (Conn.) subcontractor to Pratt &
Whitney Co. and other aerospace companies. In the past 18 months, declining
orders have forced him to cut his work
force in half, to 200, and to close plants
in Waterbury, Conn., and Wildwood, Fla.
"What we are doing is reducing our
staff to keep a smaller amount of people
working [full-time]," Gregory says.
Depressed labor markets are magnifying the impact of the cutbacks. Laid-off
defense workers are finding "No Hiring" notices up in all sorts of specialties
where they might have been hired a
year or two ago. Such previously strong
alternatives as commercial aerospace
and high technology are now cutting
back, too. Northrop Corp. recently announced 2,400 layoffs after Boeing Co.
scaled back production of the civilian 747
jets. And employment in the U. S. semiconductor and computer industries is
down by 30,000 over the past year. The
typical result A study of workers laid
off from McDonnell Douglas Corp.'s St.
Louis operations showed that up to a
year after losing their jobs, 44% had not
found any work.
The white-collar set isn't faring much
better. Fully half of all technical and
professional employees—largely engineers and scientists—working in Southem California's defense and aerospace
industry have lost their jobs, according
to an upcoming study from Rand Corp.
A year after being laid off, most of
those highly skilled workers have hot
found other work. "Southern California
is a lot worse than people realize," says
James N. Dertouzos, a Rand economist
MORI TO COME. When arms workers do
land new jobs, they usually find their
incomes downsized. For instance, hiring
at the booming Foxwoods Casino in Ledyard, Conn., run by the Mashantucket
Pequot Indians, has helped cushion the
defense job cuts at the General Dynamics Corp.'s Electric Boat shipyards in
nearby Groton. But the casino pays 25%
to 40% less than the $13 or so hourly
that the shipyard paid.
There's more bad news coming: The
third round of mihtary base closings in
five years is on its way. In mid-March,
Defense Secretary Les Aspin proposed
closing 31 major military installations by
the year 2000, plus cuts at dozens of
smaller bases. The toll on communities
such as Charleston, S. C, longtime home
to a large naval port, could be stark. In
early May, state and local officials in
South Carolina told Congress that plans
for plant closings could cost more than
36,000 jobs and take a $1.1 billion slice
out of the local annual payroll.
Worst of all: It ain't over yet The
Clinton Administration wants to slice
$127 billion worth of defense spending
out of the budget over the next five
years, but it hasn't figured out what
programs or people will be cut. Add it all
together and one thing is clear Americans keep waiting for the boom after the
bust What many are getting, instead, is
the dull ache of layoffs and cutbacks.
By Michael J. Mandel in New York and
Tim Smart in New Haven, with Eric Schine
in Los Angeles, Christopher Farrell in New
York, and bureau reports.
BUSINESS WEEK/MAY 17. 1993 35
�THI WHITE HOUSE I
eNews
THE 1993y2 CLINTON
PULLS ONTO THE TRACK
Can he win back a Middle America turned off by his sputtering start?
T
he first Clinton Administration is
dead. Hail to the new Clinton
Administration.
That, at least, is the tune that some
Democrats are singing amid signs that
President Clinton is steering his drifting
ship of state toward the political center.
During his first 100 days, Clinton's
initial focus on deficit cutting and economic stimulus was obscured by such
heightened by fears of a health-care
plan financed with stiff new taxes—sent
his poll ratings down and triggered intensive White House strategy sessions.
Although talks are ongoing, White
House advisers say the President is
weighing steps to shake his image as a
traditional Democrat—and rekindle his
appeal to swing voters. Among the
options:
IPUSH-PULL
IN THE
CLINTON
WHITE
HOUSE
M M T M l b MIDOU-OF-THI-ftOAD
II HIALTH O H J I A D n
PRAGMATISTS
TRUE BELIEVERS
Moderates, led by Uoyd Bentsen,
believe long-term investment is
more important than stimulus
THE
ECONOMY
Worried that the recovery has
stalled, liberals want to revive
the President's stimulus package
Bentsenites scoff at market-share
targets and fret that the approach could trigger a trade war
TRADE
Trade czar Mickey Kantor and
others want Japan to agree to
market-share targets
Economic advisers oppose price
controls and want a limited
health-reform plan
HEALTH
CARE
Health guru Ira Magaziner wants
reform that pairs big benefits
with stiff new taxes
Moderates urge the Prez to stress
crime prevention, welfare refonn,
and "New-Democrat" issues
SOCIAL
ISSUES
Activists have prodded Ointon to
move on issues such as abortion
rights and gays in the military
DATAi B S E S WHK
UMS
issues as gay rights, abortion, "diversity," and a profusion of White House
initiatives. The impression, says a party
moderate, "was of an agenda that was
skewed to the left We saw the Clinton
who worked for McGovern in '72, not the
man who headed the [centrist] Democratic Leadership Council" in 1989-90.
The perception that Clinton was edging out of the cultural mainstream—
36 BUSINESS WEEK/MAY 17, 1993
mp*. Until now, Clinton has shown unswerving faith in his
White House crew of youthful former
campaign aides, known collectively as
"the children" on Capitol Hill. But the
President now believes that an inexperienced White House team, presided over
by Chief of Staff Thomas F. McLarty
III, has failed to exercise coherent management over the Administration. Says a
senior White House official: "Mack has
too much on his plate."
A Washington neophyte whose overwhelmed deputy is 36-year-old Mark D.
Gearan, McLarty is expected to appoint
Roy M. Neel, an aide to Vice-President
Al Gore, to help run operations. Insiders
also say that a Clinton intimate may be
named counselor and given the difficult
task of keeping Bill and Hillary Rodham
Clinton from flooding the Hill with liberal nostrums. "Clinton needs a counselor
who focuses on the budget, health care,
and whatever foreign crises come up—
and obliterates everything else," says
one adviser.
Meanwhile, communications czar
George R. Stephanopoulos, who alienated the press by keeping it at bay, will
curb his public role, ostensibly to focus
on strategy. He has "gotten too glamorous too fast" says a party veteran.
Until now, White House political aides
have been a remarkably insular bunch.
Increasingly, though, they are seeking
the advice of veteran Democratic pols.
"A lot of people who weren't asked into
the Administration are smiling today,"
says one such operative. "We predicted
t h i crew would go four months, screw
up, and start asking for help."
• RadlMover NM Monomy. Although Clinton began his Presidency with spending
restraint and competitiveness as overarching themes, he now concedes that
his eagerness to solve social problems
contributed to the Administration's policy vertigo. As a result, he is focusing
more of his public exhortations on the
need to pass his budget and with it, a
long-term investment strategy.
Although some deny it, there are also
signs that Clinton's moderate economic
team—Treasury Secretary Lloyd Bentsen, Budget Director Leon E. Panetta,
National Economic Council honcho Robert E. Rubin—are pressuring for more
disciplined, less interventionist policies.
Panetta has warned openly that unless
Clinton delays the North American Free
Trade Agreement and his health-care
blueprint, he risks sinking his entire economic program.
The health plan has become a particular target of centrists. In an Apr. 29
briefing by health coordinator Ira C.
Magaziner, stunned Clinton economic
aides were told the plan could cost the
government upwards of $100 billion in
new spending a year. Publicly, Rubin
insists that "Ira has done a magnificent
job." Privately, Clinton's economists
have begun a campaign to limit the program's scope and to cut the burden on
companies and the middle class. "There
is a great deal of concem among the
President's economic advisers that we
not take on more than the system
�I
can bear," says one Clinton confidant.
As the Administration's leading conservative, Treasury's Bentsen has be
come especially active in the drive to
guide policy back toward the center. He
has emerged as an increasingly vocal
critic of medical price controls, bellicose
trade rhetoric, and overregulation of
business. Even Labor Secretary Robert
B. Reich, a liberal, has changed his tune.
Reich recently disappointed union allies
by endorsing NAFTA, and he's among
those urging caution on health care.
• Oat back lo thatotvra.Concerned about
the liberal cast of Clinton's early policies, aides have begun consultations
with D C President Al From and key
L
moderates. The results are already evi-
dent: On Apr. 30—day 101 of the retooled Clinton Presidency—the First
Wonk journeyed to New Orleans. There,
to cheers of DLC members, he unveiled a
plan to offer $10,000 in college loans to
young people in exchange for two years
of public service.
The national-service plan is the first of
a series of new centrist initiatives Clinton will unleash. In July, there will be a
plan to streamline government. This fall,
he'll announce a proposal to step up
training of welfare mothers—and to cut
off benefits after two years. The crime
issue, which dropped off Clinton's radar
screen in Phase I of his Presidential odyssey, will make a comeback, too. During budget talks, he'll lobby hard for
more funds for law enforcement. The
intent, says From, "is to reinforce the
themes of opportunity, responsibility,
and community."
Will any of it work? Maybe. Many
analysts believe that, although Clinton's
leftward lurch has cost him some crucial
support among business, independents,
and G P moderates, he still has time to
O
recoup with a retum to middle-class
themes. "It'll be difficult to get back on
his message," says University of Virginia political scientist Larry Sabato. "But
Clinton has shown that he can keep reinventing himself." Presto! Ladies and
gentlemen . . . meet the New Clinton.
By Lee Walczak and Susan B. Garland
in Washington
Commentary/by Douglas Harbrecht
TRADE: 'PERHAPS WE SHOULD JUST SHUT UP FOR A WHILE'
othing
annoys
U.S. Trade Representative Mickey
Kantor so much as the
suggestion that there
might be some ideology
-behind Clinton Administration-trade policy. "Managed trade, free trade, proitectionism—we
reject
;these labels," he huffs.
-No wonder that those
"groping to describe the
message behind the Administration's trade policy
use the word "confused."
To hear some tell it, the
^Administration is engaged
in a trade war—with itself.
fVee traders, such as Trearsury Secretary Uoyd M.
Bentsen and National Economic Council Chief Robert E. Rubin,
'- are supposedly locked in combat with
'Snch aggressive trade hawks as Kantor .-and Laura D'Andrea Tyson, head
/of the Council of Economic Advisers.
"And the fate of the global trading sys.ternseems to hang in the balance.
«iAU.BOMKAST.' The fact is, they all are
managed traders to some degree, and
Tthey all believe that an activist govern- ment should nurture industry at home
and push for open markets abroad. No
one counts himself or herself a freetrade puriat Indeed, in his days as Senate Finance Committee chairman, Bentsen joined with Representative Richard
A. Gephardt (D-Mo.) in an effort to
identify and punish what they saw as
unfair Japanese trade practices.
This approach generates
cynicism among small and
midsize companies, which
see trade help going only
to the big guys. "The last
lobbyist in Mickey Kantor's office seems to be
making the policy," says
John Endean of the American Business Conference.
WMNO I U I N . The
;
"Die trouble isn't with the Clintonites' philosophy, ifs with their followthrough. Concedes one senior Adminis-
tration official: "You can't have a
policy thafs all bombast" But the political fusillade continues. On Apr. 30,
Kantor leveled a broadside against Tokyo, threateningretaliationunless Japan opens its construction and architectural markets and buys U. S.
supercomputers. And on May 5, he
fired on the European Community,
blasting subsidies for the Airbus manufacturing consortium. Says a U. S.
trade hand: "Maybe we should just
shut up for a while."
Instead of making noise, the Clintonites should decide what trade they really want to manage. That requires an
inventory of America's most critical industries and promising export markets.
Until now, though, the Administration
has just followed through on old negotiations or applied grease to such
squeaky wheels as the auto industry.
Presi-
dent has also gotten off
track with his obsession
vrith the yen. A strong yen
may or may not shrink the
$50 billion trade deficit
with Japan. But if that
country's economy doesn't
bounce back soon, the
U. S. trade deficit wfll likely grow even bigger in
1993—increasing pressure
for U. S. retaliation.
The imbalance is not the disease, ifs
a symptom. Almost 4 % of the trade
0
deficit could be wiped out if Japaneseowned manufacturers in the U. S.
would buy American parts. And Clinton could achieve that with the North
American Free Trade Agreement,
which would require companies doing
business here to buy two-thirds of
their parts in North America.
Trade Ambassador Kantor, the foi^
mer Los Angeles attorney, is doing
what lawyers do: keeping trade partners off balance. Thafs fine as far as
it goes. But ifs time to ease up on the
rhetoric and get on with the business
of buflding new traderelationshipsfor
the America of the 21st century. .
Harbrecht writes on trade policy for
BUSINESS WEEK.
*
BUSINESS WEEK/MAY 17. 1993 37
�INDUSTRIAL POUCY I
eNewsi
needs thousands of flat
screens for such products as
video phones.
AT&T and other computer
makers have long faced a
daunting dilemma: Do they
cut a deal with Japanese
suppliers or struggle to
make the screens themselves? If Uncle Sam
chipped in, the executives
reason, the industry could
put together a U. S. team
and raise the $300 million
needed to start a world-class
manufacturing effort. Toward that end, AT&T linked
up with Standish and with
Xerox, which has developed
advanced active-matrix tech-
AM 1CD CUAN lOOMf OHTKf SAT A R M ' S R M V U T FOR PROPOSAU MVORIB O U
INDUSTRIAL POLICY,
OR INDUSTRIAL FOLLY?
ARPA's award for aflat-panelvideo screen factory is raising eyebrows
I
t seemed like a model of industrial
policy—Clinton-style. On Apr. 30,
tiny ois Optical Imaging Systems
Inc. was picked for a government award
of up to $50 million to help build the
nation's first large U. S.-owned factory
for advanced flat-panel screens. The
Troy (Mich.) electronics company's selection by the Advanced Research Projects
Agency—the Pentagon unit the Administration hopes will promote high-tech
competitiveness—shows that "government and industry can work together to
develop a critical technology," says Representative Sander M. Levin (D-Mich.).
Critics contend, though, that the potential award has the scent of high-tech
political pork. Instead of giving the U. S.
flat-screen business a vital boost in its
struggle with Japan, technology-watchers say the pending deal may hurt
America's chances for catching up in a
technology needed for everything from
fighter-plane cockpits to wall-sized television screens. "It's a missed opportunity," says an industry expert Although
the story isn't over, it offers a lesson in
the potential pitfalls of government-directed technology policy.
CUSTOM JOB. No one doubts that flatpanel displays are a crucial technology
for the Information Age. Sales were $3.2
billion last year and are expected to hit
$9.4 billion by 2000 (chart). And since
Japanese companies own more than 95%
of the market, the U. S. faces a daunting
challenge in getting back into the race.
"It's going to take all the
; i ui
M BUSINESS WEEK/MAY 17. 1993
that the U. S. government and industry
can muster," says Peter Mills, chief executive of the U. S. Display Consortium,
a 10-company, ARPA-funded effort to develop the basic materials and manufacturing processes needed for fabricating
displays.
But is OIS, a subsidiary of Guardian
Industries Corp. in Northville, Mich., the
best choice for that job—or simply the
company with the most
friends in Washington?
Last fall, a group of
Michigan
lawmakers
slipped $25 million into
the fiscal 1993 defense
budget to fund a flat-panel development effort.
ARPA officials considered
the congressional action
misguided. The reason:
The legislation was written to steer the money to
the U.S. company most
capable of supplying the military with
the active-matrix liquid-crystal displays
(LCDs) it wants—a description that fits
OIS perfectly. Nonetheless, ARPA sent
out a request for proposals, which critics
say also favored OIS.
A group made up of AT&T, Xerox, and
Standish Industries, a Wisconsin maker
of LCDs, decided to bid despite ois' advantage, "AT&T would like to get into the
display business in the U. S.," says Richard T. Archambault, director of American Telephone & Telegraph Co.'s global
manufacturing and engineering. AT&T
nology, to ask ARPA for $180
million over six years.
That put ARPA in a quandary. Only
OIS' plan met the request-for-proposal's
criteria, which included a proven ability
to supply the military with active-matrix
screens. But ARPA officials feared that
handing the money to the small company, which plans to sell most of its displays to the Pentagon, would push AT&T
to buy from Japan and doom chances of
building U. S. flat-panel manufacturing.
VAOUl ASCURANCIS. So, the agency now
is playing coy. While it negotiates a final
contract with OIS, ARPA is trying to keep
the AT&T-Xerox-Standish group on board
with vague assurances of more awards
early this summer. "You haven't heard
it all yet," says a senior ARPA official.
The approach has left some in the industry fuming. This is
the Clinton Administration's first big industrial
policy effort, "and
they're giving money to a
$10 million company to
take on Japan," snorts
one flat-panel expert For
its part OIS insists that it
won the award fairly,
and that it has as good a
chance of jump starting
the U. S. industry as the
heavy hitters. "Thinking
that only the big guys can do it is dangerous industrial policy," says OIS Director Peter Young.
In fact, industrial policy opponents
may wonder why AT&T and Xerox need
money from the federal trough in the
first place. The reason, explains Display
Consortium's Mills, is that U. S. companies are too far behind Japan to catch up
on their own. That may be debatable.
But it is dear that a military display
factory in Michigan isn't likely to worry
Japan's flat-panel makers.
By John Carey in Washiyigton
�EDITED B STEPHEN H. WILDSTROM
Y
!
THE COMEBACK KID
OR BACKLASH BILL?
Texas' May 1 special Senate election was an even clearer
ith the Democrats' margin in the Senate too slender
to protect Bill Clinton's agenda from Republican case. Republicans shared 58% of the vote in a free-for-all prifilibusters, the President needs every ally he can mary. Krueger—despite calculated opposition to Clinton's tax
get. So it's hardly surprising that Clinton has been invited to hikes and defense cuts—got just 29% of the total. The ShakeTexas to stump for appointed Democratic Senator Bob Krueg- speare-prof-tumed-pol now faces an uphill struggle in an exer, the underdog in a runoff to fill Treasury Secretary Lloyd pected June 5 runoff against Republican State Treasurer Kay
M. Bentsen's old seat. Trouble is, it was G P leaders, not Bailey Hutchison, who is eager to make the vote a referendum
O
Texas Democrats, who issued the invite. Republican Senator on Clinton. "This is going to be the first test of what people
Phil Gramm even offered to pay his way—a commentary on think of the Bill Clinton economic plan," she declares.
the President's dismal standing in the Lone Star State.
Of course, no local election is a national referendum, and
In a recent Texas Poll, only 37% of those questioned rated Krueger has plenty of homegrown woes. He shared the ballot
the President's performance "good" or "excellent." And unfor- with Democratic Governor Ann W. Richards' ill-fated plan to
shift revenues from rich school distunately for Clinton, his setbacks on
tricts to poorer ones. And Krueger's
Capitol Hill are being translated into
erudition can make him seem, well,
trouble for Democratic office seekers.
un-Texan. "Every time he quotes
While polls show that the public apShakespeare, I love it," says state GOP
proves of Clinton's message of change,
Chairman Fred Meyer. "I have a rule:
voters don't like proposed tax hikes.
If you don't quote Sam Houston or
In response, Democratic candidates
Harry Truman, don't quote anybody."
are distancing themselves from the
POPUUST TNIMIS. The Clintonites
man who topped their ticket last fall.
think Ttexas and Wisconsin are isolated
' O l * * MIMAM.' The campaign stratcases. "From what we hear, the rest
egies, in tum, are causing shudders in
of the country is dying for him to
Congress, where Clinton's tax propocome in and campaign," says Demosals, spending cuts, and long-term "incratic National Committee Political Divestment" plans face crucial tests. "If
M M I M M i DICTANCINO HIMSILF m O M CUNTON
rector Joan Baggett. And Democrats
he's losing elections, or perceived to
be losing elections, he loses all his pump," worries a House hope to leam from their early mistakes. In the Texas runoff,
Democratic aide. In Wisconsin, for example, Democrat Peter Krueger is sounding populist themes, attacking Hutchison as
W. Barca eked out a narrow victory in a May 4 special elec- a Country club candidate" in thrall to Wall Street. He blasts
tion to fill the seat of Defense Secretary Les Aspin. To win, Hutchison as "part of the forces of filibuster and not the
Barca flaunted his opposition to the President's proposed en- forces of change" and emphasizes such popular Clinton initiaergy tax, the North American Free Trade Agreement, and tives as abortionrights,Head Start, and immunization.
White House operatives say they'll let candidates run away
higher taxes on Social Security benefits. "The people in the
Democratic Party who have to face the voters are running from Clinton if absolutely necessary. They have little choice. Hi
from Clinton like scalded dogs," gloats Republican Party there are more dismal showings in races such as Krueger's,
Chairman Haley Barbour. "It's a very clear message that the the President could find the going tough indeed.
By Richard S. Dunham
President's plans are unpopular."
W
CAPITAL WRAPUPI
H E CABIIET
F
ormer San Antonio Mayor Henry
G. Cisneros is the latest politician to
discover that being a second-string
Cabinet member isn't much fun. Like
his predecessor at the Housing & Urban Development Dept., Jack F. Kemp,
Cisneros is an energetic booster of an
aggressive new urban policy. Also like
Kemp, he's having a hard time getting his President's attention. Cisneros'
ambitious enterprise-zone plan was reduced to a shadow of itself in the proposal issued by the White House on
May 4 He got nowhere with pleas that
Bill Clinton fight harder to save community-development block grants from
WASHINGTON OUTLOOK
the Republican assault on the Administration's stimulus plans. In recent
weeks, Cisneros has been asking mayors, municipal-bond underwriters, and
other urban interest groups to lobby
the White House on his behalf.
Dole (R-Kan.) and Jesse Helms (RN. C.) and Representatives Glenn English (D-Okla.) and Dan GUckman (DKan.). The four have a total of 78
years of service.
TERM UMITS
T
I
t sometimes takes a bit of shamelessness to be a successful politician.
But Senator Strom Thurmond (RrS. C.)
may take the prize by coming out in
support of term limits for members of
Congress. Thurmond, 90, is the senior
member of the Senate, where he has
served since 1954. Other veterans signing up with U. S. Term Limits, an advocacy group, include Senators Bob
PE0P11
he White House is close to filling
two key vacancies. Washington lawyer Ridd R. Tigert, a former Federal
Reserve Board attorney, appears to
have edged out former Connecticut
Treasurer Francisco L. Borges to become chairman of the Federal Dep ;
Insurance Corp. And David R. Hinson,
the former chief executive of Midway
Airlines Inc, is in line to become Federal Aviation Administrator.
BUSINESS WEEC/MA'
1993 51
�orporate Scoreboar
WELL, IT LOOKED LIKE
THANKS already COST-CUTTING, FIRST-QUARTER PROFITS ROSE BY 27%
TO winding down? restructuring. That means profits will main in first place for long is another
s the party
I
Buoyed by election euphoria and holiday cheer, the country finished off
last year with a bang. With the U.S.
economy finally heating up, corporate
profits shot up 51% in the fourth quarter. That torrid growth, however, was
bound to be unsustainable—as BUSINESS
WEEK'S latest Corporate Scoreboard reveals. First-quarter profits for the 900
companies on the Scoreboard jumped by
27%. That's certainly still a robust performance, especially compared with the
7% profit gain of a year ago. The worry
is that profit growth may contract in the
next few quarters, with the recovery
slowing down, sales growth remaining
anemic, and productivity gains increasingly hard to come by.
The economic revelry
was clearly muted in the
first quarter, when gross
domestic product grew
by an annual rate of just
1.8%, compared with 4.7%
in the fourth quarter of
1992. Says economist
Lacy H. Hunt at HSBC
Holdings PLC: "It's an
economy growing at a
crawl." Revenues also
continue to grow at a
sluggish pace. First-quarter sales crept up by a
modest 5%, to $985.2 billion. So where did the
hefty profit gain come
from? Mostly cost-cutting, as companies further trimmed overhead,
notably payrolls. "The
reason we're getting the
profits is that companies
are holding the line on labor costs. They're taking
the productivity gains
and reaping the income
growth from that," says
Goldman, Sachs & Co. Senior Economist Edward
F. McKelvey.
have little room for growth if the economy doesn't pick up. For all of 1993, earnings are expected to rise 17%, and by a
mere 11% in 1994, McKelvey estimates,
compared with a 20% gain in 1992.
One first-quarter profit standout that
may be facing future pressure is cigarette and food giant Philip Morris Cos.
The company managed to hold on to its
No. 1 position in BUSINESS WEEK'S rankings of the top 15 profit performers.
Earnings climbed 11%, to $1.2 billion,
thanks to surging sales
abroad of everything
from cigarettes to Oscar
Mayer meats. But whether Philip Morris will re-
matter. In April, it announced plans to
cut prices on its premium-brand smokes
such as Marlboro in an attempt to stop
defections to discount brands.
OAININO SPUD. Retailers as a group
posted the strongest profit growth of
any industry for the first quarter—up
287%, to $4.4 billion, on an 11% increase
in sales. But that figure largely represents the happier days of late last year.
The last quarter for most retailers ended
in January and includes holiday sales
WINNERS AND LOSERS IN
THE INDUSTRIES^®
THE SHARPEST GAINS
THE DEEPfSTMOPS
RETAUNG
287%
AOLMES
.-.'^f.mrttai
F RS P O U T
O ET R D CS
336
SE L
TE
I
BROADCAST**;
161
BUUXNG MATERMLS ~
1
AUTO PARTS
138
ALUMMUM
S MC N U T R
E I O D CO S
103
P P R CONTAtERS.
AE
CONSTRUCnON & REAL E T T 69
SAE
C M U E S & FEBMBAIS -71
O PTR
MAOWE & HAND T O S
OL
62
PMNTMG & ADVEKISNG
-69
OR. & GAS
47
OTTfiK METALS .
-49
C M U E SOnWARE
O PTR
46
COAL
-37
BANKS-WEST & S U H E T 44
OTWS
INSTRUMENTS
-32
GASUTUIES
41
F O DSTRBUTKM
OD
-17
BAMQ-MDWEST
39
THUOONGlSHWi*:
TEXIIES
37
PAPR '
DRUGOtSnOBUTlON
34
PETR0UUMSBMCE5
-10
BGCntOMCS
ss;
FOOOPTOCESSWG>;:
-9
I
110 BUSINESS WEEK/MAY 17, 1993
—13
' ' r - ^ v V . - - - -12
AlUNDUSTRYAVBUM: + i r »
The weak sales numbers don't bode well for
the rest of 1993. Many
economists fear companies have already realized
most of the benefits of
1
-81%
COSPOBATE !
�1 CLEAR SAILING
E
MOMENTUM MAY BE SLIPPING AWAY
from November and December. The
profit advance also has to be weighed
against the poor results of a year ago.
That is especially true of J. C. Penney
Co. Its profits jumped a stunning 914%
compared with the same period of 1992,
when the retailer earned just $37 million
after a $264 million restructuring
charge. Carter Hawley Hale Stores, Federated Department Stores, R. H. Macy,
and Woolworth all also chalked up substantial profit gains when compared
with their sluggish earnings last year.
T
er
to
es
»
P
ip
of
JP
se
e:n
i
id
es
u
T-QUARTER PROFITS
THE COMPANIES
WHO MADE THE MOST
The auto industry likewise scored impressive results. Detroit's Big Three,
which have been steadily downsizing in
recent years, all made money in the first
quarter—the first time that has happened since the second quarter of 1990.
Their bottom-line performance also
earned each a place among the 15 top
profit makers of the first quarter. "It
shows the power of cost-cutting when
they finally get around to it," notes economic consultant A. Gary Schilling. "It
took them a long time."
Still, most of the credit
for profit gains at General Motors Corp. and Ford
Motor Co. goes to nonauto operations. GM's
WHO LOST THE MOST
Mttom
(rfdofcn
MHfan
of M m
P I P MORRIS
HU
LS
OS
LS
OS
$1,218
C A E MANHATTAN
HS
EX N
XO
$1,185
BM
285
AMDAHL
240
G N R L BKTRIC
EEA
1,085
$347
-71
-69
996
UAL
138
WAL-MART STORES***
LS
OS
ATM
750
D L A AIR UNES**
ET
134
MR K
EC
614
USG
129
B I T LM E S SQUIBB
RS O - Y R
575
CAMPBOLSOUP*
116
114
-32
^17~
-13
-12
-10
-9
FR M T R
OD OO
572
IMCFHITIUZR**
KIEL
-49
548
LAFARGE
73
KMART*"
535
SALOMON
65
OffiYSlER
530
S O E C N AMER
TN OT
63
P O T R & GAMBLE
R CE
516
USAIR
61
GNRLM T R
EEA OO S
513
NATIONAL S E L
TE
54
J H S N & JOHNSON
ONO
503
JAMESWAY***
43
CER N
HVO
501
B T L H M STER
E HE E
41
DAIAi STANDMDftPOOR'S GOMAJSTAT SBMGB MC
CORPORATE SCOREBOARD
Hughes Aircraft Co., Electronic Data
Systems Corp., and its finance unit generated much of the company's earnings.
G made $513.2 million in the first quarM
ter, compared with a loss of $166.7 million in the first quarter of 1992. Similarly, Ford's finance unit chipped in a large
portion of the auto maker's 1577c profit
gain, to $572 million.
By contrast, Chrysler Corp.'s improved profits, analysts say, have a lot
to do with continued cost-cutting and
well-received new models, such as the
LH sedans and the Jeep Grand Cherokee.
Chrysler's first-quarter sales rose by
33%', to $10.9 billion. Profits soared to
$530 million, compared with a loss of
$231 million in 1992's first quarter.
CUTBACKS. Even with a
tepid rebound in housing
starts, forest-product
profits surged 236% after
lumber prices doubled in
October. The shrinking
timber supply, following
logging cutbacks to protect the spotted owl, was
behind the price surge.
The big winners: owners
of private timberland
such as Louisiana-Pacific
Corp., whose profits
jumped 144%, to $87.7
million, and Weyerhaeuser Co., up 105%, to
$177.4 million.
The computer industry
included many big winners, as Compaq Computer and Cray Research enjoyed strong comebacks
and clonemaker Dell
Computer maintained its
momentum. All had triple-digit profit hikes and
healthy sales gains. Yet
that didn't offset Big
Blue's blues: The industry posted a 71% decline
in profits, largely because of IBM's $285 million loss. Chase Manhattan Corp. beat out IBM to
log the greatest loss for
the quarter. Excluding
accounting adjustments
that pushed it back into
BUSINESS WEEK/MAY l / J W J ' l l l
�1
a
?
orporate Scoreboaris still plagued by excess capacindustry
the black, the bank lost $347 million because of a special provision & further
mark down S2 billion in troubled real
estate assets.
The booby prize for industry performance, though, goes to the airlines. The
seven publicly traded carriers lost a
staggering $345.1 million in the first
quarter, little better than the year-ago
quarter's $394 million in red ink. The
ity thait may take another year to remedy. The biggest loser was UAL Corp.,
parent of United Airlines Inc., which lost
$138 million, compared with a $108 million loss in the same period of 1992.
This quarter's results make many
economists nervous. Corporate America
thought it was seeing a real turnaround
in the fourth quarter of 1992 and started
amassing inventory to meet expected
sales growth early this year. Inventory
levels haven't been this high since the
beginning of 1989, notes HSBC's Hunt. If
sales remain lax, he believes the economy might grow at roughly the same
1.8% pace in the coming year. If so, the
sluggish first quarter will have been
more than just a groggy morning after.
By Elizabeth Lesly in New York
A SPOTLIGHT ON FIRST-QUARTER PROFITS
AFTERTAX PROFITS,
QUARTER BY QUARTER
BREAKING DOWN
THE L T S Q A T R
AE T U RE
A UO TO
S f P RE
+27%
WH U RfUILING +20%
IOI
WH U
IOf
4 —
0
m O M N T N +31 %
t M UI I S
C
MO
60 H
INDUSTRIES WITH THE BIGGEST
DOLLAR CHANGE IN THE QUARTER
The January-March period was the fifth straight quarter of positive earnings.
The big dollar changes were all on the plus side—with the sole exception of
computers and peripherals, zapped by IBM's loss. Sales continued to grow
at a relatively modest 5% clip.
R T IE S
EA R
L
CR ( TUK
A S R CS
Oil I G S
A
20
E E T I iniUTIES
L CR
C
S M O D CO S
E I NUTR
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C N L MRTS
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-20
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VRG
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PR E T C A G F O S M
E CN HN E R M A E
- PERIOD O P E E I G TEAR, F R C DN
AU INDUSTRIES
SEIL MC I E Y
P CA A HN R
| C M U E S I P RP E A S
O P TR
EIHRL
-1.0
-Oi
0
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^IIUIOKOFDOILUJ^
3i
A LOOK AT PROFITS FROM THE INVESTOR'S PERSPECTIVE
RETURN ON EQUITY
EARNINGS GROWTH
A N A P RS A E J I A E
N U L E - H R WR G
L T S 5 TUB
AE T
1
PRICE-EARNINGS RATIO
LOIST12 MONTHS' E R I G
A NN S
Amnrua
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AIL-INDUSTRT
AVIRAGf...
NONIAMK H A Q L
NN A
f
CUKUMn P O U T
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0
5
PRET •
ECN
I l l BUSINESS WEEK/MAY 17. 1993
-0
1
5
0
5
• PRET •
« ECN
70
3
0
4
0
S
O
DSIl SUNOIRD S POOI S (0MPUSI4! SUVIUS INC.
CCHPORAjE ^COH^OARD
1
�Lnvestmeht Figures •? the Wee
COMMEKTARY
STOCKS
Think i m o l l . T h t D o w J o n « l i n d u t -
May
THE DOUAR
I0NDS
Nov
Moy
May
Nov.
Apr. 2 9 - M o y 5
UO
52-week change
12001
52^reek change
•6.7%
• 1.3%
May
Apr29-Moy5
Nov
May
Apr 28-Moy
5
14O0
130
1 -week change
May
t r i a l i m o v t d u p 1 % t o r th« w * « k ,
a n d t h . b r o a d t r S&P 5 0 0 , 1 . 5 % .
A
But t h a r i a l a c t i o n in the a q u i t y
m a r k e t * w a i f a r a w o y f r o m the
b l u e c h i p i . B o t h the S 4 P M i d C a p
a n d the Rutsell 2 0 0 0 indexes i h o t
up 3 . 3 % , w h i c h c o u l d b e a l i g n o f
r e n e w e d i n v e i t o r i n t e r e s t in i m a l l er c o m p a n i e i . The t t o c k m a r k e t
took t o m e strength from falling
m e r e s t r a t e s . The 3 0 - y e a r U.S
T r e a s u r y b o n d r a l l i e d a n d the
y i e l d d r o p p e d significantly, despite i n c r e a s i n g l y bearish b o n d
market sentiment.
Lehman Srotftsi
Treasury lnd*>
. 1150
l^veek change
+12.4%
40 I
52^veek change
•1.4%
1-week change
-0.6%
-0.5%
MARKET ANALYSIS
% skM«e
Week
SI
Utut
U.S. STOCKS
1.0
3.3
3.3
1.9
2.4
13.0
14.4
8.4
UtKt
Week
nnmek
2796.5
20,919.2
3788.9
0.0
2.3
2.1
3.6
17.0
12.7
F O R I I O N STOCKS
LONDON (FINANCIAL TIMES 100)
TOKYO (NIKKEI INDEX)
TORONTO (TSE COMPOSITE)
W e * .*e
MM
FUNDAMINTALS
3449.1
DOW JONES INDUSTRIAIS
164.1
MIDSIZE COMPANIES (S<P MMCop Index)
227.7
SMAU COMPANIES (Rustell 2000)
A U COMPANIES (Retsell 3000)
254.7
90-DAY TREASURY I I U YIELD
SMEAR TREASURY ROND YIELD
SAP S00 DIVIDEND YIELD
SAP 500 PRICE/EARNINGS RATIO
2.95%
6.78%
2.81%
22.6
tatnt
Weefcete
438.9
62.2%
0.38
2.93
T1CHNICAL I N D I C A T O R S
54P 500 26-w»*k moving average
Stocks above 26-week moving average
Speculative sentiment: Put/call ratio
Insider sentiment: Vickert sell/buy ratio
T — f
2.98%
6.92%
2.85%
22.0
438.1
58.1%
0.46
3.06
3.69%
7.97%
2.96%
25.5
Potttive
Neutral
Neutral
MIDGE INFORMATION SYSTEMS INC.
INDUSTRY GROUPS
%sfcaa*e
VOUR-WIIK
51-«eet
LIADIRS
I DRUGS
Price
12.4
-16.4
PFIZER
17.4
-2.3
69 V,
2 TOYS
9.5
18.4
MATTEL
12.1
6.0
24 Vi
3 GOLD MINING
9.5
38.4
ECHO BAY MINES
17.6
27.7
4 AUTOMOBILES
8.9
24.3
GENERAL MOTORS
10.9
2.4
5 OIL AND GAS DRILLING
8.7
45.2
HELMERICH A PAYNE
8.9
35.3
WMkat itadi h * M *
4-veek
S kMefc
*«Mk
F O U R - W I I K LAOOARDS
1 METALS
S
-11.9
-8.4
CYPRUS MINERALS
-21.7
7 VJ
41
32 Vi
M M
24%
-1.0
DAYTON HUDSON
-11.1
17.4
ROADWAY SERVICES
-10.7
-22.1
58 VA
-5.2
LIMITED
-10.8
-5.5
21 V.
-2.8
PEPSICO
-8.6
2.1
2 GENERAL MERCHANDISE
-7.3
6.9
3 TRUCKING
-7.1
-20.2
4 SPECIALTY APPAREL RETAILERS
-6.9
S S 0 n DRINKS
-5.9
71
37
MORNINGSTAR INC.
MUTUAL FUNDS
UADIRS
%
1 LEXINGTON STRATEGIC INVESTMENTS
2 EQUITY STRATEGIES
3 USAA INVESTMENT GOLD
19.7
18.3
13.8
%
Sl^Moh total ratwn
1 METUFE-STATE STREET GL0IAL ENERGY
2 FINANCIAL STRATEGIC GOLD
3 FIDELITY SELECT AMERICAN GOLD
59.0
47.6
46.9
S&PS00
LAOOARDt
%
STEADMAN 0CEAN0GRAPHIC TECHNOLOGY
STEADMAN INVESTMENT
SHERMAN DEAN
elairelvm
PROGRESSIVE AGGRESSIVE GROWTH
FINANCIAL STRATEGIC ENVIRONMENTAL
FINANCIAL STRATEGIC HEALTH SCIENCES
Average fund
S2^reek total retum
2
20
1
15
0
10
-I
-8.1
-7.6
-7.5
%
Si-mefc tetrf r e f t n
• • I
5
-2
0
-3
- -5
%
-34.5
-25.5
-19.7
- %
DATA RESOURCES INC.
RELATIVE PORTFOLIOS
Dollof omounts
i
reprafant
valtwaf
th« praMnt
$10,000
i n v tlad o n * year a g o
Percentages indicate
Foreign stocks
SIMM
Treasury bonds
$11419
five-day total returns
+1.49%
+1.09%
in i
. May 5, 1993, gntets otherwise indketed.
All dote en this page are as af morket dose Wa
moude SAP 500 companies eniy; perfoni ence end share prices era as c markel dose
> of
U.S. stocks
$10.9*4
+1.38%
Gold
$10,590
•1.98%
4. MulMl find return a n as of A p r 30. ftefa
'
of tha page bovo«aUe on request.
Money market fund
$10,147
+.5
00 %
» are valued as of May 4. A e
X
BUSINESS W E E K / N M 5 C l ^ i 993 1 3 7
�\S1
A NEW CHINA POLICY FOR A NEW CHINA
T
he U. S. needs a China Policy for the 1990s. For too desperate to get into the General Agreement on Tariffs &
long, Washington has perceived China narrowly, as a Trade. Mexico was able to put 1,000% tariffs on Chinese imcard to be played against the Soviet Union during the ports with impunity recently because China is outside the
AT
cold war, a huge foreign market, or, since the Tiananmen G T circle.
Instead of engaging in perennial debates over MFN, AmerSquare massacre, a violator of human rights. As Congress
debates whether to curb China's Most Favored Nation trade ican foreign policy toward China should be redrawn along
status unless Beijing improves thoserights,Washington con- the following lines:
• Guide China into the international arena, especially GATT.
tinues to define U. S.-China relations in constricted terms.
The dramatic changes sweeping through China today au- In exchange, the U. S. should pressure Beijing to allow the
gur well for a broader, more sophisticated American foreign Red Cross access to political prisoners, press for release of
policy for the world's most populous nation. China is build- specific dissidents, and end exports of prison-made products.
ing a new kind of capitalism that is boosting economic growth • Make contact with China's new political leaders, both in
at a double-digit clip, propelling the country into Big Power Beijing and in the provinces. Once China's old men in Beijstatus.
ing pass on, the U. S. would be well placed with the next
China-style capitalism is revolutionizing the economy, but generation.
change will come slower to politics. The Communist Party • Muscle China to balance its $18 billion trade deficii with
shows no signs of giving up power. At the same time, local the U. S. Beijing should comply with existing agreements to
party cadres in the provinces are busily transforming them- expand access to its markets and sharply boost imports of
selves into prosperous business executives, running state- American goods and services. Washington should threaten
owned but market-oriented companies. Alongside them, a pri- to impose stiff tariffs under Section 301 of U. S. trade law if
vate business class is emerging. If political change is to come China doesn't act.
to China, they would be the vanguard.
• Resume military contacts with the People's Liberation
Theriseof Chinese capitalism offers a chance for the U. S. Army, broken off after Tiananmen Square, in exchange for
to broaden its agenda with China and build a partnership restraint on the export of Chinese missiles to the Middle East
that deals not only withrightsbut also with trade, invest- and other hot spots.
ment, regional security, and arms exports. A policy that com- Engaging China in a series of relationships has a greater
bines political, military, and economic relations is now pos- chance of expanding American economic interests and mainsible, and the Clinton Administration should seize the day. taining a crucial measure of political influence than isolating
For their part, the Chinese want access to U. S. markets the awakening giant. This is one opportunity Washington
for their exports and for American technology. China is also should not waste.
H WASHINGTON FIDDLES, THE E O O Y DRIFTS
CNM
T
he U. S. economy is wobbly again. It shot out of 1992 about refusing to agree to my new taxes to cut the deficit.
only to lose momentum and falter in the first four
It's no wonder that people and corporations are confused
months of 1993. The latest reading of the leading indi- and are dialing back their spending and investments. Bushcators shows a drop of 1 in March, the worst decline since era gridlock threatens just when the country desperately needs
%
November, 1990, when the country was in recession. The con- a sense of direction. If this continues, any kind of economic
ventional explanation among economists is the Blizzard of '93. or political shock could send the economy into quadruple-dip.
But there is no way for bad weather to explain what hapThe uncertainty in Washington must end quickly if the repened in April, when the National Association of Purchasing covery is to regain its footing. Above all, the sparring beManagement index dropped sharply to 49.7% from 53.4%, and tween Democrats and Republicans over taxes and spending
corporate layoffs rose 3.6%. Despite stronger auto sales, the in the deficit program should be settled in weeks, not months.
second quarter may not turn out to be much better than the Bill Clinton should make it clear that he is willing to accept
first, which grew at a tepid L8% rate.
congressional changes in his plan that shift a significant sum
We believe Washington has a lot to do with this big chill. from new tax hikes to new spending cuts. And if cuts are
There is uncertainty in the economy because there is un- made. Republicans must agree to higher taxes—if not corpocertainty on the Potomac Business and consumers are con- rate taxes, then certainly consumption, such as energy.
fused by the trial balloons, leaks, and policy zigzags out of
The Administration must also face reality on the cost of
Washington almost daily. Most disturbing is the static over health-care refonn. A bare-bones plan that costs about $30
new taxes. The deficit-reduction package, once a sure thing, billion and isfinancedmostly through sin taxes can fly. Connow looks shaky. The Republicans, fresh from their eviscer- gress and the voting public aren't going to accept much more.
ation of the President's stimulus plan, are making noises Clarity and pragmatism are the order of the day.
I M BUSINESS WEEK/MAY 17, 1993
�A WesK jn Review,
Monday, May 10, 1993
Produced by the News Analysis Staff
Room 160, OEOB (Ext. 7151)
�Ohman
The Oregonian. Portlana
T A S O E H N RD
H T N U DE
'
D U . M . P EI E T
U S R R S N.
D
CLINTON'S IS iCQ eariNfc&
�HH S T f THe FR T loo Pailfe
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EX WAR
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HUMORED DAYS ?
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K\^-
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Peter Steiner
•truaimvi-mqr
93
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HU - P T O fO .
YOURF|R$rA55ieNH\ENT
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��©1993
Washington Post
'Remember- keep it to the usual wipeout of civilians by
artillery, tanks and ground troops.'
�par-aw POXY
THEM. ^
VLi.^. IH ABour T^E I
PRESIDENT f l
RESULTS IM
I'D LIICE VOU TO
TAKE A LOOK AT
AMLOSEV/Ci COTAPOUWO
/N SERB'A.
WASHINGTON ®
BY A Z - t o - 1 MARGIN
AMERICANS OPPOSE
NA\LVTARY
/
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To BE
EDUCATED.
/J/arA: Alan Stamatv
V^E WATCH
ALL THE MORE
A^fRiCAN CHILDREN P-&A50N TO
GROWiNG UP IN W R
A
BEWARE
ZONES, KILL\NG
EACH OTHER. ©vER.
DRUGS, CLOTHING,
GLANCES,.••
-SURROUNDED^
MORAL
"IMPERATIVE
GWDUOCK.
The cartoonist is a contributor to the Village Voice.
BY M O R A L
IMPERATIVES'
�nK/titjf""
Howto tell when the Allies mean
The lousa that roared.
Tom Toles
Serb leader Radnivv Karadzic. Bill Clinton and Bons Yeltsin, arm in arm to the peace table.
�VleLCoMe To
BOSNIA.-BILL/ PICK A
DooRi
DEORE'S WORLD
B M DrOre The D i l l l i M o r n i n g A t w j
�Americans welcome.
I SHOULD RISK
AMERICAN
TKOOPS I N
BOSNIA
V
ISHOULP
1 SHOULD...
I SHOULD MOT...
I SHOULD.••
I SHOULD
MOT...
I SHOULD...
I SHOULD NOT...
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W M N W CTOREN!
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NeQoTlATloNS W H Tne
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�THE BALkAMS
Stove Benson. The Arizona Reoublic. Tribune Media Services
Jack Ohman / The Oregonian
C O M I M C SOOM
BOSNIAN
AJMMEX
�1
rtrlcr^AVOS:
THt
PRESI PENT HAS
WnH S6R5IA....
IN
JANET KENO.
Dana Summers
~ The Orlanao (Fla.) Sentinel. The Washington Post Wnters Grooo
kll
P
'...Somebody here call 911?..'
I
�Mike Keefo
DENVER POST
DE ANGELIS
IL POPOLO
Rome
ITALY
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T h Christian Scienco Monito.
Los Angeles Times Syndicate
H^STE fMKEfH ^ T E , 6£NOT
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TAKE CM^ OF ^ ^NN\ES A D
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�Sacramento Bee
That was fust a little bump in the road, Mr. President.'
�" I KO P R W E I SEE IT'
NW O K H N
<D»)9
SORRY, £IR-
lf woNf Ht
�if uo M w
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�'Wry advice is io tor get about ihe Waco doomsday cult,
and concentrate on the economy..."
�ncn^n^wentL linton. if
^"u e/er Vs'/jnt to >ee
E e tltpudi psvtWocpl
.n
v
pr^esofliirTiandhir
falcf^rs hd be ckxie,
a en
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�l GUESS TUB
SOUND DOLE.
f
1
�I REJECTED THE PRESIDENT'S
STMULUS PACKAGE BECAUSE
IT COULD SETOOUSUf HURT ANY
CHANCES FOR A RECOVERY..
�Mike Smith
LAS VEGAS
SUN
�ABOUT A^NMUTt AnEt\
HAILING HLP, FIFTLLN
HARD-LARNED DOLLARS TO
UNITED W STAND AMERICA,
E
m S . ELIZABETH SKOOQ
REALIZES S E HAS
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r
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F YOU ACD 'EM ALL JP- FOLKS. ' H E Y CCME OUT 7 0 A BIG. r A T Z E T O P
"That Texan twang LS really starting to bug me. Besides, ivho invited him?"
�HAPPENS "WHEN THE PRESIDENT
Q."WHATCONGRESS ARE DEADLOCKED ?
AMP
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OF GOVERNMEHT
STEPS IN.
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�Since Cuomo doesn't want to be on the Supreme Court, here's a
list of others who may run against you in '96.'
r
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HARRY.TKE P E I E T
'
R SD N
W N S G I INPUT/
A T U?
Palm Beacn Post/Wngnt
�N MIDDLE CLASS
O
TAX HIKE!
MD L CLASS
I DE
TAX HIKE!
I'D ADMIT
I W N ADMIT
O'
T
HAITIAN REFUGEES! HAITIAN REFUGEES!
I WON'T
BOMB BOSNIA'.
I'D B M
O B
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N VALUE
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ADDED TAX!
VALUE ADDED
TAX!
Dick Wright/Providence Journal-Bullet
Tom Toles
"WELL THERE YOU HAVE IT, CHELSEA ....
M O M T W S ^ A ^
�The White House sharpens its focus
IF THOMAS
>
JEFFERSON
MERE ALIVE TODAY,
I'D APPOINT HIM
SECRETARY
OF STATE.
IF THOMAS
JEFFERSON
MERE ALIVE TOQM,
YOU'D BE THE
GOVERNOR OF
ARKANSAS.
�SuSH L;>;ep
R>«»C
woMDER UMAT THC
/?fNDS CUMTOtf ADW STRAT/ON c
s
FAVORiTt FOOD is ?
f
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3' M R N t n FOR THE INOUUIUHXIS NEWS
Does He ReallyJ(fQnt To Know?
M R D M ISSUES F R C I T N
OI UB
O LN O
IT'S UNTHINKABLE
THAT SAY SPIES
HME To HIK
THEI* SEXUAUT/.'
IVE XCIPED TO STAKE THE
ENTIRE PRESTIGE OP Mi
PRESIDENCY ON SUPPORTING
SELF- DETERMINATION FoR THE
vPCOPLE OF STATEN ISLAND.'
IT'S THE
GA/S IN
THE CI.A.,
STUPID.
J
IT'S THE
SCCCSSION
OF STATEN
ISLAND.
STUPID.
THE ECONOMY MUST PLAY A
SECONDARY ROLE TO MAKING
SURE CHUCK BERRY ANO Bo
PIPPLEy GET ALL THE MON£7
THEY GOT CHEATED OUT OF
. i I BACK IN THE FIFTIES:
^>2r
WE WILL USE MILITARY
FORCE TO PROTECT THE
C I V I L RIGHTS O F SOUTH
A F R I C A N W H I T E S I F THEY
EVER Y I E L D P O W E R TO
BLACKS WHO ARENT NICE!
IT'S
HERS.
STUPID
�Gridlock! Evervwhere!
Joe Sharpnack
�DRAWINGBOARD / WUERKER
i
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Rob Rogers. Pittsburgh Post-Gazette. United Feature Syna.
�Uv.cie bill will give me a
s-'imner job, coJloge r^oney,
and (xmpjeVg healVh cere
covQrage... what do yots '
he\'e Xo offer ?...
/ , T
•w
Sxin &aei. juSt relumed
c^^t experience
-h n the Cotnwifler
ta
in Chief
David Catrow
SPRINGFIELD
NEWS-SUN
��decide v^ucb.
proimses to
\
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D lu ci c^ h o s
t
c np trflccoun^edforthe
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disappeeraice o 25,ooo
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dozen nw promises...
e
Jimmy Margulies
New Jersey Record
�if you
TRUUV
fceueve
f
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MR WHY Y O U R WAND I S
IN MY P O C K t T ?
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fAAoeA rA\sTAKE.
ACCORPING TO TriE SCHEDULE,
1 NA SUPPOSED TO MEET
THEY'VE
WITH
THE
A
NEW
WHITE
MEN\SER
HOUSE
OF
STAFF.
/
Y U ARE
O
PUDE!
\
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Walt Handeisman. The Times-Picayune. New Orleans. La.. Tribune Media Services
SHfo
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Can't Get Any Lift With This Thing!'
St. PetersDura Times/Ber
�HERfc IT IS THE toepyiST PISCLOSUPC MX!
COHGKSS
WELL, THAT'S
PHOTECTED
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New York Newsaay/Marleite
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Dublin Core
The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/.
Title
A name given to the resource
David Kusnet
Creator
An entity primarily responsible for making the resource
David Kusnet
Office of Speechwriting
Date
A point or period of time associated with an event in the lifecycle of the resource
1993-1994
Is Part Of
A related resource in which the described resource is physically or logically included.
<a href="http://clinton.presidentiallibraries.us/items/show/36196">Collection Finding Aid</a>
<a href="https://catalog.archives.gov/id/7431944">National Archives Catalog Description</a>
Identifier
An unambiguous reference to the resource within a given context
2006-0465-F
Description
An account of the resource
This collection contains the files of David Kusnet, Presidential Speechwriter and includes some papers of Liz Bowyer, Staff Assistant. The collections consists of drafts of the 1993 inaugural address, speeches on health care, economics, and other speeches from early in the Administration. The combined files of Kusnet and Bowyer are largely administrative in nature. A large portion of this collection consists of daily news reports, dated April 1, 1993 to February 17, 1994, compiled by the White House Office of News Analysis.
Provenance
A statement of any changes in ownership and custody of the resource since its creation that are significant for its authenticity, integrity, and interpretation. The statement may include a description of any changes successive custodians made to the resource.
Clinton Presidential Records: White House Staff and Office Files
Publisher
An entity responsible for making the resource available
William J. Clinton Presidential Library & Museum
Extent
The size or duration of the resource.
269 folders in 26 boxes
Text
A resource consisting primarily of words for reading. Examples include books, letters, dissertations, poems, newspapers, articles, archives of mailing lists. Note that facsimiles or images of texts are still of the genre Text.
Original Format
The type of object, such as painting, sculpture, paper, photo, and additional data
Paper
Dublin Core
The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/.
Title
A name given to the resource
[Press Clips] Tuesday, May 11, 1993[2]
Creator
An entity primarily responsible for making the resource
Office of Speechwriting
David Kusnet
Identifier
An unambiguous reference to the resource within a given context
2006-0465-F
Is Part Of
A related resource in which the described resource is physically or logically included.
Box 10
<a href="http://clinton.presidentiallibraries.us/items/show/36196">Collection Finding Aid</a>
<a href="https://catalog.archives.gov/id/20759753">National Archives Catalog Description</a>
Provenance
A statement of any changes in ownership and custody of the resource since its creation that are significant for its authenticity, integrity, and interpretation. The statement may include a description of any changes successive custodians made to the resource.
Clinton Presidential Records: White House Staff and Office Files
Publisher
An entity responsible for making the resource available
William J. Clinton Presidential Library & Museum
Format
The file format, physical medium, or dimensions of the resource
Adobe Acrobat Document
Medium
The material or physical carrier of the resource.
Preservation-Reproduction-Reference
Date Created
Date of creation of the resource.
5/19/2015
Source
A related resource from which the described resource is derived
42-t-7431944-20060465F-010-005-2015
7431944
20759753